The Unreasonable Effectiveness of Address Clustering
This work addresses the problem of entity mapping in Bitcoin for blockchain analysts, but it is incremental as it explains existing effectiveness rather than introducing new methods.
The paper investigated why simple heuristics are effective for address clustering in Bitcoin, identifying key factors like address reuse and incremental growth, and quantified their impact over Bitcoin's first seven years.
Address clustering tries to construct the one-to-many mapping from entities to addresses in the Bitcoin system. Simple heuristics based on the micro-structure of transactions have proved very effective in practice. In this paper we describe the primary reasons behind this effectiveness: address reuse, avoidable merging, super-clusters with high centrality, and the incremental growth of address clusters. We quantify their impact during Bitcoin's first seven years of existence.