A group of computer science students and professors from Trinity College Dublin are working on some interesting Bitcoin projects. In an attempt to tackle and reduce fraud, they are combing the blockchain in search of patterns.
According to Phys.org, “bitcoin credit-checks” are one use case that the team is exploring. Essentially, businesses and other entities would be able to peek at a database to check for credit, or other information. But that's just one use case.
The idea behind the project is to “enhance” Bitcoin transparency, since fraud is fairly rampant. However, all transactions are recorded on Bitcoin's underpinning ledger, so the blockchain is already transparent. It's possible, especially with a user-friendly blockchain explorer like Blockchain.info to track every transaction ever. On the other hand, each transaction is not necessarily tied to any individual.
But the blockchain is already pretty darn transparent, isn't it?
What's missing is finding patterns from all the data, and then to make sense of these patterns. Using this could be one way for regulators to find more information about Bitcoin. Professor of Computer Science in the School of Computer Science and Statistics at Trinity, Donal O'Mahony, tasked with guiding the project, told Phys.org:
"We wanted to develop systems that would give a 'regulator' a degree of visibility on the flows of bitcoin in the same way that central banks have this visibility over normal currencies."
O'Mahony is part of what some call the Crypto Mano Group, which some speculate is Satoshi Nakamoto, Bitcoin's elusive founder.
How do they go about gleaning information and gathering patterns from the ledger? Any one person can generate as many addresses as they want. It's possible to make a new address for every transaction. But this project aims to connect addresses to related addresses. Masters Student, Cian Burns, has set up experiments with a set number of Bitcoin addresses and is learning how to detect relationships between them. Burns told Phys.org:
"The big benefit of such a picture is that if an address is involved in fraudulent activity, tracing related addresses could protect other users from further fraud. Our trawl gave us a unique insight into some very high-profile Bitcoin fraud cases that were being conducted across the world. Regulation is further down the line, but a database of accounts could certainly protect people and raise the appeal of Bitcoin for legitimate businesses."
These findings could pave the way for other projects like the aforementioned Bitcoin “credit-checks as the research team delves further to explore and test the limits of Bitcoin's transparency.
Did you enjoy this article? You may also be interested in reading these ones: