Cryptocurrency’s Myth of Anonymity

Lauren Goode: Oh, when I buy something with cryptocurrency, like when I go up to my morning coffee shop and I open my MetaMask and I’m like, “Hey, do you guys take BTC or ETH or GoodCoin?”

Michael Calore: Yes.

Lauren Goode: No, I don’t do any of that, and I really haven’t thought too much about the anonymous prospects of this, although I know that’s a big part of cryptocurrency, right?

Michael Calore: It is. The prevailing thought is that, if you use it, people wouldn’t really know what you’re buying or how much you spent or that you even participated in a transaction in the first place, but that is actually kind of a myth.

Lauren Goode: Interesting.

Michael Calore: Yes. Do you want to hear more about it?

Lauren Goode: I definitely do.

Michael Calore: Then let’s bring on our guest.

[Gadget Lab intro theme music plays]

Michael Calore: Hi, everyone, and welcome to Gadget Lab. I am Michael Calore. I’m a senior editor at WIRED.

Lauren Goode: And I’m Lauren Goode. I’m a senior writer at WIRED.

Michael Calore: We are joined this week once again by WIRED senior writer Andy Greenberg. Andy, welcome back to the show.

Andy Greenberg: Thanks to you both for having me on again.

Michael Calore: It’s great to have you back. We’re talking about cryptocurrency again on today’s show, but it’s not really in the way that you might expect. Andy, at the end of last year, you published a book. It’s called Tracers in the Dark. It’s filled with stories about investigators who have been able to track down criminals by studying their cryptocurrency transactions. These are people who operated on the dark web, places like Silk Road, AlphaBay, and Welcome to Video, a site where users shared child sex abuse videos. These criminal enterprises were funded and fueled by cryptocurrency, primarily bitcoin. Now, since bitcoin has existed, people have been using it to buy and sell all sorts of legal and illegal things online. They may not see that behavior as risky if they’re doing something illegal, because they’re operating under the assumption that bitcoin transactions are untraceable. Now, that’s never really been true, but that belief has persisted anyway. Andy, this myth of anonymity around cryptocurrency is a running theme in your book. How did this myth come to be?

Andy Greenberg: Well, I have to admit that I am in some sense a part of it, Mike. I wrote the first print magazine piece about bitcoin in 2011—thankfully, in some sense, not for WIRED magazine. I worked at Forbes magazine at the time. I covered this world of anonymity and hackers and surveillance, and I came upon this new phenomenon. Bitcoin was described to me as a kind of untraceable, anonymous digital cash for the internet. I was talking with some of the first bitcoin developers, and even Satoshi Nakamoto, this mysterious creator of bitcoin, had written in this email to a cryptography mailing list that, among other things, participants can be anonymous in this new cryptocurrency world that he or she or whoever they are was describing. So I wrote this first piece in 2011, and I did describe in this Forbes piece how this seemed to be a kind of untraceable digital cash. You could put unmarked bills in a briefcase and send them across the internet to anybody without revealing your identity if you were careful, it seems. Of course, I immediately also was imagining, just being the kind of reporter I am, that this was going to unlock a whole world of money laundering and online drug deals and, I don’t know, terrorist financing. All of that, in some sense, did come to pass over the following years because it did seem … And it wasn’t just me. Even Satoshi Nakamoto believed that bitcoin and cryptocurrency more generally, as there became more flavors of cryptocurrency, had these anonymous properties. It was only, I would say, at least fast-forward a whole decade, around 2020, that I started to realize how completely wrong I was about this. How not just I was a little bit wrong, but actually 180 fully opposite of correct about this—that bitcoin is actually fully traceable. In fact, it is much easier to follow the money if you can crack and decipher the blockchain with cryptocurrency than even with traditional finance. It was actually when I started to see the Department of Justice credit this one company, Chainalysis, which is a cryptocurrency tracing firm, in one announcement after another, I started looking into this world of investigators who had figured this out much earlier than me. I saw that this small group of detectives had learned to trace cryptocurrency within law enforcements in many cases, and had used this to take down one massive cybercriminal operation after another over the last 10 years. That escalating spree of massive busts and takedowns is the story of this book, Tracers in the Dark.

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