BitFury Research Report Shows Shared Send Bitcoin Transactions Do Not Provide Enough Security

As BitFury’s Shared Send Untangling in Bitcoin report states, this anonymization method does not provide adequate security, allowing the detection of senders and receivers in half of the cases.

As distributed ledger technology becomes more and more popular, more and more people are looking for ways to maintain the anonymity of the Bitcoin network. One of these methods is to mix transactions with the help of special services (e.g., bitmixer) or the CoinJoin and CoinSwamp algorithms (SharedSend). The investigators did not analyze the first anonymization method, because it involves splitting one transaction into several, so that the connection between the sending and receiving addresses is almost impossible to track. The second method involves combining multiple users in a single transaction: coins from different wallets are tangled together, so that it is impossible to link the movement of funds to a specific wallet.

The researchers said:

“SharedSend mixing is one of the main types of anonymization techniques in the Bitcoin network. Accordingly, solving SharedSend transactions (e.g., discovering the value flow in transactions) has important practical significance.”

This anonymization can be exploited by hackers. The published literature is a theoretical approach based on computational experiments in graph theory. Thus, the researchers demonstrated that most transaction entanglements can be deciphered and analyzed by using moderate computing resources.

The report is based on an analysis of a total of 10 million bitcoin transactions conducted between May 27 and July 11, 2016. The researchers found that 2.5% of bitcoin transactions used SharedSend technology to process transactions, and about half of them were unraveled. BitFury plans to use these analysis results in an upcoming project - a blockchain investigation and analysis network service BitFury Crystal Blockchain .

BitFury is one of the largest Bitcoin miners and private blockchain infrastructure providers. The company develops and distributes the software and hardware needed for businesses, governments, organizations and individuals to ensure the safe movement of their assets on the blockchain. According to earlier reports, BitFury proposed the establishment of a small payment system, the Lightning Network, to achieve the expansion of the Bitcoin network.