Team Project (FSS 2022)
Cryptocurrency forensics: Tracing and identifying payments in public ledgers
Bitcoin and other cryptocurrencies have seen a sharp increase in popularity over the past years. While the concept of Bitcoin and its promise of a decentralized, user-controlled currency is highly appealing, cryptocurrencies have severe implications regarding user privacy. It is a common misconception that Bitcoin is anonymous. In fact, Bitcoin and similar cryptocurrencies are pseudonymous, meaning they operate on cleary identifiable and trackable entities. For example, Bitcoin's public ledger means that the flow of currency within the network is completely transparent to any external observer. If individual Bitcoin addresses can be identified, external observers are able to profile user behavior and can potentially infer sensitive information.
During this project, you will gain hands-on experience of how blockchain analysis works. Your task will be to trace payments made with funds of illegal origin, such as Darknet Markets, Ransomware, Extortion etc. In particular:
- You should collect Bitcoin addresses related to criminal activity and flag thos addresses in our database (You can use services like the Bitcoin Abuse Database and/
or build on the work of previous team projects) - You should identify Bitcoin addresses belonging to interesting services, e.g. cryptocurrency exchanges, gambling, mixers,...
- Given the two sets of addresses, check if there is a direct flow of currency between them, i.e. determine if those services are used for money laundering
- If you find such payments, you should attempt to reverse the laundering by analyzing the service and perhaps track the currency flow across ledgers
- Reverse engineer the payment system of the service and try to match payments to activities on the service (e.g. using service APIs)
- If time permits, build a blockchain database of a second cryptocurrency (e.g. Litecoin) to perform large-scale analysis
You will receive help from the chair during all stages of the project, but you will have of opportunities to implement your own ideas, approaches and analyses.
Kick-Off
The Kick-off will take place on Wednesday, 2nd of March 2022 at 15:30. Students admitted to the course have received an invitation. Alternatively, the Zoom-Link can be found on ILIAS.
Goal
The goal of this project is to give you an understanding of how Bitcoin works, what tools can be used to analyze it and what security risks are associated with public blockchains. You should be able to demonstrate that with a concrete example in your project report.
Recommended Literature
Below the links to the recommended materials are given (will be expanded).
Bitcoin and Blockchains
- The original Bitcoin whitepaper by Satoshi Nakamoto
- Andreas M. Antonopolous – Mastering Bitcoin
- Greg Walker's learnmeabitcoin.com
- MIT OpenCourseWare – Cryptocurrency Engineering
- Sarah Meiklejohn et al. - A fistful of Bitcoins: characterizing payments among men with no names
- Elli Androulaki et al. – Evaluating User Privacy in Bitcoin
- McGinn, McIllwraith, Guo – Towards open data blockchain analytics: a Bitcoin perspective
- Yousaf, Kappos, Meiklejohn – Tracing Transactions Across Cryptocurrency Ledgers
- Schäfer, Müller, Armknecht – If You Like Me, Please Don’t “Like” Me: Inferring Vendor Bitcoin Addresses From Positive Reviews
Miscellaneous
- Robinson, Webber, Eifrem – Graph Databases, 2nd Edition
- Netflix – How to Sell Drugs Online (fast)
- STRG_F/
funk – Bitcoin: Wohin führt die Spur illegaler Geschäfte?
Software
You will primarily use free and open source software. If you want to familiarize yourself with the tools, here's a list. For the most part, these tools are a recommendation only – you can use your preferred alternatives if you want.
- Neo4j
- Python
- MariaDB
- GUI: DBeaver
You will have to connect to our server via SSH. If you're running GNU/
Linux or MacOS your system should support this natively. On Windows you can use the PowerShell or a SSH client (like PuTTY) for more convenient access.