Title: An Empirical Analysis of Traceability in the Monero Blockchain,
Abstract: 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.