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[tor-talk] Bitcoin over Tor isnât a good idea (Alex Biryukov / Ivan Pustogarov story)


âBitcoin is a decentralized P2P digital currency in which coins are
generated by a distributed set of miners and transaction are
broadcasted via a peer-to-peer network. While Bitcoin provides some
level of anonymity (or rather pseudonymity) by encouraging the users to
have any number of random-looking Bitcoin addresses, recent research
shows that this level of anonymity is rather low. This encourages users
to connect to the Bitcoin network through anonymizers like Tor and
motivates development of default Tor functionality for popular mobile
SPV clients. In this paper we show that combining Tor and Bitcoin
creates an attack vector for the deterministic and stealthy
man-in-the-middle attacks. A low-resource attacker can gain full
control of information flows between all users who chose to use Bitcoin
over Tor. In particular the attacker can link together userâs
transactions regardless of pseudonyms used, control which Bitcoin
blocks and transactions are relayed to the user and can delay or
discard userâs transactions and blocks. In collusion with a powerful
miner double-spending attacks become possible and a totally virtual
Bitcoin reality can be created for such set of users."

Interesting quote:

"Combining it with some peculiarities of how Tor handles data streams a
stealthy and low-resource attacker with just 1-3% of overall Tor Exit
bandwidth capacity and 1000-1500 cheap lightweight Bitcoin peers (for
example, a small Botnet) can force all Bitcoin Tor traffic to go either
through her Exit nodes or through her peers. This opens numerous attack

a) Does this paper hold water? b) What is the price of 1-3% of all Tor
Exit capacity and "1000-1500 cheap lightweight" Bitcoin peers?

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