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NextAdvisor may receive compensation for some links to products and services on this website. Dollar, which makes its price much more stable than other cryptocurrencies. That stability lends itself more toward digital payments, while other cryptocurrencies have more potential to increase in value as investments.

Block rewards are new ether coins that are created when each new block is discovered and are given to the successful miner for their efforts. It took about three years for the second-largest cryptocurrency by market cap to retest its previous all-time high price.

Since depreciation is not captured in EBITDA, it can lead to profit distortions for companies with a sizable amount of fixed assets and subsequently substantial depreciation expenses. LunarOpinions Would you recommend trading on Beaxy? Data represents opinions given on LunarCrush over the last 24 hours.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period.

CoinDesk journalists are not allowed to purchase stock outright in DCG. World currency prices are based on rates obtained via Open Exchange Rates. Mobile App Buy, sell, earn and exchange crypto anywhere and anytime. Together, the eight-member team formed an entity known as the Ethereum Foundation пїЅ a Switzerland-based nonprofit organization.

A dispute between Hoskinson and Buterin over whether Ethereum should be a for-profit company, led to Hoskinson leaving the project. Select the initial invested amount, set the buy and sell dates, and enter the time machine. These working-capital factors are the key to determining how much cash a company is generating. EBITDA can be used to analyze and compare profitability among companies and industries, as it eliminates the effects of financing and capital expenditures.

A digital fiat represents a fiat, or government-backed, currency on the blockchain, says Moore. Learn all about finances in next to no time with our weekly newsletter. Unlike the money kept in a bank account, money you have in crypto may not be FDIC insured. This calculator is not realtime пїЅ try querying data for a previous month. Real-time last sale data for U. Intraday data delayed at least 15 minutes or per exchange requirements. If both companies have the same amount of debt, perhaps Company A has a lower credit rating and must pay a higher interest rate.

This EVM is built into every full Ethereum node and can carry out more than different operation codes. This means running an Ethereum node requires significantly more storage and is expensive to run compared with a bitcoin node. EBITDA can be used as a shortcut to estimate the cash flow available to pay the debt of long-term assets. Earnings before interest, taxes, depreciation, and amortization is a widely used metric of corporate profitability.

Saylor noted that the Tysons Corner, Va. EBITDA, however, can be misleading because it does not reflect the cost of capital investments like property, plants, and equipment. Since Nexo has strived to bring professional financial services to the world of digital assets. Ether is the cryptocurrency of the Ethereum network, an open-source blockchain upon which developers can build apps and other cryptocurrencies. Investopedia does not include all offers available in the marketplace.

Hubspot terminated access for the compromised Hubspot employee account and limited the ability for other employees to take action in customer accounts. The victimized companies confirmed their operations were not disrupted and the safety of their treasuries. To check Cronos price live in the fiat currency of your choice, you can use Crypto.

With the currency calculator, you can quickly and easily convert amounts between any currencies. In total, there are about different currencies available on the currency calculator. The currency calculator of Markets Insider is the ideal tool for you. A week after rolling out crypto wallets to 2 million users, Robinhood listed shiba inu coin and a handful of other altcoins on Tuesday.

The functions that a currency took on were essential to the development of an efficient economy with division of labor. In the beginning, different items were used as currency, including metals, pearls, shells or agricultural products. Minting of coins from precious metals was developed about years ago in ancient Greece; paper money has existed for about years.

Natalie Arabian dropped out of college once she started making a lot of money from her crypto investments. America has the best vaccines in the world and our time with Covid is quickly fading. Nexo, which is backed by TechCrunch founder Michael Arrington, has introduced several initiatives over the last few months and recently became the first project to accept XRP as collateral. First proposed in by Russian-Canadian computer programmer Vitalik Buterin, Ethereum was designed to expand the utility of cryptocurrencies by allowing developers to create their own special applications.

Companies of different sizes in different sectors and industries vary widely in their financial performance. Today, almost every country has its own currency, with the exception of countries with a common currency or countries that have adopted a foreign currency. Thus, there are worldwide more than official currencies that can be traded on the currency market at constantly changing exchange rates. On the currency market, there is a larger trade volume than on the credit or the stock market.

For decades, the most important base currencies of the world have been the U. The kind of behaviour needed to protect your privacy therefore depends on your threat model. Newcomers to privacy often think that they can simply download some software and all their privacy concerns will be solved.

This is not so. Privacy requires a change in behaviour, however slight. For example, imagine if you had a perfectly private internet where who you're communicating with and what you say are completely private. You could still use this to communicate with a social media website to write your real name, upload a selfie and talk about what you're doing right now. Anybody on the internet could view that information so your privacy would be ruined even though you were using perfectly private technology.

For details read the talk Opsec for Hackers by grugq. The talk is aimed mostly at political activists who need privacy from governments, but much the advice generally applies to all of us. Much of the time plausible deniability is not good enough because lots of spying methods only need to work on a statistical level e.

Multiple privacy leaks when combined together can be far more damaging to privacy than any single leak. Imagine if a receiver of a transaction is trying to deanonymize the sender. Each privacy leak would eliminate many candidates for who the sender is, two different privacy leaks would eliminate different candidates leaving far fewer candidates remaining.

See the diagram for a diagram of this. This is why even leaks of a small amount of information should be avoided, as they can often completely ruin privacy when combined with other leaks. Going back to the example of the non-anonymous Chinese newspaper buyer, who was deanonymized because of a combination of visible transaction information and his forum signature donation address.

There are many many transactions on the blockchain which on their own don't reveal anything about the transactor's identity or spending habits. There are many donation addresses placed in forum signatures which also don't reveal much about the owners identity or spending habits, because they are just random cryptographic information. But together the two privacy leaks resulted in a trip to the reeducation camp. The method of data fusion is very important when understanding privacy in bitcoin and other situations.

Financial privacy is an essential element to fungibility in Bitcoin: if you can meaningfully distinguish one coin from another, then their fungibility is weak.

If our fungibility is too weak in practice, then we cannot be decentralized: if someone important announces a list of stolen coins they won't accept coins derived from, you must carefully check coins you accept against that list and return the ones that fail. Everyone gets stuck checking blacklists issued by various authorities because in that world we'd all not like to get stuck with bad coins. This adds friction, transactional costs and allows the blacklist provider to engage in censorship, and so makes Bitcoin less valuable as a money.

Financial privacy is an essential criteria for the efficient operation of a free market: if you run a business, you cannot effectively set prices if your suppliers and customers can see all your transactions against your will.

You cannot compete effectively if your competition is tracking your sales. Individually your informational leverage is lost in your private dealings if you don't have privacy over your accounts: if you pay your landlord in Bitcoin without enough privacy in place, your landlord will see when you've received a pay raise and can hit you up for more rent.

Financial privacy is essential for personal safety: if thieves can see your spending, income, and holdings, they can use that information to target and exploit you. Without privacy malicious parties have more ability to steal your identity, snatch your large purchases off your doorstep, or impersonate businesses you transact with towards you Financial privacy is essential for human dignity: no one wants the snotty barista at the coffee shop or their nosy neighbors commenting on their income or spending habits.

No one wants their baby-crazy in-laws asking why they're buying contraception or sex toys. Your employer has no business knowing what church you donate to. Only in a perfectly enlightened discrimination free world where no one has undue authority over anyone else could we retain our dignity and make our lawful transactions freely without self-censorship if we don't have privacy.

Most importantly, financial privacy isn't incompatible with things like law enforcement or transparency. You can always keep records, be ordered or volunteer to provide them to whomever, have judges hold against your interest when you can't produce records as is the case today. Globally visible public records in finance are completely unheard-of. They are undesirable and arguably intolerable.

The Bitcoin whitepaper made a promise of how we could get around the visibility of the ledger with pseudonymous addresses, but the ecosystem has broken that promise in a bunch of places and we ought to fix it. Bitcoin could have coded your name or IP address into every transaction.

It didn't. The whitepaper even has a section on privacy. It's incorrect to say that Bitcoin isn't focused on privacy. Sufficient privacy is an essential prerequisite for a viable digital currency [2]. Bitcoin uses a block chain. Users can download and verify the blockchain to check that all the rules of bitcoin were followed throughout its history. For example, users can check that nobody printed infinite bitcoins and that every coin was only spent with a valid signature created by its private key.

This is what leads to bitcoin's unique value proposition as a form of electronic cash which requires only small amounts of trust. But the same blockchain structure leads to privacy problems because every transaction must be available for all to see, forever.

This section discusses known methods an adversary may use for analyzing the public blockchain. Bitcoin uses a UTXO model. Transactions have inputs and outputs, they can have one or more of each. Previous outputs can be used as inputs for later transactions.

An output which hasn't been spent yet is called an unspent transaction output UTXO. UXTOs are often called "coins". UTXOs are associated with a bitcoin address and can be spent by creating a valid signature corresponding to the scriptPubKey of the address. Addresses are cryptographic information, essentially random numbers. On their own they do not reveal much about the real owner of any bitcoins on them.

Usually an adversary will try to link together multiple addresses which they believe belong to the same wallet. Such address collections are called "clusters", "closures" or "wallet clusters", and the activity of creating them is called "wallet clustering". Once the clusters are obtained the adversary can try to link them real-world identities of entities it wants to spy on.

For example, it may find wallet cluster A belonging to Alice and another wallet cluster B belonging to Bob.

If a bitcoin transaction is seen paying from cluster A to cluster B then the adversary knows that Alice has sent coins to Bob. It can be very difficult to fine-tune heuristics for wallet clustering that lead to obtaining actually correct information [3]. This is a heuristic or assumption which says that if a transaction has more than one input then all those inputs are owned by the same entity.

This transaction would be an indication that addresses B and C are owned by the same person who owns address A. One of the purposes of CoinJoin is to break this heuristic.

