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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title The Complex Community Structure of the Bitcoin Address Correspondence Network
Organization Unit
  • Jan Alexander Fischer
  • Andres Palechor
  • Daniele Dell’Aglio
  • Abraham Bernstein
  • Claudio Tessone
Item Subtype Original Work
Refereed Yes
Status Published in final form
  • English
Journal Title Frontiers in Physics
Publisher Frontiers Research Foundation
Geographical Reach international
ISSN 2296-424X
Volume 9
Page Range 681798
Date 2021
Abstract Text Bitcoin is built on a blockchain, an immutable decentralized ledger that allows entities (users) to exchange Bitcoins in a pseudonymous manner. Bitcoins are associated with alpha-numeric addresses and are transferred via transactions. Each transaction is composed of a set of input addresses (associated with unspent outputs received from previous transactions) and a set of output addresses (to which Bitcoins are transferred). Despite Bitcoin was designed with anonymity in mind, different heuristic approaches exist to detect which addresses in a specific transaction belong to the same entity. By applying these heuristics, we build an Address Correspondence Network: in this representation, addresses are nodes are connected with edges if at least one heuristic detects them as belonging to the same entity. In this paper, we analyze for the first time the Address Correspondence Network and show it is characterized by a complex topology, signaled by a broad, skewed degree distribution and a power-law component size distribution. Using a large-scale dataset of addresses for which the controlling entities are known, we show that a combination of external data coupled with standard community detection algorithms can reliably identify entities. The complex nature of the Address Correspondence Network reveals that usage patterns of individual entities create statistical regularities; and that these regularities can be leveraged to more accurately identify entities and gain a deeper understanding of the Bitcoin economy as a whole.
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Digital Object Identifier 10.3389/fphy.2021.681798
Other Identification Number merlin-id:21177
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Keywords Physical and Theoretical Chemistry, General Physics and Astronomy, Mathematical Physics, Materials Science (miscellaneous), Biophysics