Bitfury Group announced they’re concerned about the advent of bitcoin users having multiple wallet addresses, which the company views as leading to greater anonymity and, they also believe, facilitates crime.
Also read: Nine Years Ago, Bitcoin’s Block Zero is Born
Bitfury Watches Bitcoiners
“Currently, bitcoin users can have multiple addresses,” Bitfury Group CEO Valery Vavilov detailed, “making it easier to conceal identities and commit crimes on the Blockchain,” he concluded. The relative ease of keeping transactions somewhat private has raised grave concern at one of the largest companies in the ecosystem.
Founded in 2011, Bitfury is best known for its mining prowess. Estimates have it at one point the group held nearly half a million bitcoin, which put their reserves into the stratospheric category if they’ve managed to keep half that amount today (250K BTC x 16,000 USD = 4,000,000,000 USD).
Bitfury made its fortune and business model largely on mining transaction fees, which too are booming these days. This fact alone might be why its engineers are focused on other problems like bitcoiners’ privacy rather than mempool congestion, for example. Bitfury is respected in the bitcoin core community, and support the very pro-law enforcement Blockchain Alliance. The company long has had plans on being more than just a mining company.
“Bitfury’s award-winning engineers have come up with an incredibly innovative and novel approach to analyzing transactions on the Bitcoin Blockchain,” Mr. Vavilov continued. This “new method will help ensure that it lives up to that potential by aiding investigations and reducing criminal activity.”
Mr. Vavilov insisted his company’s “ability to link related addresses, called ‘clustering,’ is an important new tool that helps law enforcement agencies conduct criminal investigations.” Indeed the announcement continues in this manner, slathering lauds upon police and regulators. Bitfury was quick to cite a former Deputy Assistant Attorney General for the US Department of Justice (DOJ), now Bitfury advisor, blustering, “Criminals should run, not walk, [… and] thanks to Bitfury, today they should be running away even faster,” he swaggered.
Who is Watching Bitfury
Bitfury released a white paper detailing their solution. They claim “address clustering is a process that exposes bitcoin users by determining which addresses belong to a single user through an analysis of Blockchain data. The act of clustering groups those addresses together, enabling investigators to link them to a single entity,” the company revealed.
The group’s attempt is innovative because while “prior algorithms constructed clustering models using Blockchain information and validated it with off-chain data, such as public information on the Internet, Bitfury’s new method uses both data types during the model construction step. The proposed approach allows investigators to reduce errors in unreliable input data sources and achieve a higher level of accuracy.”
Former DOJ investigator, now Bitfury advisor, Jason Weinstein agrees: “Having a traceable public ledger of every bitcoin transaction ever conducted allows law enforcement to ‘follow the money’ in a way that would never be possible with cash.”
Such cosy relationships with governments contain major problems for most attracted to the very concept of bitcoin. Often gleeful pronouncements about catching criminals boomerang into basic civil rights violations, crackdown on dissidents — folks governments are inclined to track in the first place.
“I am disappointed in Bitfury,” bitcoin core developer Jimmy Song said in exasperation. “It’s a bad story. This is like the next level of Chainalysis. You can go find out who is doing what. I am kinda disappointed in Bitfury Group that they’re sorta enabling this stuff,” he shrugged. “The data is there, so I guess somebody was bound to come up with some way to analyze it.”
What do you think of Bitfury’s address clustering solution? Tell us what you think in the comments!
Images courtesy of Pixabay.
Purchase Bitcoin without visiting a cryptocurrency exchange. Buy BTC and BCH here.