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Issue #801: Bitcoin users are being targeted on Tor

Issue #801: Bitcoin users are being targeted on Tor

Aug 12, 2020
Marty's Ƀent

Issue #801: Bitcoin users are being targeted on Tor

Here's something that should be on your radar if you're a Bitcoiner who uses Tor frequently and for bitcoin-related purposes. It seems that the anonymous browser and communications project has been subject to an attack in which malicious actors will use exit nodes they control to switch out bitcoin addresses users are pasting within the browser. Specifically targeting users attempting to access mixing services.

via zdnet

For you freaks who are unaware of what Tor is or what any of the above means; Tor is an open source software project that aims to bring privacy tools to individuals looking to use the Internet. Similar to Bitcoin, it depends on individual users running nodes to distribute the network's risk as much as possible. A special type of node within the Tor network is an "exit node" which acts as a gateway between the encrypted data flowing through the Tor network and the normie Internet. Historically, exit nodes have been targeted by authorities and malicious actors alike to de-anonymize Tor traffic. In this specific instance, it seems that a malicious actor(s) is spinning up exit nodes and squatting on traffic to and from bitcoin mixing services running on clearnet in an attempt to downgrade HTTPS security to HTTP so that they can switch out users' bitcoin addresses with their own. Users who were accessing these sites via their onion addresses (Tor dedicated address) were unaffected.

Uncle Marty has a few thoughts on this. First, as we discuss on Rabbit Hole Recap quite frequently, it is becoming more obvious that the futures of Bitcoin and Tor are going to be intertwined from here on out. Both projects have very similar core goals; provide individuals with Liberty-enabling technology. They also compliment each other very well. Bitcoin's sub-par privacy assurances at the peer-to-peer network level are aided by Tor ability to route data anonymously (if you are comfortable assuming Tor provides sufficient privacy, this is often debated). Conversely, Bitcoin is an incredible money and payment network for Tor users to leverage instead of traditional payment networks that leverage the dollar system.

Frankly, I have no idea whether or not Tor will be successful in its endeavor to provide the world with truly private communications technology for surfing the web. I am much more confident in Bitcoin's ability to succeed. This is due to the fact that I understand Bitcoin much better than I do Tor. With that being said, I can say for certain that I believe the world would be a much better place if both projects were to reach their goals.

Secondly, with regards to this particular attack, the situation highlights yet another reason why people should not be using centralized mixers. They are honeypots. Whether it be law enforcement or malicious actors, these sites will be targeted. These sites are also terrible ways to achieve better privacy and put you at risk of going to prison because they knowingly receive funds from dark net markets. It makes much more sense from a risk-reduction and verifiability perspective to use Chaumian CoinJoin software like Samourai's Whirlpool or JoinMarket to achieve better on-chain privacy. These systems encourage you to run your own node and interact with the CoinJoin software directly so that you can verify everything for yourself.

Adding to this, as I alluded to above, this situation highlights the fact that Bitcoin's privacy assurances have A LOT of room for improvement. I believe that Bitcoin's privacy assurances have improved significantly over the years and I think they will continue to improve as we move forward. Bitcoin users should never get complacent in regards to privacy assurances. This is one of the network's most arduous ongoing uphill battles.

Lastly, this situation highlights how valuable Bitcoin is becoming and how it will help strengthen many systems from a security-perspective. The incentive to acquire bitcoins is so strong that hackers are thinking of creative and unique ways they can steal them from unsuspecting users. When these attacks happen, they highlight shortcomings of systems and networks that bitcoiners leverage. Discovering pain points that are eventually strengthened. Your Uncle Marty expects the mad dash for bitcoins to make many systems much more robust and secure as the people building them work to ensure malicious actors are unable to siphon off bitcoins for themselves.

We are still very early in this game. Be aware of the risks that exist out there.

Final thought...

Pray for me as I embark on my first business-related golf outing.


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