Researchers propose new scheme to help courts test anonymized blockchain data

A team of researchers has come up with five "argumentative schemes" designed to protect the rights of cryptocurrency suspects while helping investigators.

A team of researchers from Friedrich-Alexander-Universität Erlangen-Nürnberg recently published an article detailing methods that investigators and courts can use to determine the validity of anonymized data on the Bitcoin (BTC) blockchain.

The team's preprint document, "Argumentation Schemes for Blockchain Deanonymization," lays out a plan for conducting, verifying, and presenting investigations of crimes involving cryptocurrency transactions. Although the paper focuses on the German and American legal systems, the authors state that the conclusions should be generally applicable.

Bitcoin crime investigations revolve around de-anonymizing suspected criminals, a process made more difficult by the pseudonymous nature of blockchains. Users performing blockchain transactions are identified by wallets (unique software addresses) instead of legal names.

However, blockchains are inherently transparent. Each time data is added to a blockchain ledger, the transaction is recorded and made available to anyone with access to the blockchain.

Investigators trying to determine who is behind a specific wallet use the information in blockchain transactions (blocks) as data points that, when combined, form a digital paper trail.

According to the research team, the current bottleneck of such investigations is no longer technological; it is a legal question.

Law enforcement has access...