Researchers at the University of Cambridge in the U.K. are using an 1816 legal precedent to track down stolen bitcoins, having written proof-of-concept software that can scan the blockchain and, starting from known examples of bitcoin theft, theoretically identify the same stolen cryptocurrency.
The Clayton's Case precedent established the first-in-first-out (FIFO) rule, which became the U.K.'s gold standard for identifying whose money is whose in mixed-up assets. Under that principle, the researchers posited that if the first bitcoin to go into the mix was stolen, the first to come out of the mix would be considered that same coin, and thus still stolen.
"It allows us to see through the great majority of the algorithms people use to try and mix and obscure the origins of bitcoin transactions," says Cambridge professor Ross Anderson.
The software's FIFO analysis yielded more accurate answers about where stolen bitcoins wound up in actual heists than standard methods.
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