Taint analysis of the Bitcoin network

TL;DR

This paper introduces TaintRank, a taint analysis method for Bitcoin addresses that assesses the trustworthiness of wallets by analyzing their transaction history, aiding exchanges in evaluating the risk of received Bitcoins.

Contribution

The paper presents a novel taint scoring system, TaintRank, which quantifies Bitcoin address trustworthiness based on historical interactions, filling a gap in existing Bitcoin analysis tools.

Findings

TaintRank effectively differentiates between trustworthy and tainted addresses.

The method provides valuable insights for exchanges to assess transaction risks.

TaintRank enhances transparency in Bitcoin transactions.

Abstract

Determining the trust of an individual Bitcoin wallet is a difficult problem. There are no ratings, that offer vendors or exchanges meaningful information about the level of the taint of Bitcoins they are receiving. Lack of such information places exchanges liable in an event when the received Bitcoins are stolen or ill-gotten. In this paper, we try to solve this problem by introducing a Bitcoin address taint score called TaintRank. It provides insight into a specific wallet by taking the addresses it interacted with throughout history into consideration. This ranking method provides such Bitcoin exchange companies insight with whom they are trading.