First, the original
Title:HOW ANONYMOUS ARE BITCOINS?
Satoshi Nakamoto November 25 2009, 06: 17: 23 PM
Can nodes on the network tell from which and or to which bitcoin address coins are being sent? Do blocks contain a history of where bitcoins have been transferred to and from?
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Bitcoins are sent to and from bitcoin addresses, which are essentially random numbers with no identifying information.
When you send to an IP address, the transaction is still written to a bitcoin address. The IP address is only used to connect to the recipient's computer to request a fresh bitcoin address, give the transaction directly to the recipient and get a confirmation.
Blocks contain a history of the bitcoin addresses that a coin has been transferred to. If the identities of the people using the bitcoin addresses are not known and each address is used only once, then this information only reveals that some unknown person transfers some amount to Someone else.
The possibility to be anonymous or pseudonymous relies on you not revealing any identifying information about yourself in connection with the bitcoin addresses you use. If you post your bitcoin address on the web, then you're associating that address and any transactions with it with the Name you posted under. If you posted under a handle that you haven't associated with your real identity, then you're still pseudonymous.
For greater privacy, it's best to use bitcoin addresses only once. You can change addresses as often as you want using Options->Change Your Address. Transfers by IP address automatically use a new bitcoin address each time.
Second, the translation
Title: What is the anonymity of Bitcoin?
Nakamoto Satoshi, November 25, 2009, 6:17:23 PM
Does the network node know the ins and outs of Bitcoin? Does the block contain a history of inbound and outbound?
The address of the receiving and receiving bitcoin is essentially a random number without any identifying information.
The transaction sent to the IP address is still written to the Bitcoin address. The IP address is simply used to connect to the payee's computer to request a new Bitcoin address, to deliver the transaction directly to the payee and to be confirmed.
The block contains the bitcoin address history that was transferred. If the identity of the person using the bitcoin address is unknown and each address has only been used once, then the historical information will only indicate that some anonymous people have transferred the money to others.
The possibility of anonymity and the use of a pseudonym depends on whether or not the identity information associated with the Bitcoin address is disclosed. If you publish your own Bitcoin address on the Internet, you can associate the address, the transactions it contains, and the name used to publish it. If you use a vest that is not associated with real identity information, it is anonymous.
For better privacy, Bitcoin addresses are best used only once. This can be done by modifying the Opions->change to adjust the frequency of address changes.
Third, dialogue interpretation
Liu Jian: This is a post published by Nakamoto in the forum, which mainly explains the characteristics of bitcoin anonymity. Many people will regard the anonymity of Bitcoin as an important feature of it, but now there are some voices of opposition. They think that the anonymity of Bitcoin is not enough. What do you think about this issue?
Yuandao: For anonymity, there are usually two understandings, one is not to reveal the true identity, the other is to leave no identity information. Bitcoin only uses the address instead of the user's real identity to trade. If no other data is associated with this address, it will not be able to confirm his identity in the real world. In the current era of big data, personal data information is widely spread. As long as it has certain data collection, processing and analysis capabilities, it is entirely possible to associate a bitcoin address with someone's identity. As Nakamoto said in the email, "If you publish your own bitcoin address on the Internet, you can associate the address, the transactions it contains, and the name used in the publication." So, from this From the perspective, Bitcoin's anonymity is clearly the first, just a limited anonymity that does not reveal the true identity. The second type of anonymity without leaving any information, I think only banknotes are closest to this scene. Face-to-face banknote transactions, taking appropriate measures, can not disclose any identity information, do not record any information related to the payer, basically achieve the purpose of leaving no traces and clues.
Liu Jian: Zhou Xiaochuan, former president of the People’s Bank of China, once said: “From the perspective of the central bank, the future digital currency should do its utmost to protect private privacy and find a balance between protecting privacy and cracking down on criminal activities.” How do you deal with Bitcoin's anonymity? What do you think Bitcoin is doing to grasp this balance?
Yuandao: Bitcoin brings together two characteristics of leaving anonymity and recording the complete transaction history. The Bitcoin ledger records the entire transaction history of each address and is fully public, allowing anyone to retrieve all transactions for any address in the ledger. With these records you can restore the ins and outs of any bitcoin. For example, in 2011, researchers Fergal Reid and Martin Harrigan published an analysis report, one of which was to try to track a theft involving 25,000 bitcoins in June 2011. The two researchers successfully used bitcoin books to track stolen funds for a considerable distance. In August 2013, a group of researchers from George Mason University and the University of California, San Diego, published a report titled "Bitcoin: Describe the Characteristics of Anonymous Payments," which describes how they got up. The Bitcoin theft case successfully tracked the process of a trading platform, and proposed a tracking and heuristic "change order" detection algorithm and other tracking techniques. On this basis, the use of big data to link the bitcoin address to the personal identity can completely determine the direction of a fund and the identity of the trader. Governments and regulators have strong data collection and analysis capabilities that can effectively use these leads and data to combat crime. Therefore, Bitcoin can be considered to provide a natural, open regulatory interface. Although the technology is mature, collecting, processing, and analyzing data requires professional skills and time and effort, so there are thresholds and restrictions for individuals, not everyone can do it. Therefore, I think Bitcoin is not anonymous to government regulators, but anonymous to ordinary people. In this sense, Bitcoin did indeed "seek a balance between protecting privacy and cracking down on criminal activities" as President Zhou Xiaochuan expected.
Liu Jian: Recently, the lightning network is very hot, and its appearance has greatly improved the user experience of Bitcoin payment. I think the current bitcoin system can be said to be a collection of decentralized central banks (issuing, clearing) + commercial banks (payments, settlements). At present, for banks, KYC has become a responsibility and obligation that must be fulfilled. Do you think the Bitcoin system needs to increase KYC function?