Nonetheless this heuristic is very commonly true and it is widely used by transaction surveillance companies and other adversaries as of The heuristic is usually combined with address reuse reasoning, which along with the somewhat-centralized bitcoin economy as of is why this heuristic can be unreasonably effective [4]. The heuristic's success also depends on the wallet behaviour: for example, if a wallet usually receives small amounts and sends large amounts then it will create many multi-input transactions.

Many bitcoin transactions have change outputs. It would be a serious privacy leak if the change address can be somehow found, as it would link the ownership of the now spent inputs with a new output. Change outputs can be very effective when combined with other privacy leaks like the common-input-ownership heuristic or address reuse.

Change address detection allows the adversary to cluster together newly created address, which the common-input-ownership heuristic and address reuse allows past addresses to be clustered. Change addresses lead to a common usage pattern called the peeling chain. It is seen after a large transactions from exchanges, marketplaces, mining pools and salary payments.

In a peeling chain, a single address begins with a relatively large amount of bitcoins. A smaller amount is then peeled off this larger amount, creating a transaction in which a small amount is transferred to one address, and the remainder is transferred to a one-time change address.

This process is repeated - potentially for hundreds or thousands of hops - until the larger amount is pared down, at which point in one usage the amount remaining in the address might be aggregated with other such addresses to again yield a large amount in a single address, and the peeling process begins again [5]. Now are listed possible ways to infer which of the outputs of a transaction is the change output:.

If an output address has been reused it is very likely to be a payment output, not a change output. This is because change addresses are created automatically by wallet software but payment addresses are manually sent between humans.

The address reuse would happen because the human user reused an address out of ignorance or apathy.

This heuristic is probably the most accurate, as it is very hard to imagine how false positives would arise except by intentional design of wallets. This heuristic is also called the "shadow heuristic".

Some very old software from the era which did not have Deterministic wallets did not use a new address change but sent the change back to the input address. This reveals the change address exactly. Avoiding address reuse is an obvious remedy. Another idea is that those wallets could automatically detect when a payment address has been used before perhaps by asking the user and then use a reused address as their change address; so both outputs would be reused addresses.

Also, most reused addresses are mentioned on the internet, forums, social networks like Facebook, Reddit, Stackoverflow It's like a little bit de-anonymization of pseudo-anonymized blockchain. A careful analyst sometimes deduce which software created a certain transaction , because the many different wallet softwares don't always create transactions in exactly the same way.

Wallet fingerprinting can be used to detect change outputs because a change output is the one spent with the same wallet fingerprint. As an example, consider five typical transactions that consume one input each and produce two outputs. A, B, C, D, E refer to transactions. A1, A2, etc refer to output addresses of those transactions. If wallet fingerprinting finds that transactions A, B, D and E are created by the same wallet software, and the other transactions are created by other software, then the change addresses become obvious.

The same transactions with non-matching addresses replaced by X is shown. The peel chain is visible, it's clear that B2, D2, E1 are change addresses which belong to the same wallet as A1. If multiple users are using the same wallet software, then wallet fingerprinting cannot detect the change address. It is also possible that a single user owns two different wallets which use different software for example a hot wallet and cold wallet and then transactions between different softwares would not indicate a change of ownership.

Wallet fingerprinting on its own is never decisive evidence, but as with all other privacy leaks it works best with data fusion when multiple privacy leaks are combined. Many payment amounts are round numbers, for example 1 BTC or 0. The leftover change amount would then be a non-round number e. This potentially useful for finding the change address. The amount may be a round number in another currency. The amount 2. BIP defines a mechanism for replacing an unconfirmed transaction with another transaction that pays a higher fee.

In the context of the market for block space , a user may find their transaction isn't confirming fast enough so they opt to "fee bump" or pay a higher miner fee. However generally the new higher miner fee will happen by reducing the change amount. So if an adversary is observing all unconfirmed transactions they could see both the earlier low-fee transaction and later high-fee transaction, and the output with the reduced amount would be the change output.

This could be mitigated by some of the time reducing the amount of both outputs, reducing the payment amount instead of change in a receiver-pays-for-fee model , or replacing both addresses in each RBF transaction this would require obtaining multiple payment addresses from the receiver. Also called the "optimal change heuristic". Consider this bitcoin transaction. Assuming one of the outputs is change and the other output is the payment. But if the 1 BTC output is the payment amount then the 3 BTC input is unnecessary, as the wallet could have spent only the 2 BTC input and paid lower miner fees for doing so.

This is an issue for transactions which have more than one input. One way to fix this leak is to add more inputs until the change output is higher than any input, for example:.

Now both interpretations imply that some inputs are unnecessary. Unfortunately this costs more in miner fees and can only be done if the wallet actually owns other UTXOs. Some wallets have a coin selection algorithm which violates this heuristic.

An example might be because the wallets want to consolidate inputs in times of cheap miner fees. So this heuristic is not decisive evidence. Sending funds to a different script type than the one you're spending from makes it easier to tell which output is the change. For example, for a transaction with 1 input spending a p2pkh coin and creating 2 outputs, one of p2pkh and one of p2sh, it is very likely that the p2pkh output is the change while the p2sh one is the payment. This is also possible if the inputs are of mixed types created by wallets supporting multiple script types for backwards compatibility.

