Blockchain Intelligence and Anonymity - … Intelligence and Anonymity Dr. Adam Joyce. ... SLIDE ......
Transcript of Blockchain Intelligence and Anonymity - … Intelligence and Anonymity Dr. Adam Joyce. ... SLIDE ......
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Blockchain Intelligence and AnonymityDr. Adam Joyce
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Agenda
Who we are
Bitcoin + Financial compliance
What and who are the entities?
How are entities interacting?
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Elliptic is (now) a blockchain intelligence company.
We work with financial institutions and law enforcement agencies to identity illicit activity on the Bitcoin blockchain.
Who we are
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Our team
Dr. James SmithCEO
Dr. Tom RobinsonCOO
Dr. Adam Joyce, Chief Scientist
Kevin BeardsleyHead of Business
Development
Matthew LeonSenior Software
Engineer
Tuan Anh LeSoftware Engineer
Nathan JessopAnalyst
Yacoob KurimbokusCTO
Dr. Christoph Fretter Data scientist
Dr. Martin Harrigan Data scientist
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Life at a bitcoin startup?...
Who we are
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Agenda
Who we are
Bitcoin + Financial compliance
What and who are the entities?
How are entities interacting?
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Bitcoin
● A transparent, global ledger of ownership and value-transfer.
● Decentralized and distributed
● Open and permissionless
● ~150M addresses, ~130M transactions, ~50Gb compressed raw ledger, ~520 .dat block files.
● 82% of txs have < 2 inputs, 89% of txs have < 2 outputs
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Bitcoin
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Agenda
Who we are
Bitcoin + Financial compliance
What and who are the entities?
How are entities interacting?
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● Very good knowledge of identities (KYC)
● Incomplete knowledge of transactions
● Banking gate-keepers
● National and corporate borders, central bank control.
● Opaque
● Highly regulated
Financial Comparison
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● Limited knowledge of identities
● Perfect knowledge of transactions
● Open and “permissionless”
● Global system with pre-defined monetary supply
● Transparent
● Traditional regulation being applied
Traditional finance/payments systems
Bitcoin
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Theft
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Dark Marketplaces
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Ransomware / Extortion
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Financial Regulation
● Consumer protection issues
● Risk of criminal misuse
● Do existing frameworks ‘fit’ cryptocurrencies?
● Will compliance costs kill the industry? How to balance innovation vs. risk?
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Regulatory challenges around identity + ownership
On a blockchain, everybody looks the same.
This perception of anonymity presents a new world of problems for money laundering, fraud and other criminal activity.
How to deal with identity on a blockchain?
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The Immediate Problem
All enterprises that handle digital currency must comply with anti-money laundering regulation.
The inability to identify proceeds of crime is a major roadblock for enterprises that wish to engage with blockchains.
“HSBC Breaks Ties with Bitcoin Fund Over Money Laundering Concerns”- Inside Bitcoins
“FinCEN Fines Ripple Labs Over AML”- American Banker
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Agenda
Who we are
Bitcoin + Financial compliance
What and who are the entities?
How are entities interacting?
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Identifying Clusters
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VERSION 2.1
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Beyond Pseudonyms - Mapping the Blockchain
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VERSION 2.1
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Gambling service
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Panama
Clustering Tagging
Beyond Pseudonyms
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Clustering
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VERSION 2.1
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0.00700276 BTC
0.56324 BTC0.57 BTC
0.00024276 BTCTx
Clustering
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VERSION 2.1
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Clustering
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VERSION 2.1
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Tagging
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VERSION 2.1
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SILK ROAD
Tagging
COINBASE
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Agenda
Who we are
Bitcoin
Financial compliance
What and who are the entities?
How are entities interacting?
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One hop: 6 counterparties
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Two hops: 37 entities
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Three hops: 131 entities
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Four hops: Many entities
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Hitting exchanges complicates the graph.
Exchanges are highly connected nodes.
1. How do you quickly decipher the connection?
2. How do you know if the connection is important?
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Adding dark markets makes it even more complicated
Dark marketplaces are represented with the red
‘nuclear’ symbol.
1. Which connections are more important now?
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RISK SCORE
Risk-scoring of entities, transactions
2%
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“Towards Risk Scoring of Bitcoin Transactions”, Malte Moser et al. (2014)
THEFT
RISK SCORE
Risk-scoring of entities, transactions
80%
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Project ideas! Work with us!
● Just how rich is Satoshi?
● On a blockchain, does anybody know you’re a fridge?
● Is it all just in Silicon Valley?
● Will Elliptic have to use Spark eventually?
● How many txs are just in $$$?
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Thank you. Questions?
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