Trinity College Dublin researchers are studying Bitcoin in an effort to make the cryptocurrency more transparent and reduce the risk of fraud while maintaining sufficient anonymity to make it appealing to a wide range of legitimate businesses.
Although Bitcoin is attractive because it is not regulated by governments or banks, the lack of regulation leaves the system prone to fraudulent business practices or money laundering. The Trinity researchers determined a Bitcoin regulator would want to know how much currency is in circulation, how it was distributed and whether anyone was stockpiling it, and whether there were any patterns in the transactions about which people should be concerned.
"We wanted to develop systems that would give a 'regulator' a degree of visibility on the flows of Bitcoin in the same way that central banks have this visibility over normal currencies," says Trinity professor Donal O'Mahony.
Every time someone makes a transfer from one numbered Bitcoin account to another, it gets written into a giant public ledger called the Bitcoin Blockchain. The researchers used this ledger to look for patterns in Bitcoin transactions.
"Our trawl gave us a unique insight into some very high-profile Bitcoin fraud cases that were being conducted across the world," says Trinity researcher Cian Burns.
From Trinity College Dublin
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