Another risk of CORRELATION is that it can increase risk to your colleagues. Your donation to a human rights organization might put your other business partners at risk the next time they enter a country that has human rights problems. (8/13)

Christopher Allen

@ChristopherA

Of all of the adversaries found in #SmartCustody, the one most likely to cost you your privacy is CORRELATION. (1/13)

7/14/2020, 12:40:04 PM

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Christopher Allen

@ChristopherA

It's important to remember that Bitcoin is pseudonymous, not truly anonymous. You can see where money came from. You can trace it forward and backward. That's the definition of the blockchain, and is also true for many other blockchains. (2/13)

7/14/2020, 12:40:04 PM

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Christopher Allen

@ChristopherA

It's also the definition of CORRELATION. If you keep all of your digital assets together, once you make one transaction with someone, they can see all of those funds and all of the others things you did with those funds and all the ways you received them. (3/13)

7/14/2020, 12:40:05 PM

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Christopher Allen

@ChristopherA

That's *all* pseudonymous too, of course. You interact with Bitcoin addresses that aren't necessarily tied to specific identities. But they could be. And every one is a transaction that can reduce your own privacy. (4/13)

7/14/2020, 12:40:05 PM

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Christopher Allen

@ChristopherA

Even just revealing your holdings could be dangerous. Imagine spending from an address with a large balance at a coffee shop. Suddenly, the staff there knows you're a Bitcoin millionaire, and they physically know who and where you are. That's not safe! (5/13)

7/14/2020, 12:40:05 PM

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Christopher Allen

@ChristopherA

There's been some serious forensic analysis of Bitcoin translations when money has gone missing or when people have mysteriously "died". That could be directed at anyone, including you. (6/13)

7/14/2020, 12:40:05 PM

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Christopher Allen

@ChristopherA

CORRELATION can also reveal those who you are transacting with are doing business with. You don't want to be paid for your share of a dinner, only to find that all your funds are not accepted because some of those coins were used in a crime three transactions back. (7/13)

7/14/2020, 12:40:05 PM

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Christopher Allen

@ChristopherA

Another risk of CORRELATION is that it can increase risk to your colleagues. Your donation to a human rights organization might put your other business partners at risk the next time they enter a country that has human rights problems. (8/13)

7/14/2020, 12:40:06 PM

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Christopher Allen

@ChristopherA

So how do you avoid CORRELATION? Key Hygiene. At minimum use a different address for *everything*. Use wallets that offer coin control. For Bitcoin there are also various trustless coin-mixing methods such as CoinJoin.(9/13) https://en.bitcoin.it/wiki/CoinJoin(7/12)

7/14/2020, 12:40:06 PM

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Christopher Allen

@ChristopherA

Another anti-CORRELATION tactic is segregation. Keep the funds you use for your different businesses, hobbies, charities, family life and personal life separate. You don't have to CoinJoin everything, maybe just coins intended for transfers between your own accounts. (10/13)

7/14/2020, 12:40:06 PM

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Christopher Allen

@ChristopherA

And of course, good personal data hygiene helps as well. Don't offer personal information or KYC/AML proofs to parties that might not serve your interests. (11/13)

7/14/2020, 12:40:06 PM

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Christopher Allen

@ChristopherA

As with everything in #SmartCustody, assess your danger. Are Privacy-cascade problems such as censorship and physical theft are likely to threaten you? If so, your Privacy is important. If not, you wan to worry more about other adversaries. (12/13)

7/14/2020, 12:40:07 PM

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Christopher Allen

@ChristopherA

Have your own stories of CORRELATION impacting digital assets? Your own solutions? Let us know! And please consider supporting #SmartCustody. We're working on V2, with multi-sigs and other expansions: https://smartcustody.btcpay.blockchaincommons.com/ (13/13)

7/14/2020, 12:40:07 PM

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