If one of the output script types is known to be used by the wallet because the same script type is spent by at least one of the inputs while the other is not, the other one is likely to be the payment. This has the most effect on early adopters of new wallet technology, like p2sh or segwit. The more rare it is to pay to people using the same script type as you do, the more you leak the identity of your change output. This will improve over time as the new technology gains wider adoption.

Some wallet software handles change in a very un-private way. For example certain old wallets would always put the change output in last place in the transaction. Equal-output- CoinJoin transactions trivially reveal the change address because it is the outputs which are not equal-valued.

For example consider this equal-output-coinjoin:. There is a very strong indication that output D is change belongs to the owner of input Y, while output C is change belonging to input X.

However, CoinJoin breaks the common-input-ownership heuristic and effectively hides the ownership of payment outputs A and B , so the tradeoffs are still heavily in favour of using coinjoin.

Wallet clusters created by using the common-input-ownership heuristic usually grow in number of addresses slowly and incrementally [11]. Two large clusters merging is rare and may indicate that the heuristics are flawed. So another way to deduce the change address is to find which output causes the clusters to grow only slowly.

The exact value for "how slowly" a cluster is allowed to grow is an open question. As described in the introduction, addresses are connected together by transactions on the block chain. The mathematical concept of a graph can be used to describe the structure where addresses are connected with transactions.

Addresses are vertices while transactions are edges in this transaction graph. This is called a heuristic because transactions on the block chain do not necessarily correspond to real economic transactions.

For example the transaction may represent someone sending bitcoins to themselves. Also, real economic transactions may not appear on the block chain but be off-chain ; either via a custodial entity like an exchange, or non-custodial off-chain like Lightning Network. Taint analysis is a technique sometimes used to study the flow of bitcoins and extract privacy-relevant information.

If an address A is connected to privacy-relevant information such as a real name and it makes a transaction sending coins to address B, then address B is said to be tainted with coins from address A. In this way taint is spread by "touching" via transactions [12]. It is unclear how useful taint analysis is for spying, as it does not take into account transfer of ownership. For example an owner of tainted coins may donate some of them to some charity, the donated coins could be said to be tainted yet the charity does not care and could not give any information about the source of those coins.

Taint analysis may only be useful for breaking schemes where someone tries to hide the origin of coins by sending dozens of fake transactions to themselves many times. Blockchain transactions contain amount information of the transaction inputs and outputs, as well as an implicit amount of the miner fee.

This is visible to all. Often the payment amount of a transaction is a round number, possibly when converted to another currency. An analysis of round numbers in bitcoin transactions has been used to measure the countries or regions where payment have happened [13].

A mismatch in the sizes of available input vs what is required can result in a privacy leak of the total wealth of the sender. For example, when intending to send 1 bitcoins to somebody a user may only have an input worth 10 bitcoins. They create a transaction with 1 bitcoin going to the recipient and 9 bitcoins going to a change address. The recipient can look at the transaction on the blockchain and deduce that the sender owned at least 10 bitcoins.

It may well be higher of course, but it's at least not lower [14]. Payments that send exact amounts and take no change are a likely indication that the bitcoins didn't move hands. This usually means that the user used the "send maximum amount" wallet feature to transfer funds to her new wallet, to an exchange account, to fund a lightning channel, or other similar cases where the bitcoins remain under the same ownership. Other possible reasons for sending exact amounts with no change is that the coin-selection algorithm was smart and lucky enough to find a suitable set of inputs for the intended payment amount that didn't require change or required a change amount that is negligible enough to waive , or advanced users using manual coin selection to explicitly avoid change.

Payment batching is a technique to reduce the miner fee of a payment. It works by batching up several payments into one block chain transaction. It is typically used by exchanges, casinos and other high-volume spenders. The privacy implication comes in that recipients can see the amount and address of recipients [15]. When you receive your withdrawal from Kraken, you can look up your transaction on a block chain explorer and see the addresses of everyone else who received a payment in the same transaction.

If Kraken made each of those payments separately, they might still be connected together through the change outputs and perhaps also by certain other identifying characteristics that block chain analysis companies and private individuals use to fingerprint particular spenders. Most but not all bitcoin scripts are single-signature.

Other scripts are possible with the most common being multisignature. A script which is particularly unusual can leak information simply by being so unique. A mystery shopper payment is when an adversary pays bitcoin to a target in order to obtain privacy-relevant information.

It will work even if address reuse is avoided. For example, if the target is an online merchant then the adversary could buy a small item.

On the payment interface they would be shown one of the merchant's bitcoin addresses. The adversary now knows that this address belongs to the merchant and by watching the blockchain for later transactions other information would be revealed, which when combined with other techniques could reveal a lot of data about the merchant. The common-input-ownership heuristic and change address detection could reveal other addresses belonging to the merchant assuming countermeasures like CoinJoin are not used and could give a lower-bound for the sales volume.

