Alyssa Blackburn, a data scientist at Rice University and Baylor College of Medicine in Houston, has spent several years performing digital detective work with her trusty lab assistant, Hail Mary, a shiny black computer with orange trim.
Satoshi Nakamoto, its pseudonymous inventor, proposed that the world run not on centralised financial institutions but on an egalitarian, math-based electronic money system distributed through a computer network.
Satoshi Nakamoto had presented the currency as anonymous: For bitcoin transactions , users employ pseudonyms, or addresses — alphanumeric cloaks that hide their real identities.
Aggregating multiple leakages, Blackburn consolidated many bitcoin addresses, which might have seemed to represent many miners, into few.
“What they figured out, just how concentrated early mining and use of bitcoin was, that’s a scientific discovery,” said Eric Budish, an economist at the University of Chicago.
Computer scientist Jaron Lanier, an early reader of the paper, called the investigation “important and significant” in its ambitions and social implications.
The demonstration of blockchain leakage, he noted, will be surprising to some, not to others.
One of Blackburn’s tactics was simple perseverance.
Blackburn was particularly interested in miners, the agents who verify transactions by engaging in an elaborate computational tournament — a puzzle hunt, of sorts, guessing and checking random numbers against a target, in search of a lucky number.
From Lieberman Aiden’s perspective, the population under investigation was “even more concentrated than it seems.” Although the analysis showed that the big players numbered 64 over two years, at any given moment, according to the researchers’ modelling, the effective size of that population was only five or six.
For instance, the team introduced the Google Ngram Viewer, which lets users type in a word or phrase and observe its usage plotted over the centuries.
In the same spirit, he wondered what treasures might be submersed in bitcoin’s data lake.
Blackburn was barred from the university’s supercomputing cluster — with her file folder labelled “Bitcoin,” she was suspected of mining the cryptocurrency.
She speculates that the extranonce’s leaky behaviour was tolerated because it allowed bitcoin’s creator to keep an eye on miners; the source code was modified to plug this leak shortly before Satoshi Nakamoto disappeared from the public bitcoin community in December 2010.
Once Blackburn had put various toeholds to use — allowing her to erode the identity-masking protections — she began merging addresses, linking nodes on a graph, consolidating the effective population of mining agents.
19 is Michael Mancil Brown, aka “Dr Evil,” who was found guilty of a 2012 fraud and extortion scheme involving Mitt Romney, then a candidate for president.
But he noted that in a public setting, as with bitcoin’s blockchain, a data set’s size and subtle patterns made it susceptible to breaches, even as the data remained immutable.
Once Blackburn had assembled the catalogue of agents, she analysed the income they had reaped from mining.
The lab unintentionally replicated this dynamic when they invented “CO2 coin,” a cryptocurrency that could be used to buy snacks from a student-run store.
“The people who had a lot of crypto resources had very strong control over what the store would acquire, which other people didn’t feel great about,” Lieberman Aiden recalled.
In the formal study, Blackburn also observed that the concentration of resources threatened the network’s security, with a miner’s computational resources being directly proportionate to his or her mining income.
This is true even today, of course, and it was even more true at the beginning.” As for what should be done about it, “we do need to really examine that question,” she said.
But to add a twist, Blackburn found that while some miners had the power to execute 51 per cent attacks, they repeatedly chose not to.
In parsing this finding, Blackburn’s team turned to the tools of experimental economics.
“In scenarios like this, it appears that people don’t like to kill the golden goose — they don’t like to spoil it for the group,” Lieberman Aiden observed.
“Sure, decentralisation protects the blockchain,” he said.
For Glen Weyl, an economist at Microsoft Research who was consulted on the research, this finding demonstrates how decentralisation played a rhetorical rather than substantive role.
But, he said, these systems end up hiding a new elite, which is probably just an old elite in a new arena.