Ethereum transactions are even easier to de-anonymize than Bitcoin due to its specifics

According to a team of researchers in Hungary from Ferenc Béres, after analyzing the Ethereum Blockchain to find out how easy its transactions can be anonymized, they have discovered quite a few interesting features on the network.

ethereum-transactions-are-even-easier-to-de-anonymize-than-bitcoin-due-to-its-specifics

Ethereum possesses some of the more prominent features than Bitcoin

The researchers noted that Ethereum’s account model, contrasted with Bitcoin’s Unspent Transaction Output (UTXO) model, already makes it less private due to the practice of wallet reuse:

“The account-based model reinforces address-reuse on the protocol level. This behavior practically makes the account-based cryptocurrencies inferior to UTXO-based currencies from a privacy point of view.”

The first unique feature of Ethereum is its name service, which ties addresses to human-readable “.eth” domains. The researchers were able to scrape 890 domains located on public Twitter profiles. This feature gives you the full potential to discover activities that could potentially harm the network, as approximately 10% of those wallets are able to interact with gambling platforms. While 5% of them use adult services.

The researchers then used ENS addresses as a starting point to discover whether they could tie the others to their public identifiers. They proposed several methods to identify specific account owners across multiple addresses, including time zone signatures, gas prices, and activity shared among multiple addresses.

Although there was a mixer method through Tornado Cash, which allowed users to wipe their money out by sending them to a new address, in fact, 7.5% of them withdrew their money to the exact same account that made the deposit, which rendered their mixing efforts completely futile.

Besides, the use of custom gas values ​​on many transactions and making direct transfers between deposit and withdrawal wallets also makes identification easy. Overall, up to 17% of transactions can be anonymized through these simple techniques.

Furthermore, the majority of these linked users do not keep their money in the contract for more than a few days, which can be used to reduce the general anonymous set. Many people will also use the same wallet to receive multiple ETH 0.1 withdrawals, which makes it easy to compare them with incoming wallet transactions.

Although researchers focus on Ethereum’s weaknesses, they caution that similar techniques can also be used on UTXO-based currencies – not so easy.
They concluded:

“We believe that in practice […] also Bitcoin non-custodial mixers provide drastically less privacy and fungibility than what currently the community expects.”

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