Cryptocurrency doesn’t guarantee financial privacy, researchers find

Popular cryptocurrency Bitcoin has been used for 8 years to make anonymous payments on the web, and is now also accepted by Microsoft, Newegg and Overstock. But the payments are not as below the radar as Bitcoin adepts might think, according to researchers from Princeton University who analyzed 130 merchants who accept Bitcoin.

The group used two attack methods to investigate how third-party web trackers that store user data for advertising and analytics can expose the identity of the users, even though blockchain anonymity techniques such as CoinJoin are deployed. After identifying the transaction, they linked it to the cookie collected and then to the user’s real identity.

“If the user pays using a cryptocurrency, trackers typically possess enough information about the purchase to uniquely identify the transaction on the blockchain, link it to the user’s cookie, and further to the user’s real identity,” the paper reads.

“Our second attack shows that if the tracker is able to link two purchases of the same user to the blockchain in this manner, it can identify the user’s entire cluster of addresses and transactions on the blockchain, even if the user employs blockchain anonymity techniques such as CoinJoin. The attacks are passive and hence can be retroactively applied to past purchases. We discuss several mitigations, but none are perfect.”

Additionally, many merchants leak to third parties users’ PII (Personally Identifiable Information) such as name and email address, allowing them to track transactions and activity. Almost all merchants’ websites enabled malicious trackers to extract the information with JavaScript.

Key takeaways:

  • 53 websites intentionally leaked payment information
  • 49 websites leaked PII data
  • 43 websites sent some form of non-BTC-denominated cart price data to third parties
  • 28 merchants who accept Bitcoin shared add-to-cart events with third parties
  • 17 websites send the receiving Bitcoin address or BTC-denominated price to a third party

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