MtGox Bitcoin Trace Revisited. AKA Where did all the bitcoin go?

I've been gradually refining my software approach to analysing the bitcoin traces I can generate by reading the blockchain. My little python app is now more capable so I can feed better, cleaner data to Gephi, which sorts out the muddle and creates output imagery. There's a fair way to ho yet, but I can now produce some very interesting output.

So, I decided to return to my starting point for all this and look at what happened to MtGox's bitcoin after they "demonstrated control of a vast (well, at least pretty impressive) reserve of coins in 2011 in order to counter suggestions they might not have enough reserves of "real" coin to cover people's trading accounts. It was a bit of a dog and pony show. The new traces show up some very interesting features, including one or two I still find pretty baffling.

So, here is the starting point for the trace, visualised using Gephi. Remember, each sphere is a bitcoin address, and in this case each little arrow is a transfer route that was exercised in the first 5000 transactions after the "show". The MtGox wallet shows up red, a little below centre, with numerous arrows emanating from it. The redder the node, the better it is connected to MtGox. There is quite a lot of "fan-out" even in this image, with bitcoin heading off in lots of directions.

If we pull back a bit we can see this is just part of a wider ecosystem:

Around 5000 addresses - with some noticeable "clumps" of organisation (although nothing on the scale of Satoshi Dice (discussed in a previous post). The group shown below is the biggest.

This one is Instawallet - a "we host your wallet" site that folded stating hacking and loss of coins as the reason. Another of the notable groups is shown below:

The prominent "hub" here is Coinb - another wallet service who also appear to have folded. The presence of these two  (defunct) wallet sites does prompt the question as to whether MtGox could have borrowed the bitcoin they used for the "show"? That has to remain a subject of conjecture - at least for now. Other explanations could be that Gox users withdrew funds and stored them in online wallets - or that Gox stored some of their funds there.

Now here is the strangest feature of all. You have to pull right back to see it.

See the big loop? That appears to be a string of hunderds of addresses, with bitcoin be transacted on and on, along the chain. I have no idea what the idea of this is... Is it an obfuscation method? If so, it isn't a great one as it stands out like a beacon of bizarreness. We can zoom in:

Here is the start of the loop. As you can see, the loop has two strands of addresses, which transact along the chain and also direct a little bitcoin in to the "centre" addresses. The second strand appears to be second pass around the loop - so its really a big spiral. Could be if I run more transactions through the trace we'd get more turns. If anyone can explain what's going on, I'd really like to hear.

I'm off for another round of development of the python scripts - I have a couple more additions in the pipeline that will give more detail.

Silk Road Seized Coins and SatoshiDice

I have been doing some more development work on my bitcoin tracing software - which consists of a C++ program to read the blockchain and pull out interesting tractions by following them in a kind of daisy chain fashion, plus, latterly, some python scripting to do some initial analysis and write them out in a form that can be read by Gephi - where I do some further analysis and layout. Its working well now. I'm now writing a GML file for Gephi (but currently thinking of switching to GraphML for various reasons).

As an exercise I thought I'd take a look at the Silk Road Siezed Coins address (coins seized when the FBI shut down the Silk Road deep web black market site). I thought it would be interesting to map out a little of the bitcoin geography around there and see what showed up.

The trace came out huge - a million plus transactions so I restricted my analysis to just a few thousand. Here is a zoomed out view of the transaction graph I produced

:
The nodes in yellow are those connected directly to silk road. The lower part of the diagram are loosely connected addresses - mostly in long chains - but the clumping at the top is totally different! Here is a zoomed-in shot of that region:

You can make out some nodes around the edge of the innermost clump with large numbers of connections. The nodes in the middle are clump are special because they are each connected to several of the highly connected "master" nodes. Inedentally there is a yellow node in there. The pink nodes are those two steps removed from "Seized Coins". So what's going on here.

Those highly connected master nodes are all public facing SatoshiDice addresses. SatoshiDice is officially a gambling site. "The Ghost of Satoshi will roll the dice and pick a Lucky Number! " it says. However it is allegedly (from some sources I have read) also used as a tumbler to obfuscate bitcoin trails. To use it you simply send bitcoin to one of its nodes (each pay at a specfied rate) and the nodes send coin back to your address if you win. I can see this would make a powerful tumbler. I'm guessing the nodes are the middle clump are back-end routing ans storage nodes. The fact my trace gets so complex in this area just shows how effecive the mechanism is at creating complexity and confusion. They could be a real challenge to unpick! Perhaps the association with SR was merely that some customers used it to decouple their various wallets for security purposes.