This works because anybody on the entire internet can request one of the merchant's addresses. Forced address reuse is when an adversary pays an often small amount of bitcoin to addresses that have already been used on the block chain. The adversary hopes that users or their wallet software will use these forced payments as inputs to a larger transaction which will reveal other addresses via the the common-input-ownership heuristic and thereby leak more privacy-relevant information.

These payments can be understood as a way to coerce the address owner into unintentional address reuse [16] [17]. This attack is sometimes incorrectly called a dust attack [18]. If the forced-payment coins have landed on already-used empty addresses, then the correct behaviour by wallets is to not spend those coins ever.

If the coins have landed on addresses which are not empty, then the correct behaviour by wallets is to fully-spend all the coins on that address in the same transaction.

Amounts correlation refers to searching the entire block chain for output amounts. For example, say we're using any black box privacy technology that breaks the transaction graph. The privacy tech is used to mix V amount of bitcoins, and it returns V bitcoins minus fees back to the user. Amount correlation could be used to unmix this tech by searching the blockchain for transactions with an output amount close to V.

A way to resist amount correlation is to split up the sending of bitcoins back to user into many transactions with output amounts w0, w1, w2 which together add up to V minus fees. Another way of using amount correlation is to use it to find a starting point. For example, if Bob wants to spy on Alice. Even if multiple matches are found it still gives Bob a good idea of which bitcoin addresses belong to Alice. Timing correlation refers to using the time information of transactions on the blockchain.

Similar to amount correlation, if an adversary somehow finds out the time that an interesting transaction happened they can search the blockchain in that time period to narrow down their candidates.

Bitcoin nodes communicate with each other via a peer-to-peer network to transmit transactions and blocks. Nodes relay these packets to all their connections, which has good privacy properties because a connected node doesn't know whether the transmitted data originated from its peer or whether the peer was merely relaying it.

An adversary able to snoop on your internet connection such as your government, ISP, Wifi provider or VPN provider can see data sent and received by your node. This would reveal that you are a bitcoin user. Even if a connection is encrypted the adversary could still see the timings and sizes of data packets. A block being mined results in a largely synchronized burst of identically-sized traffic for every bitcoin node, because of this bitcoin nodes are very vulnerable to traffic analysis revealing the fact that bitcoin is being used.

If the adversary sees a transaction or block coming out of your node which did not previously enter, then it can know with near-certainty that the transaction was made by you or the block was mined by you. As internet connections are involved, the adversary will be able to link the IP address with the discovered bitcoin information. A certain kind of sybil attack can be used to discover the source of a transaction or block without the adversary entirely controlling the victims internet connection.

It works by the adversary creating many of their own fake nodes on different IP addresses which aggressively announce themselves in an effort to attract more nodes to connect to them, they also try to connect to as many other listening nodes as they can.

This high connectivity help the adversary to locate the source newly-broadcasted transactions and blocks by tracking them as they propagate through the network. Some wallets periodically rebroadcast their unconfirmed transactions so that they are more likely to propagate widely through the network and be mined.

Some wallets are not full nodes but are lightweight nodes which function in a different way. They generally have far worse privacy properties, but how badly depends on the details of each wallet. Some lightweight wallets can be connected only to your own full node , and if that is done then their privacy with respect to traffic analysis will be improved to the level of a full node. Some bitcoin wallets are just front-ends that connects to a back-end server run by some company.

This kind of wallet has no privacy at all, the operating company can see all the user's addresses and all their transactions, most of the time they'll see the user's IP address too. Users should not use web wallets. Main article: Browser-based wallet. All bitcoin wallets must somehow obtain information about their balance and history, which may leak information about which addresses and transactions belong to them.

Blockchain explorer websites are commonly used. Some users even search for their transaction on those websites and refresh it until it reaches 3 confirmations. This is very bad for privacy as the website can easily link the user's IP address to their bitcoin transaction unless tor is used , and the queries to their website reveal that the transaction or address is of interest to somebody who has certain behavioural patterns.

To get information about your transactions it is much better to use your wallet software, not some website. Many lightweight wallets use the BIP37 standard, which has serious design flaws leading to privacy leaks. Any wallet that uses BIP37 provides no privacy at all and is equivalent to sending all the wallets addresses to a random server.

That server can easily spy on the wallet. Lessons from the failure of BIP37 can be useful when designing and understanding other privacy solutions, especially with the point about data fusion of combining BIP37 bloom filter leaks with blockchain transaction information leaks. Main article: BIP37 privacy problems. Electrum is a popular software wallet which works by connecting to special purpose servers.

These servers receive hashes of the bitcoin addresses in the wallet and reply with transaction information. The Electrum wallet is fast and low-resource but by default it connects to these servers which can easily spy on the user.

Some other software aside from Electrum uses the public Electrum servers. As of it is a faster and better alternative for lightweight wallets than BIP Servers only learn the hashes of addresses rather than addresses themselves, in practice they only know the actual address and associated transactions if it's been used on the blockchain at least once.

