The Anonymity of Cryptocurrency Users May not Last Forever

The identity of the individuals behind supposedly anonymous cryptocurrency transactions may be revealed as technology develops in the future, according to a cryptocurrency expert.

Although many users of cryptocurrencies value anonymity, particularly when using them in transactions on the dark web, advances in technology and law enforcement tools mean this secrecy is not guaranteed forever, Garrick Hileman, an economic historian at the University of Cambridge, told Business Insider.

"It's like taking a blood sample from Lance Armstrong from 2005 — at that time, there was no way to test for the particular drug he may have been using, but through preservation you can, retroactively," said Hileman.

Bitcoin has soared in value this year, rising over 1,000% against the dollar so far. This has prompted both increased interest and concern from investors and financial executives. European and UK authorities are planning to crack down on bitcoin as concerns grow that cryptocurrencies are being used to facilitate financial crimes and launder money.

Since blockchain transactions are recorded, future law enforcement officials may be able to go back and reveal the details of sales and users, even if they do not have the tools to do this today.

"We will see a lot more of this," said Hileman. "Anything that can be made can be unmade."

Already, said Hileman, bitcoin has proven to be less anonymous than many people had initially thought. As a result, some alternative cryptocurrencies, like monero, have gained ground on bitcoin on the dark web. Privacy technology is also constantly evolving, and services exist to launder cryptocurrencies to make them even less traceable.

But, says Hileman, the cryptography that underpins these systems have "never been mathematically proven to be secure — they just haven't been cracked yet."

It's difficult to predict when these algorithms will be cracked, he said, and it won't necessarily be tomorrow. "The key is you preserve those records, and later do a Lance Armstrong."

So, in nutshell, the following points may become valid in the future.

1. The details of supposedly anonymous cryptocurrency transactions may be revealed in the future, according to an expert in the field.

2. Those taking steps to conceal their identities for dubious reasons may be identified by law enforcement as detection tools improve.

3. Blockchain transactions leave traces, which could be analysed if algorithms are cracked in the future.