Startups seek to de-anonymize Bitcoin to fight crime

Over in the US, a Seattle-based startup called CoinLab claims that it’s developed a piece of software, Oden, that can monitor a person’s Bitcoin activity. Unfortunately for Bitcoin evangelists, the company claims that the majority of transactions come from one of two places: online gambling or the darknet. The background to the story is that CoinLab, which incubates Bitcoin-related businesses, sued Mt. Gox in 2013. The firm alleges that Gox chief Mark Karpeles hid a quantity of the cryptocurrency in his own pockets to defraud customers. As a consequence, CoinLab says that it began developing Oden as a way of tracing the blockchain for “bad money movements.”

Oden’s trick is to search through the blockchain for repeated addresses, like the tip jar code for a website. While Bitcoin’s original architecture is designed to obscure each transaction, human nature tends towards laziness. As such, websites like The Pirate Bay used the same code on its front page, presumably to avoid losing repeat donations. But these repetitions also allow third parties to start finding patterns, and from there, understanding behaviors. Add in the use of vanity addresses and it’s not long before tying Bitcoin activity to individuals is, at least theoretically,

Read more ... source: TheBitcoinNews