It is not very difficult to run your own Electrum server and point your wallet to use only it. This restores Electrum to have the same privacy and security properties as a full node where nobody else can see which addresses or transactions the wallet is interested in. Then Electrum becomes a full node wallet. A simple but effective privacy leak. Alice gives Bob one of her addresses to receive a payment, but the communication has been eavesdropped by Eve who saw the address and now knows it belongs to Alice.

The solution is to encrypt addresses where appropriate or use another way of somehow hiding them from an adversary as per the threat model. Sometimes the eavesdropping can be very trivial, for example some forum users publish a bitcoin donation address on their website, forum signature, profile, twitter page, etc where it can be picked up by search engines. In the example of the non-anonymous Chinese newspaper buyer from the introduction, his address being publicly visible on his forum signature was a crucial part of his deanonymization.

The solution here is to show each potential donator a new address, for example by setting up a web server to hand out unique addresses to each visitor.

Sometimes users may voluntarily reveal data about themselves, or be required to by the entity they interact with. All this information is then linked with the bitcoin addresses and transactions that are later used.

When buying goods online with bitcoin a delivery mail address is needed. This links the bitcoin transaction with the delivery address. The same applies to the user's IP address unless privacy technology like Tor is used.

Wallet software usually stores information it needs to operate on the disk of the computer it runs on. If an adversary has access to that disk it can extract bitcoin addresses and transactions which are known to be linked with the owner of that disk.

The same disk might contain other personal information such as a scan of an ID card. Digital forensics is one reason why all good wallet software encrypts wallet files, although that can be beaten if a weak encryption password is used. For example if you have a bitcoin wallet installed on your PC and give the computer to a repair shop to fix, then the repair shop operator could find the wallet file and records of all your transactions.

Other examples might be if an old hard disk is thrown away. Other software installed on the same computer such as malware can also read from disk or RAM to spy on the bitcoin transactions made by the user. For privacy don't leave data on your computer available to others. Exactly how depends on your threat model.

Encryption and physical protection are options, as is using special operating systems like Tails OS which does not read or write from the hard drive but only uses RAM, and then deletes all data on shutdown.

If the adversary has not linked your bitcoin address with your identity then privacy is much easier. Blockchain spying methods like the common-input-ownership heuristic , detecting change addresses and amount correlation are not very effective on their own if there is no starting point to link back to. It works far better than any actual technology like CoinJoin. Physical cash is an anonymous medium of exchange, so using it is a way to obtain bitcoin anonymously where no one except trading partners exchange identifying data.

Note that some services still require ID so that is worth checking. Some services require ID only for the trader placing the advert. As of late there is at least one decentralized exchange open source project in development which aims to facilitate this kind of trading without a needing a centralized third party at all but instead using a peer-to-peer network.

Cash-in-person trades are an old and popular method. Two traders arrange to meet up somewhere and the buyer hands over cash while the seller makes a bitcoin transaction to the buyer. This is similar to other internet phenomena like Craigslist which organize meetups for exchange. Escrow can be used to improve safety or to avoid the need to wait for confirmations at the meetup. Cash-by-mail works by having the buyer send physical cash through the mail. Escrow is always used to prevent scamming.

The buyer of bitcoins can be very anonymous but the seller must reveal a mail address to the buyer. Cash-by-mail can work over long distances but does depend on the postal service infrastructure.

Users should check with their local postal service if there are any guidelines around sending cash-by-mail. Often the cash can also be insured. Cash deposit is a method where the buyer deposits cash directly into the seller's bank account. Again escrow is used , and again the buyer of bitcoins can be near-anonymous but the seller must sign up with a bank or financial institution and share with them rather invasive details about one's identity and financial history.

This method relies on the personal banking infrastructure so works over long distances. Cash dead drop is a rarely used method. It is similar to a cash-in-person trade but the traders never meet up. The buyer chooses a location to hide the cash in a public location, next the buyer sends a message to the seller telling them the location, finally the seller picks up the cash from the hidden location. Escrow is a requirement to avoid scamming.

This method is very anonymous for the buyer as the seller won't even learn their physical appearance, for the seller it is slightly less anonymous as the buyer can stalk the location to watch the seller collect the cash. Cash substitutes like gift cards, mobile phone credits or prepaid debit cards can often be bought from regular stores with cash and then traded online for bitcoin. Bitcoins accepted as payment for work done can be anonymous if the employer does not request much personal information.

This may work well in a freelancing or contracting setting. Although if your adversary is your own employer then obviously this is not good privacy. Mining is the most anonymous way to obtain bitcoin. This applies to solo-mining as mining pools generally know the hasher's IP address.

Depending on the size of operation mining may use a lot of electrical power which may attract suspicion. Also the specialized mining hardware may be difficult to get hold of anonymously although they wouldn't be linked to the resulting mined bitcoins. In theory another way of obtaining anonymous bitcoin is to steal them. There is at least one situation where this happened. In May a hacker known as Phineas Fisher [25] hacked a spyware company that was selling surveillance products to dictators [26].

