Techniques to achieve privacy

As the blockchain is a public ledger of all transactions and is openly available, it becomes easy to analyze it. When combined with traffic analyses, transactions can be linked back to their source IP addresses, thus possibly revealing a transaction’s originator. This is a big concern from a privacy point of view.

In the Bitcoin domain it is a recommended and common practice to generate a new address for every transaction, which allows some level of unlinkability. However, this is not enough, and various techniques were developed and successfully used to trace the flow of transactions throughout the network and link them back to their originator. These techniques analyze blockchains by using transaction graphs, address graphs, and entity graphs, which facilitate linking users back to the transactions, thus raising privacy concerns.

These techniques are based on the idea that every transaction on the Bitcoin network (or any public blockchain...