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Bitcoin privacy may be reduced with the launch of QLUE alongside other deanonymization tools used to trace Bitcoin transactions and reveal user identities.
QLUE for Law Enforcement on ‘Financial Crimes’
Although Bitcoin is known for being used in criminal activities like the sale of illicit items on the deep web, its pseudonymous nature makes it less than optimal for cyber criminals. But the misconception that Bitcoin is untraceable is a common one and it’s often still referred to as an ‘anonymous currency’ despite its public ledger.
Now, Bitcoin may become even less anonymous with the launch of QLUE, a platform created to combat illicit transactions on the Bitcoin network.
The launch was announced yesterday by the Blockchain Intelligence Group (BIG), a Canadian company focused on big data and blockchain technology which developed QLUE to help law enforcement agencies across the world “in the fight against financial crimes involving Bitcoin” by identifying and tracing Bitcoin transactions.
QLUE incorporates various techniques and advanced search algorithms to detect suspicious activity within Bitcoin transactions, use of “Dark Web” tools such as Tor, and other methods commonly employed by criminals to cover illegal activity online.
Shone Anstey, President Founder of BIG, stated:
As a pro-Bitcoin company, our mandate is to help eliminate abuse of the Bitcoin network. At this time I would like to thank our development team for their hard efforts and work bringing this version to fruition.
Although the release of the QLUE platform may have a positive impact on Bitcoin and in the fight against criminal activity within its network, it is also a worrying sign for the privacy of its users.
“Privacy is necessary for an open society in the electronic age,” wrote Eric Hughes in A Cypherpunk’s Manifesto (1993).
Along with QLUE, other measures for identifying cryptocurrency users are also being explored. In the European Union, a proposal was put forward by the European Commission to make exchanges store user ID’s and wallet addresses in a central database..
The EU Commission is pursuing this idea despite the UK Treasury previously highlighting that cryptocurrencies are at “low risk” for being used by criminals and terrorists.
However, QLUE is not the first on the scene by far. Chainalysis, a New York-based company partnered with Interpol, also provides a tool for the fight against cybercrime, one that has checked over $15 billion worth of Bitcoin transactions so far in an effort to curb the Ransomware epidemic.
Michael Grønager, Chainalysis CEO Co-Founder previously stated:
Bitcoin transactions used to be anonymous, but our software is capable of linking the source and recipient. In effect, bitcoin has become less anonymous than cash.
Ransomware, along with malicious DDOS attacks, have become a huge concern among businesses. Thus, it comes as no surprise that law enforcement wants to gain an edge on this technology by helping fund Blockchain intelligence companies such as Elliptic, which received $5 million USD in March 2016.
Meanwhile, in Italy, authorities are also concerned about criminals using Bitcoin, claiming that the mafia launders money via Bitcoin gambling. Furthermore, Italy’s cyber police argues that online anonymity should not exist because it helps cybercriminals evade law enforcement.
In italy “cyber police” say:
“Anonymity online MUST NOT EXIST!!!” pic.twitter.com/EskfkWJvwR
— Fabio Pietrosanti (@fpietrosanti) February 20, 2017
This trend towards deanonymization within Bitcoin may lead users to seek refuge in less known cryptocurrencies that focus on anonymous transactions like Zcash and Monero, of which the latter experienced a surge in price last fall in light of acceptance by several online dark markets.
Could these new surveillance tools hurt Bitcoin privacy and fungibility? Share your thoughts below!
Images courtesy of Twitter, Shutterstock