An Empirical Analysis of Traceability in the Monero Blockchain
This work addresses privacy vulnerabilities for Monero users, revealing significant flaws in its transaction obscurity, though it is incremental as it builds on known analysis techniques.
The paper identified two weaknesses in Monero's privacy mechanisms: 62% of transaction inputs are vulnerable to chain-reaction analysis, and the real input can be guessed with 80% accuracy based on age distribution. It also analyzed transaction volumes from mining pools and AlphaBay, and proposed countermeasures to improve privacy.
Monero is a privacy-centric cryptocurrency that allows users to obscure their transactions by including chaff coins, called "mixins," along with the actual coins they spend. In this paper, we empirically evaluate two weaknesses in Monero's mixin sampling strategy. First, about 62% of transaction inputs with one or more mixins are vulnerable to "chain-reaction" analysis -- that is, the real input can be deduced by elimination. Second, Monero mixins are sampled in such a way that they can be easily distinguished from the real coins by their age distribution; in short, the real input is usually the "newest" input. We estimate that this heuristic can be used to guess the real input with 80% accuracy over all transactions with 1 or more mixins. Next, we turn to the Monero ecosystem and study the importance of mining pools and the former anonymous marketplace AlphaBay on the transaction volume. We find that after removing mining pool activity, there remains a large amount of potentially privacy-sensitive transactions that are affected by these weaknesses. We propose and evaluate two countermeasures that can improve the privacy of future transactions.