Hi, I'm Jonathan Levine. I'm from London. I run with a number of people, a website and
company called Coinometrics. We measure Bitcoin activity, everything from the underlying Bitcoin
network and how transactions are propagated across this peer-to-peer network to the blockchain,
which contains all the information about the transactions, to the exchanges, to the mining
side of it. We gather all this data and we process it and we display it on a nice dashboard
at www.coinometrics.com. This is about information. Bitcoin is not about the transfer of physical
assets. It's really about transfer of information, collecting information in an unmutable database
that people can rely on. I mean, when any sort of activity happens on the blockchain,
it's there for everyone to see and forever. You can't erase this history. What CryptoLocker
had was they didn't change the address that they were giving out that often. When they
did change it, you can also cluster those addresses when they get spent in transactions
together. This is their revenue chart. You can make a certain approximation. It looks
like they made roughly a million dollars. That's a pretty conservative estimate. They
probably made a lot more, but that's how much this guy was able to track.
The way that you can track this is that when CryptoLocker lock your hardware, they give
you an address to pay. That's a public address. That's kind of like giving out your account
number, except everyone has access to the ledger where we can look up that number and
say, we can list all the previous transactions that have happened with that address. I can
link that address with another address if they've been used together in one transaction.
This is actually a graph clustering about a thousand addresses together and showing that
these all were used by the same entity. A million dollars in about three months, I would
say that's not a bad salary. Can you follow thieves? There was a theft that occurred,
which is this green line. You can see the thief made two transactions. He made a one
Bitcoin transaction to test it out to see that he actually had access, and then he made
a 25,000 Bitcoin transaction.
Because that's what they do with credit cards. Three cents is so mentality.
Yeah, exactly the same mentality. It looks like there's a link between the thief and
the victim through another channel, and that might be useful for us. This purple dot here
is a mining pool. It's a slush mining pool. The orange dot is someone who was suspected
of being the thief. What you know here is that this line between the thief and the orange
dot is actually directed from the orange to the red. We actually could clear the orange
dot from the suspect list because he wasn't being paid by the thief.
It's going the other direction.
Essentially, this is the beginnings of trying to get forensic about getting into thievery.
If you have external information about, say, the size of the theft or something like that,
then it's much easier with timing to go and find that particular transaction.
There isn't a lot of data. It's really about understanding the data structure. Here, they
thought this was the founder of Bitcoin controlling this address over here. This was the administrator
of the Silk Road. They drew a pathway between the founder and Dread Pirate Roberts, the
administrator of the Silk Road. Actually, this address here is publicly known to be
controlled by a different entity. Yes, you can use these tools, but you need to be referencing
external sources. You need extra data in there to actually make it meaningful. You can make
mistakes, which I've done in the past.
This is similar to what we said before, but this is an example of a mixing transaction.
This is money cleansing. When I speak about money laundering, this is privacy protection.
I don't want to necessarily draw a parallel, but essentially what you're doing is you're
making it very hard for someone like me to go in there and say, this transaction is linked
to this transaction is linked to this. You're making lots of pathways that mean that it's
very hard to track.
If you look here, there's many green dots in one cluster and linked between each other.
What that means is that when two green dots have a connection between them, it means that
they're not waiting for any confirmations to spend that previous transaction. There has
to be trust between those entities, and likely it is that that all happens on one computer.
Actually, if you don't use coin mixers, you are going to expose your entire money holdings
without much, without great effort from someone who really wants to know that. When you go
and say, for example, you get part of your salary in Bitcoin, when you go down to the
shopping mall and you pay for your goods with Bitcoin and you're using your address
with your salary. You pay out the change and you only pay the supermarket what you want,
but the person who's just received that money can go back to that transaction and say, oh,
you earn 50,000 Aussie dollars a year, or whatever it is. That's not really acceptable
for a financial system.
Actual anonymity is where you don't have any kind of identities attached. In Bitcoin,
you always do. At the maximum, it can be highly obscured pseudonyms. I mean, I love the ability
to have private transactions, and I think that Bitcoin wouldn't be where it is today
without the promise of that. I think that it will come. There will probably be some
interesting solutions to this.
