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Bitcoin Anonymity Concerns Boost Privacy-Centric Altcoins: BTCManager’s Week in Review August 28

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Bitcoin Anonymity Concerns Boost Privacy-Centric Altcoins: BTCManager’s Week in Review August 28

In the past week, bitcoin’s often wrongly cited anonymity, or rather the lack thereof has been pushed to the forefront of user’s minds. It came to light that the IRS is using Chainalysis’ bitcoin transaction tracking application to identify bitcoin tax cheats and as Princeton researcher published a paper that outlines how easy it is to link bitcoin online shoppers’ transactions to their real world identities through the use of popular third-party browser cookie tracking software, which e-commerce platforms almost universally deploy.

While the price of bitcoin received a small boost after the activation of SegWit, privacy-centric digital currencies rallied substantially as bitcoin’s lack of anonymity becomes an increasing concern for cryptocurrency users who believe in private financial sovereignty.

The price of monero shot up from $52 to $130, while DASH rallied from $300 to surpass the $400 mark. PIVX rallied from around $2.00 to hit a new high of $3.25, and Zcash increased from around $230 to $270 in the past seven days. Other privacy coins with smaller market capitalizations such as ZClassic and NAV Coin appreciated significantly as well.

This week’s review is compiled from contributions by Alex Lielacher, Jamie Holmes, and Nigel Dollentas.

The IRS Hopes to Combat Bitcoin Tax Evasion with Tracking Software

Bitcoin’s anonymity or rather, the lack thereof, has become a major talking point in the Bitcoin community and a focus of investigation for law enforcement agencies as well as, as it turns out, the taxman.

According to a report by The Daily Beast, the US Internal Revenue Service (IRS) has contracted the blockchain start-up Chainalysis Inc. to use their bitcoin transaction tracking software that could enable the tax collection agency to identify bitcoin users who have not been reporting their investment income in their annual tax filings.

The contract between the IRS and Chainalysis, obtained by The Daily Beast through the Freedom of Information Act, was for a 12-month Chainalysis Reactor Investigate Licence, which was purchased in late 2015. It provides the governmental agency with an interactive investigation tool that allows bitcoin transactions to be traced.

Bitcoin-Accepting Merchants’ Cookies Threaten User Anonymity

Researchers at Princeton University have published a paper that highlights the privacy issues of making cryptocurrency payments at online merchants that use browser cookies to collect user data. The paper’s findings suggest that bitcoin users lose much of the digital currency’s anonymity when shopping online. Transactions can be linked to user identities through the very commonplace use of third-party trackers.

Privacy researcher Dillon Reisman and Princeton University academics Steven Goldfeder, Harry Kalodner and Arvind Narayanan, demonstrate in their paper titled ‘When the cookie meets the blockchain: Privacy risks of web payments via cryptocurrencies’ how easy it is to link transactions to users through the use of tracking cookies.

While it is no surprise that merchants use customer data to retarget ads on social media networks such as Facebook or advertising platforms such as GoogleAds, it is somewhat discerning to see how easy it is to link bitcoin transactions to users through the use of standard tracking software and blockchain analysis.

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SegWit Activated, Bitcoin Price Rests Above $4200

The scaling upgrade for Bitcoin’s blockchain, Segregated Witness (SegWit) went live in the early hours of August 24. Market commentators have mixed feelings about where the price of bitcoin will head next. Further progress in development is expected with the activation of SegWit, and the event has spilled over into altcoin markets, with SegWit-ready altcoins showing large gains.

SegWit was first proposed over two years ago. Bitcoin Core developer Peter Wuille outlined the scalability solution at Scaling Bitcoin in Hong Kong, which can be viewed here.

Estonia Considers Issuing ‘Estcoin’ in First Ever Government-Backed ICO

The Republic of Estonia has announced it is considering creating a government-backed cryptocurrency tentatively named Estcoins. By issuing ‘estcoin,’ the Estonian government may hold an initial coin offering (ICO) with the aim to allow people to invest in the country directly.

With regard to technological innovation and advancements, Estonia is a leader, being the first country to launch an e-residency program. This program allows e-residents to access government services like physical Estonian citizens albeit digitally. Kaspar Korjus, the director of Estonia’s e-Residency program, announced the proposal on August 22.

Korjus believes the introduction of estcoin and its ICO would be beneficial for both physical and e-residents of the country. The ICO would allow investors to directly participate in the growth of the country in a way that is not possible with currents forms of international fundraising.

What is Kovri and Why is it Important for Monero?

In a recent OpenHours episode released August 17, several Monero contributors joined the show to talk about the Kovri project. The project aims to further improve the privacy of the Monero network by making it virtually impossible to deduct any information about transactions. Also, Kovri may potentially become the go-to method to hide IP addresses.

Kovri is a C++ implementation of an I2P router. In short, a general purpose anonymizing overlay network, similar to Tor. A typical I2P router is written in Java, whereas Kovri is written in the C++ language to ensure compatibility with the privacy-centric cryptocurrency, monero (XMR). At present, 48 contributors are working on the project to bring it to alpha stage.

BSP Greenlights Two Bitcoin Exchanges for the Philippines

Two companies operating out of the Philippines have just been approved to operate Bitcoin exchanges by the Bangko Sentral ng Pilipinas (BSP). The acceptance of two bitcoin exchanges comes only months after BSP recognized two bitcoin companies experiencing $5-6 million a month in volume, compared to just half that in 2016.

It was only February 2017 when the BSP issued Circular 944, which laid down the necessary framework for a monumental decision like this to occur in the first place. The circular states that Bitcoin exchanges act similarly to remittance and transfer companies, they should also be regulated by Republic Act 9160 or the Anti-Money Laundering Act of 2001.

Remittances from oversea workers back home to family in the Philippines is so routine that quite a significant portion of the country’s GDP relies on remittances. Sending money over great distances is something that bitcoin excels at, hence the rising popularity in Bitcoin remittance companies.

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