Friday, May 6, 2016

A couple of updates on Satoshi

In the previous post I said it seemed "really odd" that Wright hadn't publicly demonstrated he had Satoshi's private keys by signing a message1.  Wright has since said that he lacks the "courage" to do this, and at least one of the Bitcoin experts who had previously said that Wright was certainly Satoshi has since walked that back.

The simplest explanation here is that Wright doesn't have the key.

Re-reading that post, I see I commented to the effect that, while Bitcoin is often described as a means of anonymously transferring money, that wasn't necessarily so.  I said I'd get back to that, but didn't really, so here's a bit more:

Bitcoin's blockchain very publicly ties a given transaction to a timestamp and the keys of the sender and recipient (and probably other stuff I'm leaving out).  That's quite a bit of information to mine, even though the keys don't have real-world identities attached to them.  For example:

  • If you see a series of transactions with the same sender and recipient over time, you can assume they're doing business.
  • If you know that someone ordered a doomsday device online for one million dollars, and you see exactly one Bitcoin transaction for $1,000,000 in a reasonable time period around the purchase, that's a pretty good clue that that wallet is associated with the sale of a doomsday device.

The doomsday device is a contrived example, of course.  A real evil genius wouldn't be so obvious (though a henchman might ...)  The buyer and seller could, say, break the transaction down into unremarkably-sized pieces and use separate wallets for each part.  Nonetheless, the cardinal rule of anonymity on the web is that you've probably given away more than you think you have, if your adversary is really looking.  There are protocols built on top of Bitcoin to mitigate this, but Bitcoin itself makes no guarantee.

Another weak point is that at some point you need to get reserve currency in and out of a the system, unless you really, really believe in Bitcoin as a currency in its own right.  The easiest way to do this is via an exchange, which ties your transactions to a particular bank account.  It would not be wise to assume that these accounts can be kept perfectly anonymous.   Also, if there are relatively few people converting Bitcoin to and from reserve currency, the fact that everyone else has to go through them will leave its mark on the transactions in the blockchain one way or another.  Again, I'm sure there are ways to mitigate this, but they're not built into Bitcoin.

But then if you're buying and selling doomsday devices online, you really don't need my advice.

1In Bitcoin circles the preferred method would be to transfer some small amount of Bitcoin from Satoshi's wallet.  This process includes producing a digital signature using Satoshi's key.

No comments: