Bitcoin is a decentralized virtual currency whose usage has skyrocketed since its introduction in January 2009. Like cash, the ownership of bitcoins is anonymous, as participants transact bitcoins using pseudonyms rather than persistent real-world identities. In this article, we examine the limitations of Bitcoin anonymity and discover that the ability to cluster pseudonyms according to heuristics about shared ownership allows us to identify (i.e., associate with a real-world entity or user) a significant and active slice of the Bitcoin economy. Along the way, we explain a lot about how Bitcoin works.
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