The hacker used bitcoin stolen from other people to anonymously rent infrastructure for later attacks. If you give up your delivery address which you'll have to if you're buying physical goods online then that will be a data leak. Obviously this is unavoidable in many cases. Bitcoin wallets must somehow obtain information about their balance and history. As of late the most practical and private existing solutions are to use a full node wallet which is maximally private and client-side block filtering which is very good.

One issue with these technologies is that they always costs more resources time, bandwidth, storage, etc than non-private solutions like web wallets and centralized Electrum servers. There are measurements indicating that very few people actually use BIP37 because of how slow it is [27] , so even client-side block filtering may not be used very much.

Full nodes download the entire blockchain which contains every on-chain transaction that has ever happened in bitcoin. So an adversary watching the user's internet connection will not be able to learn which transactions or addresses the user is interested in. This is the best solution to wallet history synchronization with privacy, but unfortunately it costs a significant amount in time and bandwidth.

In cryptography, a private information retrieval PIR protocol is a protocol that allows a user to retrieve an item from a server in possession of a database without revealing which item is retrieved.

This has been proposed as a way to private synchronize wallet history but as PIR is so resource-intensive, users who don't mind spending bandwidth and time could just run a full node instead. Client-side block filtering works by having filters created that contains all the addresses for every transaction in a block. The filters can test whether an element is in the set; false positives are possible but not false negatives.

A lightweight wallet would download all the filters for every block in the blockchain and check for matches with its own addresses. Blocks which contain matches would be downloaded in full from the peer-to-peer network , and those blocks would be used to obtain the wallet's history and current balance. Wallet histories can be obtained from centralized servers such as Electrum servers but using a new Tor circuit for each address.

A closely-related idea is to connect together Electrum servers in an onion-routing network [28]. When creating such a scheme, care should be taken to avoid timing correlation linking the addresses together, otherwise the server could use the fact that the addresses were requested close to each other in time. Bitcoin Core and its forks have countermeasures against sybil attack and eclipse attacks.

Eclipse attacks are sybil attacks where the adversary attempts to control all the peers of its target and block or control access to the rest of the network [29].

Bitcoin Core and its forks use an algorithm known as trickling when relaying unconfirmed transactions, with the aim of making it as difficult as possible for sybil attackers to find the source IP address of a transaction.

For each peer, the node keeps a list of transactions that it is going to inv to it. It sends inv's for transactions periodically with a random delay between each inv.

Transactions are selected to go into the inv message somewhat randomly and according to some metrics involving fee rate. It selects a limited number of transactions to inv. The algorithm creates the possibility that a peered node may hear about an unconfirmed transaction from the creator's neighbours rather than the creator node itself [35] [36] [37] [38]. However adversaries can still sometimes obtain privacy-relevant information. Encrypting messages between peers as in BIP would make it harder for a passive attacker such as an ISP or Wifi provider to see the exact messages sent and received by a bitcoin node.

If a connection-controlling adversary is a concern, then bitcoin can be run entirely over tor. Tor is encrypted and hides endpoints, so an ISP or Wifi providers won't even know you're using bitcoin. The other connected bitcoin nodes won't be able to see your IP address as tor hides it. Bitcoin Core and its forks have features to make setting up and using tor easier. Some lightweight wallets also run entirely over tor. Running entirely over tor has the downside that synchronizing the node requires downloading the entire blockchain over tor, which would be very slow.

Downloading blocks over Tor only helps in the situation where you want to hide the fact that bitcoin is even being used from the internet service provider [39]. It is possible to download blocks and unconfirmed transactions over clearnet but broadcast your own transactions over tor , allowing a fast clearnet connection to be used while still providing privacy when broadcasting.

Dandelion is another technology for private transaction broadcasting. The main idea is that transaction propagation proceeds in two phases: first the "stem" phase, and then "fluff" phase. During the stem phase, each node relays the transaction to a single peer.

Even when an attacker can identify the location of the fluff phase, it is much more difficult to identify the source of the stem. Some privacy technologies like CoinJoin and CoinSwap require interactivity between many bitcoin entities. They can also be used to broadcast transactions with more privacy, because peers in the privacy protocols can send each other unconfirmed transactions using the already-existing protocol they use to interact with each other.

For example, in JoinMarket market takers can send transactions to market makers who will broadcast them and so improve the taker's privacy. This can be a more convenient for the taker than setting up Tor for use with tor broadcasting. At least one bitcoin company offers a satellite bitcoin service [45].

This is a free service where satellites broadcast the bitcoin blockchain to nearly anywhere in the world. If users set up a dish antenna pointing at a satellite in space, then they can receive bitcoin blocks needed to run a full node.

As the satellite setups are receive-only nobody can detect that the user is even running bitcoin, and certainly not which addresses or transactions belong to them. As of the company offers a paid-for API which allows broadcasting any data to anywhere in the world via satellite, which seems to be how they make their money.

But it appears the base service of broadcasting the blockchain will always be free. This section describes different techniques for improving the privacy of transactions related to the permanent record of transactions on the blockchain. Some techniques are trivial and are included in all good bitcoin wallets. Others have been implemented in some open source projects or services, which may use more than one technique at a time. Other techniques have yet to be been implemented.

