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Bitcoin Bugs in Tor

Bitcoin is an online transaction system that allows users to transfer and manage funds throughout the Bitcoin network. It is an open source designed for instant global transactions at a zero to minimum transaction fee. Users who go through with Bitcoin transactions enter through using the anonymity of the network Tor. While Tor is an open network that helps users defend against traffic analysis, recent studies have shown this network to be low security and therefore easy for miners to  infiltrate personal data and attack users. Hackers are able to manipulate the Tor network and thus learn the user’s IP address and Bitcoin account. When a user goes through Tor, his IP address becomes anonymous, and instead is translated to a Tor ‘exit node’ for Bitcoin transactions. However, Bitcoin will block these exit nodes from Tor if the transaction is unstable or bad. An attacker could send enough bad transactions over to Tor to get all the exit nodes blocked by Bitcoin. Therefore, the only remaining network will be from the user’s own address.

The interplay of networks is very important in this scenario. Imagine the User and the Attacker as two separate nodes with x amount of nodes between them (these nodes represent the anonymous exit noted from Tor) and the node Bitcoin. The Attacker is linked to only one x node linked to the User. The User is initially linked to each of the x exit nodes which are linked to Bitcoin. This initial state shows the User’s safety and anonymity; the more edges the User has, the more routes/options he can take, which will conceal his true address. However, now the Attacker comes and ‘blocks’ the User’s exit nodes. One by one, the User loses edges, thereby losing options of anonymity. Finally, the Attacker blocks off all these x nodes except for one, which will reveal the User’s true address. User now only has one option to Bitcoin, and that one option is through Attacker. Therefore, Attacker has control of User’s transactions. This situation reinforces the idea of power through the number of edges. When User had more edges, User had more options. He was limited to one security, but instead had many different routes to fall back on. When User has only one edge, he is reliant on that edge for his transactions, and therefore gives his address away.

http://www.coindesk.com/bitcoin-tor-anonymity-can-busted-2500-month/

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