Abstract:Purpose
The purpose of this paper is to critically analyse research surrounding the anonymity of online transactions using Bitcoin and report on the feasibility of law enforcement bodies tracing illicit transactions back to a user’s real-life identity.
Design/methodology/approach
The design of this paper follows on from the approach taken by Reid and Harrigan (2013) in determining whether identifying information may be collated with external sources of data to identify individual users. In addition to conduc… Show more
“…Indeed, all bitcoin transactions are stored publicly and permanently on the network. The bitcoin system presented in these terms is not a tool of anonymity, but rather a transparent and trackable means of information shared across a network that does not rely on a centralized agency [34]. However, this is true in principle because it can be used anonymously by applying a bitcoin address once.…”
Section: Social Aspects Of Sustainabilitymentioning
Bitcoin is a digital currency based on a peer-to-peer payment system managed by an open source software and characterized by lower transaction costs, greater security and scalability than fiat money and no need of a central bank. Despite criticisms about illegal uses and social consequences, it is attracting the interest of the scientific community. The purpose of this work is to define and evaluate the current trends of the literature concerned with the sustainability of bitcoin, considering the environmental impacts, social issues and economic aspects. From the analysis it emerges that the transition of the whole monetary system in the new cryptocurrency will result in an unacceptable amount of energy consumed to mine new bitcoins and to maintain the entire virtual monetary system, and probably bitcoin will remain a niche currency. Blockchain, which is the base for a distributed and democratically-sustained public ledger of the transactions, could foster new and challenging opportunities. Sharing the framework of medical data, energy generation and distribution in micro-grids at the citizen level, block-stack and new state-driven cryptocurrencies, may benefit from the wide spread of blockchain-based transactions. Under the perspective of its being a driver of social change, bitcoins and related blockchain technologies may overcome the issues highlighted by numerous detractors.
“…Indeed, all bitcoin transactions are stored publicly and permanently on the network. The bitcoin system presented in these terms is not a tool of anonymity, but rather a transparent and trackable means of information shared across a network that does not rely on a centralized agency [34]. However, this is true in principle because it can be used anonymously by applying a bitcoin address once.…”
Section: Social Aspects Of Sustainabilitymentioning
Bitcoin is a digital currency based on a peer-to-peer payment system managed by an open source software and characterized by lower transaction costs, greater security and scalability than fiat money and no need of a central bank. Despite criticisms about illegal uses and social consequences, it is attracting the interest of the scientific community. The purpose of this work is to define and evaluate the current trends of the literature concerned with the sustainability of bitcoin, considering the environmental impacts, social issues and economic aspects. From the analysis it emerges that the transition of the whole monetary system in the new cryptocurrency will result in an unacceptable amount of energy consumed to mine new bitcoins and to maintain the entire virtual monetary system, and probably bitcoin will remain a niche currency. Blockchain, which is the base for a distributed and democratically-sustained public ledger of the transactions, could foster new and challenging opportunities. Sharing the framework of medical data, energy generation and distribution in micro-grids at the citizen level, block-stack and new state-driven cryptocurrencies, may benefit from the wide spread of blockchain-based transactions. Under the perspective of its being a driver of social change, bitcoins and related blockchain technologies may overcome the issues highlighted by numerous detractors.
“… 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa These pseudonymous addresses, such as the one above, do not in fact provide an absolute level of anonymity, and there are several techniques that can be used to identify the owner of such an address. Web (HTTP) cookies (Goldfelder et al, ), IP addresses (Koshy et al, ), clustering techniques – where several bitcoin addresses can be identified as being controlled by one user (Meiklejohn et al, ) – information provided by users to cryptocurrency exchanges when they sign up (Reynolds & Irwin, ), as well as the public disclosure of addresses on social media (Reid & Harrigan, ), are all ways in which these pseudonymous addresses can be traced back to their owner. For instance, law enforcement agencies have been able to trace transactions as part of investigations into illicit activity; during investigations into the Silk Road Marketplace – the online marketplace where users could purchase illicit drugs and other goods using bitcoin – the FBI were able to track the provenance of over 700,000 bitcoin and connect individuals to illegal activities (Greenberg, ).…”
Section: Fungibility Privacy and Private Currenciesmentioning
The fungibility of money is a characteristic which contributes to the quality of money. Fungibleness is itself related to the technical ability to associate a unit of currency with its past instances of exchange. This history is analogous to the identity of money. The identity of an individual unit of exchange is increasingly important as cash becomes less common, and banks require more information about the provenance of money. Private currencies, including Bitcoin and Libra, are themselves subject to tracking. The prior financial – and potentially political – activities of a user determine the fungibility of the currency they hold. Different money technologies provide varied levels of privacy, while cryptocurrencies offer users the potential to choose the level of information they share.
“…This can be mitigated through designing alternate cryptocurrency called Scrooge-Coin (Chiu & Koeppl, 2017). (Reynolds & Irwin, 2017) Found that to keep up with a rapidly expanding global environment, and with the gap between the 'global' and the 'local' becoming smaller, criminals are adopting new forms of currency, such as cryptocurrency, to increase the level of anonymity afforded to their illicit activities. Further, the compliance and implementation of anti-money laundering legislation and customer identification security standards are insufficiently utilized within some exchange services, resulting in more technologically adept, or well-funded, criminals being able to circumvent identification controls and continue to transact without revealing their identities.…”
Section: Literature Reviewmentioning
confidence: 99%
“…The notable fact about the currency is it do not require banks to process payments (Grinberg, 2011) and is self-regulatorynot requiring any central regulatory authority (Reynolds & Irwin, 2017).…”
The cryptocurrency is thought to be the next internet revolution, where transactions are done utilizing peer-to-peer network creating a blockchain of the participants involved. Therefore, it is in totality creating a new virtual world, which might change the course of the foreseeable future finance.
The reaction to the block chain and cryptocurrency is synonymous to the reaction to the internet when for the first time it emerged. While it is widely accepted for transactions in some countries; for instance in Nepal, it is illegal.Where the basic knowledge about the cryptocurrency is scarce in terms of Nepal, this article attempt to connote the grass root construct on cryptography, cryptocurrency and its practices across the globe to its readers.
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