“Bitcoin addresses should always be assumed compromised”

Using Bitcoin as a payment method for Tor hidden services leaks information that can be used to deanonymize their users.

This is according to Qatar University researchers, who documented their findings in a paper titled When A Small Leak Sinks A Great Ship.

The deanonymization is mainly due to a lack of retroactive operational security present in Bitcoin’s pseudonymity model.

By inspecting transactions on the blockchain, an adversary can link users, who publicly share their Bitcoin addresses on online social networks, with hidden services, which publicly share their Bitcoin addresses.

“In a real-world experiment, we were able to link many users of Twitter and the BitcoinTalk forum to various hidden services, including WikiLeaks, Silk Road, and The Pirate Bay,” said the researchers.

“Using information from their public user profiles, we were able to show concrete case studies where the anonymity of the users is broken.”