Many of these techniques focus on breaking different heuristics and assumptions about the blockchain, so they work best when combined together. Addresses being used more than once is very damaging to privacy because that links together more blockchain transactions with proof that they were created by the same entity.

The most private and secure way to use bitcoin is to send a brand new address to each person who pays you. After the received coins have been spent the address should never be used again. Also, a brand new bitcoin address should be demanded when sending bitcoin.

All good bitcoin wallets have a user interface which discourages address reuse. It has been argued that the phrase "bitcoin address" was a bad name for this object because it implies it can be reused like an email address. A better name would be something like "bitcoin invoice". Bitcoin isn't anonymous but pseudonymous, and the pseudonyms are bitcoin addresses. Avoiding address reuse is like throwing away a pseudonym after its been used. Bitcoin Core 0. When an address is paid multiple times the coins from those separate payments can be spent separately which hurts privacy due to linking otherwise separate addresses.

If someone were to send coins to an address after it was used, those coins will still be included in future coin selections. The easiest way to avoid the privacy loss from forced address reuse to not spend coins that have landed on an already-used and empty addresses.

Usually the payments are of a very low value so no relevant money is lost by simply not spending the coins. Another option is to spend the coins individual directly to miner fees. Dust-b-gone is an old project [47] which aimed to safely spend forced-address-reuse payments. It signs all the UTXOs together with other people's and spends them to miner fees.

Coin control is a feature of some bitcoin wallets that allow the user to choose which coins are to be spent as inputs in an outgoing transaction.

Coin control is aimed to avoid as much as possible transactions where privacy leaks are caused by amounts, change addresses, the transaction graph and the common-input-ownership heuristic [48] [49]. An example for avoiding a transaction graph privacy leak with coin control: A user is paid bitcoin for their employment, but also sometimes buys bitcoin with cash.

The user wants to donate some money to a charitable cause they feel passionately about, but doesn't want their employer to know. The charity also has a publicly-visible donation address which can been found by web search engines.

If the user paid to the charity without coin control, his wallet may use coins that came from the employer, which would allow the employer to figure out which charity the user donated to. By using coin control, the user can make sure that only coins that were obtained anonymously with cash were sent to the charity. This avoids the employer ever knowing that the user financially supports this charity.

Paying someone with more than one on-chain transaction can greatly reduce the power of amount-based privacy attacks such as amount correlation and round numbers. Privacy-conscious merchants and services should provide customers with more than one bitcoin address that can be paid. Change avoidance is where transaction inputs and outputs are carefully chosen to not require a change output at all. Not having a change output is excellent for privacy, as it breaks change detection heuristics.

Change avoidance is practical for high-volume bitcoin services, which typically have a large number of inputs available to spend and a large number of required outputs for each of their customers that they're sending money to. This kind of change avoidance also lowers miner fees because the transactions uses less block space overall. Another way to avoid creating a change output is in cases where the exact amount isn't important and an entire UTXO or group of UTXOs can be fully-spent.

An example is when opening a Lightning Network payment channel. Another example would be when sweeping funds into a cold storage wallet where the exact amount may not matter.

If change avoidance is not an option then creating more than one change output can improve privacy. This also breaks change detection heuristics which usually assume there is only a single change output. As this method uses more block space than usual, change avoidance is preferable. The script of each bitcoin output leaks privacy-relevant information.

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Now, an Arizona legislator has tabled a bill that aims to give BTC legal currency status at par with fiat currency.

However, states do not have much autonomy when it comes to legalizing currencies since federal law takes precedence in such matters. The effort by Senator Wendy Rogers in the form of the Arizona Bitcoin bill must be applauded despite there being doubts about its successful passage. The voting is still pending on the bill. As per the Coinage Clause of the Constitution, Congress holds the final say in determining the legal tender status of any currency in circulation in the United States.

Thus, even if the Arizona Bitcoin bill is passed, it would be merely symbolic. However, Congress introduced the National Bank Acts of and which all but stopped this regional practice by imposing heavy taxes on state currencies. Coming back to the question пїЅ is this start of a crypto revolution in the state? Not likely. Signup for our newsletter to stay in the loop. Gurpreet Thind - January 29, Arizona Bitcoin bill seeks to mainstream crypto The effort by Senator Wendy Rogers in the form of the Arizona Bitcoin bill must be applauded despite there being doubts about its successful passage.

His scholarly interests include IT, computer languages and cryptocurrencies. Brandy covers crypto-related venture capital deals for CoinDesk. A bill introduced in Arizona would make bitcoin legal tender in the state in the unlikely event that the legislation passes and the law goes into effect. Please note that our privacy policy , terms of use , cookies , and do not sell my personal information has been updated. The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies.

CoinDesk is an independent operating subsidiary of Digital Currency Group , which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights , which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Head to consensus. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April Secure Your Seat. Facebook icon Linkedin icon Twitter icon. Follow BrandyBetz on Twitter. The bill, SB , was introduced by state Sen. Wendy Rogers, a Republican.