68% of the transaction value in Ethereum can be controlled by a single system

In a publication of Satoshi Fund in the blog of cyberFound, these results of an analysis were realized and that realized to the transactions that have been carried out on the platform created by Vitalik Buterin, that in its same publication responded to this one study.

According to Satoshi Fund, the grouping of all Ethereum addresses from the beginning of Ethereum until 15.09.2017 revealed a class of addresses that we will call “temporary addresses”. These are addresses where funds come and go in a short time interval, not much longer than 1 hour, after which the addresses are never used again. Temporary addresses constituted 46% of all active addresses and processed 65% of the total value of the transaction during the analyzed period. By analyzing the transactions in which these addresses were involved, the Satoshi Fund Foundation managed to collect piece by piece a complete picture of what was happening and that can be seen on his blog.

Based on the obtained results, the authors indicated that the temporal directions are related to each other, and they inferred that it is very probable that it is an Ethereum mixer because it turned out that the total amount transferred inside and outside the nucleus is 4 times greater than the total that entered and left the shell and core together. It should be noted that a mixer is a server that is used to mix addresses so that its origin can not be deciphered.

 

Of all the transactions carried out in the Ethereum block chain during the period analyzed, addresses with incoming amounts of ~ 500, ~ 1000, ~ 2000, ~ 3000, ~ 5000 and ~ 10,000 ETH constitute 68.5% (2,601 .041.693,6 of 3,798,195,132.0 ETH) in monetary terms, and 10.7% (6,216,314 of 58,035,623) in terms of numbers.

Satoshi Fund adds:

The system appears to be first tested in 2016, and has been in active use since the beginning of 2017. This could be explained by the increasing capitalization and liquidity of Ethereum. The most interesting thing is that an overall Ethereum transaction growth pattern looks very different when you exclude the mixer fee. If the Mixer transactions are left out of the analysis, it becomes clear that they contributed to most of the overall growth in Ethereum’s trading volume.

The analysts plotted in a graph the value of the daily transactions that have been executed since the birth of the network until the date of the analysis. In the same, it is possible to be observed that those contributions of the presumed mixer have been evidently significant for the network Ethereum.

In addition, you can see sets of addresses that are replaced almost one by one. It happens that, for example, three addresses with 1000ETH become inactive after a time, and that is when an address receives a transaction of 3000ETH. Thus, the directions “act” as if they were orchestrated following each other in the time, which makes us think that there is a certain system managing these activities.

At the end Satoshi Fund ends with five possible hypotheses:

  1. The protection offered to customers by crypto-exchanges: all client funds are mixed so that the sources of funds can not be traced and those who have clean money can not be unjustifiably accused of any illegal activity.
  2. An established mechanism to protect US residents wishing to avoid control of US regulatory agencies.
  3. A mechanism used by a large private exchange to preserve the privacy of its customers; (this exchange could be operating with fiat money)
  4. A mechanism used to securely transfer crypto actives between crypto active exchange houses.
  5. Either type of washing scheme with ether.

Vitalik Buterin responded to this study by stressing possible errors in it. One of the alleged errors that Buterin comments is that in such a study they refer to “transaction volume” at times as synonymous with “total amount of ETH sent”. In addition, Buterin considered that “the total amount of ETH sent” is a completely useless metric, because it is easily spoofable (it is easy to supplant it).

If I had to send 400k ETH myself to each block, then that would generate ~ 2b ETH moved per day, beating this “mixer” 100 times, and would probably be paying less on transaction fees to get it. This is precisely why the Bitcoin community prefers to speak of “currency days destroyed”.

Vitalik Buterin ends by emphasizing that this finding may be substantial but considers it a very different result from what is being misunderstood as, which is something like “2/3 of all activity in Ethereum is a single mixer”, something that Buterin believes that it is not true.

The studies can be carried out and the tools are available to the total disposal of the users, judge yourselves.