[LINK] Bitcoin AND Surveillance

[Jim Birch]

Worth reading, if you are so inclined: How the Bitcoin protocol actually
works

http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-actually-works/

"Many thousands of articles have been written purporting to explain
Bitcoin, the online, peer-to-peer currency. Most of those articles give a
hand-wavy account of the underlying cryptographic protocol, omitting many
details. Even those articles which delve deeper often gloss over crucial
points. My aim in this post is to explain the major ideas behind the
Bitcoin protocol in a clear, easily comprehensible way. We’ll start from
first principles, build up to a broad theoretical understanding of how the
protocol works, and then dig down into the nitty-gritty, examining the raw
data in a Bitcoin transaction."

and, this little beauty:

"How anonymous is Bitcoin? Many people claim that Bitcoin can be used
anonymously. This claim has led to the formation of marketplaces such as
Silk Road (and various successors), which specialize in illegal goods.
However, the claim that Bitcoin is anonymous is a myth. The block chain is
public, meaning that it’s possible for anyone to see every Bitcoin
transaction ever. Although Bitcoin addresses aren’t immediately associated
to real-world identities, computer scientists have done a great deal of
work figuring out how to de-anonymize “anonymous” social networks. The
block chain is a marvellous target for these techniques. I will be
extremely surprised if the great majority of Bitcoin users are not
identified with relatively high confidence and ease in the near future. The
confidence won’t be high enough to achieve convictions, but will be high
enough to identify likely targets. Furthermore, identification will be
retrospective, meaning that someone who bought drugs on Silk Road in 2011
will still be identifiable on the basis of the block chain in, say, 2020.
These de-anonymization techniques are well known to computer scientists,
and, one presumes, therefore to the NSA. I would not be at all surprised if
the NSA and other agencies have already de-anonymized many users. It is, in
fact, ironic that Bitcoin is often touted as anonymous. It’s not. Bitcoin
is, instead, perhaps the most open and transparent financial instrument the
world has ever seen."

- Jim

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