Mastering Blockchain - Second Edition

Privacy and anonymity

As the blockchain is a public ledger of all transactions and is openly available, it becomes trivial to analyze it. Combined with traffic analyses, transactions can be linked back to their source IP addresses, thus possibly revealing a transaction's originator. This is a big concern from a privacy point of view.

Even though in Bitcoin it is a recommended and common practice to generate a new address for every transaction, thus allowing some level of unlinkability, this is not enough, and various techniques have been developed and successfully used to trace the flow of transactions throughout the network and link them back to their originator. These techniques analyze blockchains by using transaction graphs, address graphs ...