Dandelion protocol attempts to bring real anonymity to bitcoin network

29 Aug, 2018
by David Borman
News
 Dandelion protocol attempts to bring real anonymity to bitcoin network

It's long been known within the crypto community that bitcoin does not in fact offer true anonymity. By analyzing the blockchain and comparing metadata, de-anonymization techniques can in many cases find the IP address of the source node and thus often the user. Now, as reported by Bitcoin Magazine, a new protocol called Dandelion thinks it may have found a novel way to fix this, inspired by its titular flower.

As many of you know, when a transaction is broadcast on the bitcoin network, it is relayed from the first node to other nodes, which then send to other nodes, and so on perpetuating itself until it is picked up by a miner and confirmed in a block. In the early days this provided sufficient anonymity because there were few people interested in/capable of analyzing the blockchain and cross referencing it with metadata.

Now that bitcoin is worth thousands per coin, there is incentive to do just that in order to find out who made the original transaction. Some privacy coins use things like ring signatures and onion routing to effectively keep transactions anonymous, but it would take drastic altering of the bitcoin code to implement these changes which would be slow, risky and contentious.

Now a protocol called Dandelion comes along with a proposed solution that is simple but seemingly effective. Developed by Giulia Fanti along with Shaileshh Bojja Venkatakrishnan, Surya Bakshi, Bradley Denby, Shruti Bhargava, Andrew Miller and Pramod Viswanath, researchers at Carnegie Mellon, MIT and the University of Illinois, Dandelion aims to put a few extra steps at the beginning of each transaction in order to make the originating node more obscure.

It works like this: Instead of the first node broadcasting out immediately to many available nodes ("diffusion"), it first just sends the transaction to just one random node, which then sends it to another random node, and this continues for a variable amount of nodes, until a randomized event causes the diffusion phase to begin. This way, analyzing the network would really only reveal the first node to diffuse, but it would be very difficult to tell how many hops it took first, or where they came from.

Dandelion

Whether or not this new protocol will be adopted remains to be seen. Problems were found in the original proposal, prompting to the team release an updated whitepaper in May. The new updates are still being developed and reviewed by the community, so only time will tell.

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Read more about: Bitcoin (BTC)

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