Bitcoin User Survey: One-fifth of Respondents May Consider Abandoning BTC Due to Privacy Issues

Three German academics are studying the privacy concerns of Bitcoin users. Their preliminary conclusion is that Bitcoin users value privacy, but most do not have the skills to anonymize transactions.

Privacy is a hot topic in the Bitcoin world, which is why they are studying anonymizing and deanonymizing Bitcoin transactions. Large companies are committed to connecting the corresponding Bitcoin addresses and identity information, while developers tend to break this connection. However, in order to understand users' attitudes towards privacy, it is best to ask them directly. Therefore, the three German scholars conducted this study.

Three researchers, Benjamin Faber, Tatiana Ermakova, and Ulrike Sander, conducted a survey on the privacy awareness and potential concerns of Bitcoin users, aiming to explore how active Bitcoin users evaluate the privacy of the cryptocurrency.

Participants

As with all empirical research, the most important question for this survey is: how to select respondents? How to ensure that the opinions of these participants are representative of all Bitcoin users?

Faber, Ermakov, and Sander recruited participants on multiple social networking sites, including Facebook, LinkedIn, Xing, bitcointalk.org, and r/bitcoin. In addition, they sent emails to "all students at a major German university, 195 German companies listed on Coinmap (a global record of companies and locations that accept Bitcoin), and 150 randomly selected companies in the United States and the United Kingdom."

To verify whether these respondents are representative of the entire Bitcoin community, they analyzed the characteristics of the respondents from a demographic perspective and compared them with other related studies.

The most common respondents in the survey were German (54%) males (95%) aged between 20 and 29 (35%) or 30 and 39 (32%).

Except for nationality, all other attributes are in full compliance with the standards. Therefore, this survey is representative to a certain extent.

Privacy of Bitcoin

Before we look at the respondents’ views on the privacy of the Bitcoin blockchain, let’s take a look at what the scholars have to say. They first explained that Bitcoin transactions are publicly visible on the blockchain and are not anonymous, but semi-anonymous (pseudonymous); then they explained how to link addresses with identity information, completely breaking this semi-anonymous feature.

First, we need to start with the transaction structure. Each transaction consists of inputs and outputs, and corresponds to an address. Most transactions contain multiple inputs from different addresses, but it is entirely possible to find the corresponding identity information through these addresses. This approach also makes it possible to cluster addresses, walletexplorer.com is a typical example.

The second method is to "de-anonymize the Bitcoin network." The Bitcoin address and IP address are linked together by mutual observation between nodes, although the result may not be completely reliable.

The three scholars concluded:

The anonymity enjoyed by Bitcoin users can be compromised.

They also introduced two ways to protect user privacy: First, you cannot reuse the same address or stealth address, which can effectively prevent address clustering. Second, you should use a mixing service to try to cut off the connection between the address and your identity, such as Bitfog or CoinJoin.

The next step is to hear from users and see if they truly understand privacy.

User Perceptions of Privacy

They asked users several questions: How much do you know about privacy? What do you think of privacy as a unique property of Bitcoin? Do you know how to de-anonymize Bitcoin transactions? Do you know how to improve privacy?

Despite some obvious flaws, most users believe that Bitcoin has a relatively high degree of anonymity.

Overall, about 40% of respondents rated Bitcoin’s anonymity as medium, and 30% rated it as high.

However, a quarter of participants believe that Bitcoin offers little (14%) or no (12%) anonymity, and about a fifth of them are even considering abandoning Bitcoin due to concerns about anonymity.

Next, the researchers asked about their understanding of decentralized technology. 85% of users said they knew about the deanonymization of Bitcoin transactions, and 50% of users expressed concerns about it. However, as the questions were further deepened, the respondents knew less and less. Regarding cluster analysis and IP connection, most people (30% to 34%) said they were "unaware". Another third said they had learned about the above information, but did not take it seriously. Among them, 29% were more worried about cluster analysis and 22% were worried about IP address tracking.

Ways for users to increase their privacy

Next, the researchers asked users if they used any techniques to improve privacy. Surprisingly, more than half of users (53%) knew about the existence of stealth addresses. Since most wallets do not support stealth addresses, only 7% of respondents are using them.

Most respondents understood that the same address cannot be used twice.

Only 18% of users are not aware that this method can improve anonymity. The remaining 35% do not use this method, while 47% are using similar methods. Therefore, the popularity of this type of solution is relatively high.

Respondents have relatively little knowledge of coin mixing services.

38% of the respondents have used or are currently using a coin mixing service. 38% of users said they would not choose such a service. The remaining 24% said they were unaware of the existence of coin mixing services.

In general, users attach great importance to the privacy of Bitcoin transactions and technologies that improve the anonymity of the network. This can once again prove that privacy is one of the most important features of Bitcoin.