Many people know bitcoin as an anonymous digital currency, one whose privacy features prime it for concealed payments in sketchy recesses of the internet’s dark web.
These same people would likely be surprised to learn that bitcoin is far from anonymous. More pseudonymous than anything, its underlying technology, the blockchain, actually features a number of technical windows through which users could peep another user’s identity. These interested parties, be they analytics companies, governments or anyone with sufficient IT knowledge, can use peer-to-peer network analysis to link a Bitcoin public address to an IP address, allowing them to learn who owns a wallet and who they’re sending their funds to.
In tracing transactions and public addresses back to their users’ IP addresses, these “spies,” also known as “adversaries,” are effectively deanonymizing users. An obvious breach of privacy, the Bitcoin community has long wrestled with solutions to neutralize this problem.
Entering the conversation is Dandelion, a protocol developed by Giulia Fanti along with Shaileshh Bojja Venkatakrishnan, Surya Bakshi, Bradley Denby, Shruti Bhargava, Andrew Miller and Pramod Viswanath, researchers at Carnegie Mellon, MIT and the University of Illinois. If theory can hold up in application, Dandelion would effectively neutralize the peer-to-peer analysis that plays a significant role in compromising user identity.The Problem
Whenever someone sends a transaction on Bitcoin’s network, typically, that transaction is broadcasted to multiple nodes until it is picked up by a miner and included in a block.
This broadcasting process is known as diffusion. It begins when the source node, the node that creates the transaction, transmits it to other nodes on the network. Once this node broadcasts the transaction, each of the other nodes that make up the network continues to independently diffuse the transaction by sending it to others with exponent...