Yuandao : In the bitcoin world, KYC is not needed. At least at the current stage, KYC is not needed, and there is no way to do KYC. My reasons are fourfold: First, Bitcoin is a decentralized system developed through cold start, and there is no leading operation. In this case, it is impossible to find a subject who is responsible for KYC. Secondly, the circulation of Bitcoin as a currency is still relatively rare. More often, it exists as a commodity with certain investment attributes, and KYC is not required to buy or sell goods. Third, convert bitcoin into French currency, or convert French currency into bitcoin. This is the interface and boundary between Bitcoin world and the legal currency world. If Bitcoin requires KYC, then it is more effective on this boundary, and digital currency. Exchanges and traditional banks are just two firewalls on this border. Fourth, KYC is for AML, but now the number of behaviors that use Bitcoin for malicious purposes has been declining due to insufficient bitcoin anonymity. I have some data here to verify this point. Japanese law enforcement agencies received 346,595 reports of alleged money laundering between April and December 2017, of which only 669 (0.19%) involved digital currency, the above data and the United States. The records in the Democratic National Defense Foundation (FDD) survey report are basically the same. In addition, there are some data showing that less than 1% of bitcoin transactions between 2013 and 2016 are illegal, and this number has dropped from 1.07% to 0.61% in three years, even in mid-2017. This data is still declining, and it can almost be judged that the use of bitcoin for malicious purposes is almost less and less . In summary, my conclusion is that KYC is not needed in the Bitcoin world.
Liu Jian: Before, in a paper, you proposed the concept of “autonomous encryption tribe”, which is a new type of collaborative organization belonging to the new world of blockchain. Then members of this organization are anonymously cooperative with each other, or Cooperation with identity?
Yuandao: For this question, let me explain my vision of the autonomous encryption tribe. There have been many good social products in the Internet world, which can connect users together and discuss and discuss some issues, thus forming an Internet community. However, the Internet community also has great limitations, limited to discussion, further substantive cooperation, especially commercial cooperation, financial transactions between users and users and exchange of value, the Internet community is difficult to really bear. However, the emergence of blockchains provides a technical basis and governance guarantee for the “deep” synergy of such groups. The DAO proposed by Ethereum is a typical example. This new form of organization will greatly release the vitality of individuals and bring more innovation to human economic development. The autonomous encryption tribe is a concrete social experiment on top of this concept, which can be first applied to the decentralized self-finance field. For example, an investment expert (KOL) and ordinary investors construct an autonomous encryption tribe, design and select investment products based on common risk preferences and income expectations, and use blockchain technology to ensure fund security, information disclosure, and effective incentive contributors. The cooperation mechanism can be implemented, the risk or benefit distribution can be implemented, etc., and the bitcoin, or other decentralized digital assets that are brewing, conform to the bitcoin mechanism, legal compliance, and no original sin as a capital bridge, widely connect the tradition The top quality assets of the world (old money world) help the autonomous inhabitants and immigrants of the autonomous encryption tribe to help each other, build and share, and jointly achieve wealth growth.
Liu Jian: This will be an interesting social experiment. It can be said to be a new, truly original P2P or P2B self-finance model that can both address the needs of both investment and financing, while also supporting Bitcoin and the future. The new generation of decentralized digital currency in the Bitcoin mechanism has created a huge circulation area.
Yuandao : In the autonomous encryption tribe, I tried to propose a new concept called KYF, (KnowYour Friend), that is, the focus of attention is not on the identity of a person, but on some specific attributes of this person. For example, in a particular autonomous encrypted tribe, each Aboriginal, each immigrant's investment experience, investment preferences, risk tolerance, etc., this information is actually more important than the "real identity" (KYC of the traditional world) . The reason is that any Tribe needs each member to contribute their own strength and achieve common goals, and these attributes will be a measure of whether a person has the ability, which is an important condition for Tribe to gather a group of people to cooperate. This scene is like the first batch of immigrants in the United States who arrived in the American continent on the Mayflower. The most concerned about each other is what skills their peers have and what kind of help they can provide, rather than his original identity in the old world of Europe. prove. Of course, in order to implement this KYF mechanism, a new generation of technical tools, such as collaborative proposal tools, rule determination tools, contribution recording tools, communication tools, credit record tools, etc., are also needed, which also requires a systematic design. And constantly optimize and improve during the use process. The blockchain can provide some support, but not all of them. I also keep thinking and communicating with a large number of like-minded friends in the industry.
Liu Jian: I understand that KYF also has the advantage of merely disclosing the necessary information and protecting personal privacy to a large extent. This is a threat to personal data leakage that is becoming more and more serious in cyberspace, even due to a large amount of personal data leakage. Leading to social crisis is very necessary. Your idea is very interesting and very attractive, and it is expected that such autonomous encrypted tribes, or autonomous encrypted tribe clusters, will emerge as soon as possible.
Yuan Dao's column is the chief evangelist of BitTribe Lab (Hong Kong). Mr. Yuan Dao has built up and conceived Mr. Yuan Dao's thoughts, understandings and prospects for the new world of blockchain over the years. "Rereading Nakamoto's Mail Series – Dr. Liu Jian's Dialogue with Yuandao" is the first series of dialogues published in this column. It is in the context of the blockchain technology and digital assets that have received much attention in the past two years. Quietly reading Nakamoto's emails in the early days of Bitcoin, dig deep into Nakamoto's initial heart, rigorously sum up the success of Bitcoin, and gather wisdom to explore future development, thus providing a hint of inspiration for people who care about the new world of blockchain.
Note: Dr. Jian Liu, Ph.D. in Engineering, National University of Defense Technology, supercomputing and distributed computing expert, one of the founders of BitTribeLab, is currently working in the blockchain industry.