P2P BitCoin: Applications and development · 2016. 11. 14. · Dark side of Bitcoin –general -...

P2P BitCoin:

Applications and development

Mathieu Devos

Tampere University of Technology

Department of Electronics & Communications Engineering

[email protected] – TG406

ELT-53206 Peer-to-Peer Networks

Outline

1. What is Bitcoin

1. Basic explanation

2. BTC vs Traditional Monetary systems

3. Market history

2. History of BTC

1. Mining community

2. White side of BTC

3. Grey side of BTC

4. Dark side of BTC

1. General dark side

2. Silk road

3. Dread Pirate Robers (The 1st)

3. Outcome

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08.11.2016ELT-53207 - BitCoin: Applications & Development

Outline

1. What is Bitcoin



3. Market history

2. History of BTC

1. Mining community


3. Grey side of BTC

4. Dark side of BTC


2. Silk road


3. Outcome

3


What is Bitcoin – Basic explanation

• Quick recap from last week

• Ecurrency

• Fully based on math

• Open transactions, everybody can see everything

• Address of your wallet to receive and send from = your id

example: 1Dkk5RrSKja8pxrYj8XfHBaskCy83SxuMK

• When transactions are done: IP is logged

• Mask IP = who does the address belong to?

• Some famous addresses:

• 1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX (Silk road seized)

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Basic explanation - continued

• Some famous addresses:

• 1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX (Silk road seized)

• Sold in auction traceable!

5


BTC vs Traditional Monetary systems

• Your bank is boss!

• Banks go bankrupt People wait on their money (Cyprus)

• Obscure transfers possible

• Is the money actually on your account? Is the bank spending it

somewhere?

• Insurance possible!

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Market History

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Market History – Predictions & Misconceptions

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Market History – How to read a market chart

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Outline

1. What is Bitcoin



3. Market history

2. History of BTC

1. Mining community


3. Grey side of BTC

4. Dark side of BTC


2. Silk road


3. Outcome

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Mining Community

• Used to be a tight group of people

• Early developers were the first miners

• Then less pure math, but programmers came along

• Introduced GPU mining, FPGA mining, ASIC (Application-

specific Integrated circuit)

• Very good concurrent programming skills required

• You could run it on your own computer (GPU, radeon,

preferably)

• The amount of ASICs have too much mining power, mining on

CPU, GPU and FPGA is no longer feasible

• Difficulty too high

• Bitcoin enthousiasts still do it, just because it’s fun to be part of

the ”banking world” and having everybodies transaction go

through your pc!

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White side of BitCoin

• Tuition at certain Universities

• King’s College in NY

• Nicosia (private school in Cyprus)

• Cumbria University (PhD student paid everything with BTC)

• Virgin Galactic

• Subway! (Uncertain about TRE)

• Donations

• Coinmap.org

• vegemesta.com

• ecation.fi

• Hostel in Helsinki

• ...

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Grey side of BitCoin

• Money transfers between countries (tor to hide ip and nobody will be

any wiser)

• Avoid transaction fees (send money overseas)

• Use it as savings account (no taxes!)

• Pay for ”under the counter”, but legal goods/services

• ”Legal” companies/governments just simply don’t like it

• MasterCard is trying to impose fees on every bitcoin transaction

• China increases taxes when using BitCoins (but doesn’t mind the huge server

farms in the country)

• TOR for ip + Bitcoin laundrying (tumbling) = very secretive transfers

• Tumblers:

• Bitcoins are not traceable! Transactions are!

• Send from A to B through tumbler: tumbler receives big amounts of

transactions, splits them into several smaller transactions, adds time delay

etc, making it very hard to track where your original bitcoin went to after the

tumbler.

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Dark side of Bitcoin - general

• Illegal actitivies using Bitcoin as means to pay

• Using it in Russia! Law forbids all ”money surrogates”, BTC

included

• Funding terrorism...

• Avoiding taxes

• Illegal goods and services

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Dark side of Bitcoin – general - continued

• Pay for DDoS using BTC

• Bitcoin currency of crime?

• ~80% of BTC went through Silk Road (when it was seized)

• ~90% of all US dollar bills show signs of drug usage

• ~94% of all Euro bills in Spain show signs...

• DarknetMarkets

• Assassination market

• Canabis markets

• Weapon markets

• Fake IDs ...

