A supposedly secure system for sending untraceable money across the planet turns out to be not secure at all. Why it’s enough to make one put on their tinfoil hat of conspiracy and wonder WTF? Who benefits from this? Not Bitcoin users, that’s for sure.
Bitcoin has an undeserved reputation for security. It has repeatedly hacked and compromised. Now this. IP addresses for Bitcoin transactions can readily be obtained, with minimal amounts of time and effort, university researchers say. I’m guessing others figured out this gaping hole in Bitcoin “security” too and have already taken advantage of it.
Researchers at the Laboratory of Algorithmics, Cryptology and Security of the University of Luxembourg have shown that Bitcoin does not protect user’s IP address and that it can be linked to the user’s transactions in real-time. To find this out, a hacker would need only a few computers and about €1500 per month for server and traffic costs. Moreover, the popular anonymization network “Tor” can do little to guarantee Bitcoin user’s anonymity, since it can be blocked easily.
The basic idea behind these findings is that Bitcoin entry nodes, to which the user’s computer connects in order to make a transaction, form a unique identifier for the duration of user’s session. This unique pattern can be linked to a user’s IP address. Moreover, transactions made during one session, even those made via unrelated pseudonyms, can be linked together. With this method, hackers can reveal up to 60 percent of the IP addresses behind the transactions made over the Bitcoin network.
Software patches written by the researchers are currently under discussion with the Bitcoin core developers.
Would these be the same Bitcoin core developers that have consistently released buggy code that is easily compromised?
Cryptocurrencies may well have a long life ahead of them – after the amateur hour that is Bitcoin has been replaced with a system that is genuinely robust and anonymous.