Diffusion: Analysis of Many-to-Many Transactions in Bitcoin

Abstract

Bitcoin is a decentralized cryptocurrency that enables entities to transfer funds psuedo-anonymously. Investigative services like the FBI, however, have been able to subvert this using various techniques. To counter this, the Bitcoin community uses several methods to obscure transactions, including shared send transactions among others. We attempt to peer into these transactions through a pairing of address clustering and shared send untangling and test our experimental results through path finding between addresses. We then implement our methodology to test its effectiveness. Our findings show that while using clustering can improve path-finding results and shared send untangling, we recommend applying heuristics in combination to increase effectiveness.