• BitCoins are high value targets, just steal a wallet from

somebody and no way of getting it back! Easy targets for

hackers

• One of the most famous DarknetMarkets: Silk Road

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Dark side of Bitcoin – Silk Road

• Biggest (ex)market for all kinds of illegal goods

• Fake IDs

• Narcotics

• Services (hitmarkets, smuggling, ...)

• Run by ”Dread Pirate Roberts”, see next slides

• Part of ”deep web”, only found through usage of TOR

• 175 000 bitcoins were seized

• 30 000 were sold to Tim Draper (17 000 000 $)

• 144 000 are still in FBI hands ...

• Silk road 2.0

• 6.11.2013 online by old admins

• 5.11.2014 ”Defcon” arrested by operation Onymous and site offline

again

• Rumours about Silk road 3.0 ...

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Dread Pirate Robers (The 1st!)

• Name gets passed every time to operator of Silk Road, First

DPR was longest in business and gathered quite a lot of wealth

• Operators of Silk Road were paid by DPR, average 1000-2000$

per week ...

• 8-15% of all sales went to Silk Road (DPR) as commission

• FBI caught him! But how?

• Ross Ulbricht

• Arrested by FBI in science fiction section of the

San Fransisco public library

• His story is just as crazy as the average science

fiction book found in there.

• FBI agents waited until he entered his passwords on his computer

before arresting him

• Go back to basics!

• Feds traced back all the way to the very first mentioning of Silk

Road, under normal circumstances this is somebody involved.

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Dread Pirate Robers (The 1st!) - continued

• Handle ”altoid” posted on forum about magic mushrooms that

he wanted to buy off silk road

• Altoid later posted on bitcoin forum similar post about silk road

• Altoid later (8 months) posted that he was looking for ”IT pro in

BTC community” ....

• Altoid asked people to redirect queries to

[email protected] (not the smartest move perhaps)

• Looking at the gmail account and sending subpoena to Google

revealed a g+ account with youtube

• Both youtube account and DPR has been posting very similar

videos about liberal ideas and free market values

• Story becomes vague at this point

• FBI suddenly intercepted a ton of fake IDs at the border with

Ulbricht’s picture on it

• DPR posted on silk road’s forum that he needed fake IDs for new

website rental

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• The end of DPR story? Not quite!

• How about adding 2 murder attemps?

• One admin had gotten arrested through dealing with undercover agent

and his account had been confiscated

• DPR was furious about this and realised the issue this might bring for the

website

• He ordered a person to kill the admin (FriendlyChemist)

• The person he ordered the ”hit” from ... Was the very same undercover agent

that arrested FriendlyChemist in the first place

• FBI faked torture pictures and death pictures and send them to Ulbricht, who

paid 2x 40 000$ for the ”kill”.

• Another person had tried to blackmail DPR and he wanted money to

pay off his own drug dealers, DPR got in contact with the ”drug dealers”

and ordered another hit on the blackmailer

• He paid 150 000$ for it (he was confused why he had to pay so much!)

• The person that was supposed to be killed was never reported dead and

person doesn’t seem to exist, location of the murder also never showed any

murders happening there.

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• Site was actually found by small security hole in it and running a service that

bypassed TOR

• Site provider was subpoenad and copy of server was sent to FBI

• Based on copy they found code that Robert Ulbricht had inquired about on

stackoverflow (using his real name again...)

• He changed the name and email on stackoverflow to frosty

• Site was signed with sshkey: frosty@frosty

• Trial for Ross Ulbricht ended May 2015, charges include:

• Drug trafficing

• Money laundering

• Conspiracy to commit murder

• IT Security breaching

• Tax evasion

• ...

• In conclusion: don’t use your own email for everything illegal that

involves millions of dollars...

• Ross Ulbricht is sentenced to life imprisonment without parole.

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Outline

1. What is Bitcoin



3. Market history

2. History of BTC

1. Mining community


3. Grey side of BTC

4. Dark side of BTC


2. Silk road


3. Outcome

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Outcome

• Know the different kinds for what BitCoin can be used

• Know that legal implications are very difficult to define when it

comes to BTC

• Laws are constantly changing

• Know a little bit about the market history

• Be able to explain how bitcoin tumbling works

• No questions about Silk Road, DPR or Dark Side of Bitcoins

• Good luck on the exam!

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Any questions?

[email protected]

Good luck on the exam!

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P2P BitCoin: Applications and development · 2016. 11. 14. · Dark side of Bitcoin –general -...

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