It is usually said that Monero is anonymous. Europol and tell the FBI that investigations usually end where Monero enters, researchers claim they do not know how to break Monero’s anonymity, and if there are reports about them, they are attacks that have long since stopped working and also only produce very poor results. The fact that common analysis services such as Chainalysis do not offer Monero tracking also suggests that the cryptocurrency is as anonymous as can be.
Accordingly, Monero enjoys one growing popularity among those in need of anonymity more than anyone else – those who hide from state authority, be it because they send out ransomware, be it because they Drugs on the Darknet to sell. Monero is about to replace Bitcoin as the reserve currency, much to the dissatisfaction of the criminal prosecutors, who have become more and more friends with Bitcoin in recent years, as the crypto currency has proven to be extremely practical for investigators after initial skepticism about its high level of transparency . A widespread acceptance of Monero in the Darknet threatens to undo all the successes of recent years.
Given what one knows – or thinks you know – about Monero, one claims Press release of the analysis service provider CipherTrace is now unbelievable: The company announces that, together with the US Department of Homeland Security, it has developed an instrument that can deanonymize Monero transactions.
According to the press release, CEO Dave Jevans acknowledges that Monero is one of the most difficult cryptocurrencies to track. But after the researchers from CipherTrace had worked on it for a year, the company could publish the first tracking software for Monero. The tool can visualize Monero’s transaction flows, for example to support law enforcement officers. “It is possible to track Monero coins used in illegal transactions. Our tool helps crypto exchanges, OTC trading desks, investment funds and custodians to rule out that they are receiving Monero from illegal sources and to investigate Monero with a potentially questionable origin in order to meet the requirements of the regulation. ”
So the tool promises to subject Monero to regulation and law enforcement like all the other cryptocurrencies. Does this break the gold standard of privacy among cryptocurrencies?
The Monero scene, of course, doubts that. For the Breaking Monero video series, Justin Ehrenhofer invited Monero researcher Sarang Noether and the CipherTrace CEO to discuss whether Monero tracing is now possible. The CEO actually went along with it, which turned into an interesting but technically extremely deep one conversation emerged: A researcher trying to make Monero more anonymous is discussing deanonymizing Monero with an entrepreneur who is making money with it.
In the video, Jevans once again explains what the first Monero tracking tool can do: It visually displays transaction flows, generates probabilities for inputs and outputs, assesses the risks of addresses and examines the corresponding addresses more closely.
During the conversation, it quickly becomes clear that hardly anyone understands what it’s about. Even the CEO admits he doesn’t fully understand the math. What he reports can be summarized as follows: CipherTrace has taken all available public research on the topic, enriched it with its own analyzes and linked it with offchain data in order to then calculate certain probabilities with which this and that input can be combined this and that address belong to the same wallet. It seems to be relatively high level, complex math and statistics.
Jevans also admits that “it’s not like Bitcoin: we don’t know 100 percent, but we can give statistical probabilities, and whenever we have a probability greater than 90 percent we consider it significant.” Sarang replies that he doubts that it is possible to calculate a concrete probability – only the probability of a probability is possible – to which Jevans replies that he is not a mathematician – which is the same for us.
The CEO also mentions an interesting option: You can scan and evaluate the entire transaction history. Up until now, people had believed that this was not possible because they needed too much computing power, but his team had found improvements.
To be honest, however, I lack the technical knowledge to even reproduce this discussion safely. I suspect pretty much everyone is doing the same thing, which leads us to a strange finding: trust in Monero’s privacy is trust in a few researchers like Sarang who study a niche discourse, even if we trust their honesty , we must continue to trust that they are the most competent researchers on the subject.
After the conversation, Moner Monerooutreach – one Press release composed. If you feel like sarcasm, you could sneer that Monero is using it to ensure the Darknet that the cryptocurrency is still anonymous. The press release highlights that CipherTrace has received more than $ 6 million from the government, including several million associated with results in late August 2020. Without explicitly saying it, the press release implies that CipherTrace is under pressure to present results that may not result.
On the subject itself, the press release remains vague. She cites Sarang’s dissatisfaction with the math explanations by the CEO of CipherTrace, but doesn’t go into detail here. However, the press release mentions that Monero is already developing a new algorithm called Triptych, which promises to further obscure the connections in the blockchain.
Triptych uses a new ring signature algorithm developed by Sarang Noether and Brandon Goodell. With this, the size of the ring signature grows logarithmically instead of linearly, which means it grows more slowly and can therefore be validated more quickly, which means that more signatures can be linked, which in turn increases the anonymity set and thus makes de-anonymization more difficult. Or so.
Finally, the question arises whether CipherTrace’s analyzes, even if they work, are also admissible in court. On the one hand, there are methods that, unlike wallet clustering in Bitcoin or attacks on CoinJoin, are not known and are publicly discussed. Can such an analysis be considered evidence in court if no one assesses its validity? How do the judges know that they are complying with the principle “in case of doubt, for the accused”?
Furthermore, one can dispute whether the proof is valid even when its validity is beyond doubt. Because a US court recently decided that courts may use blockchain analyzes of Bitcoin transactions, partly because it is well known that Bitcoin is transparent and that use is therefore not accompanied by the claim to achieve a special privacy. This argument does not apply to Monero.
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