Here is one more screenshot from the vicinity of the SatoshiDice clump. This one is created from a trace extract with over 50k transactions.

Just one more Thing

Having ranted about the IoT thing, I thought I should go and check where it originated. It turns out the phrase was coined by Kevin Aston British born (Birmingham) technology pioneer working at MIT. It dates back to 1999 (surprisingly) so I managed to avoid hearing it for a good number of years.

In fact Kevin Ashton worked on Radio Frequency ID (RFID) and the term was originally applied to tagging Things with RFID or QR cards. I.e. the IoT was about cataloguing, tracking and identifying Things, rather than connecting them to the internet.

To me, this idea, whilst it's lower tech, is far more of a world-changer (albeit in a low-key way) than connecting your fridge to the internet so you can see whether your ham has gone off while you're on holiday. And, I'd grudgingly admit, even worthy of its own catchphrase.

The internet of annoying things and vacuous jargon

One of the truly annoying things about the mainstream computing industry is the quest for the Next Big Thing and all the baloney jargon associated with it. Generally things seem to get re-invented on around a ten year cycle and given new names so the excited techno-sheep don't notice as they flock to the next piece of greener grass. All our developers are doing Scrum now - which is new and trendy - but seems to be a coming together of bits of other methodologies that have re-coalesced into something very like what I was doing 15+ years ago (I think we called DSDM back then).

The buzzword that really gets up my nose at the moment is... I can hardly bear to write the words... The Internet Of Things. There - that wasn't too painful - I managed to stop myself throwing up too!

I hate that phrase! It surprises even me that I hate it so much, but I do. Why do I hate it?

1. It sounds like a separate system - the internet of things. Its not, its just the same old internet.
2. The "things" (to adopt the meaningless nonsense jargon) do not make up the internet... They are just a small subset of the peripherals connected to it.
3. The internet has always had "things" connected to it, and been made up of things. Its made up of cables, routers and whatnot and has things called computers, webcams etc. connected to it. And lots of other stuff too - scientific equipment..., you name it. One of the earliest things you could do on the internet was log onto somebody else's supercomputer in some other country and run your jobs on it. It doesn't get much cooler than that.
4. "Things" is a word that conveys the bare minimum of information. The Things they are talking about are sensors, mechanisms and cool consumer devices. Why can't they just say the new big thing is "cool consumer stuff you can connect to the internet". Far too accessible to normal people I suspect. And less like a bandwagon everyone needs to jump on to avoid being "left behind".
5. The really cool developments around the internet in recent years - the whole web 2 thing - is the way people can connect to people. Web 2 has been(and is) about the Internet of People. I'd argue that people are far cooler than things as connectees to the internet - they do random and surprisng stuff - like raising money, forming pressure campaigns, trading, making friends, falling in love, being heard. Things can't do any of that. To me, Web 3 will be about extending how people can connect to each other and reach out, not about allowing them to switch on their Sunday roast (although that's fine too - just not very interesting!).

Please, can this IoT jargon go way? I'm hoping for a big social media-led backlash on this one!

Weird Science

No - I don't mean this.

In this week's New Scientist (I have a copy shipped to Luxembourg from the UK) there was an article about a new interpretation of Quantum Mechanics. Just googling I found Scientific American has a similar article with (I believe) the same title (is this morphic resonance in action again?). The crux of the articles is that much of the wierdness of QM is a mis-interpretation of our observations. I believe Bart Kosko also pointed out years ago in his book Fuzzy Thinking that uncertainty principles (as per Heisenberg's) actually occur in normal physical situations and have an easily explicable basis in our confusion over what we are actually measuring (i.e. kind of a gap between human language and thought and physical reality). Now, in a similar way, it is being argued that quantum mechanics may not be that weird at all. It all comes down to Bayesian statistics and the way measuring something resolves some, but not all, uncertainty about it.  This new take on things sounds very plausible, and quantum mechanics and its consequences have clearly worried many great minds. But all that "spooky interaction at a distance" did sound quite fun. As did Schroedinger's cat. Incidentally the latest article cited a similar thought experiment involving human observers in a big box, opening a box containing Schroedinger's cat. It did cross my mind what adding a further layer or two of boxes and larger and larger observers would do. I had to have a beer to wash that thought away...

Three questions occur to me though:
1) Does this idea lead to the conclusion that the universe is deterministic (with all the randomness QM introduced removed) or is there still an underlying random nature there?
2) Does the removal of non-determinism (if there is one) remove the possibility of free will and free thinking?
3) Does this new interpretation shrink the breadth of "the unknown" in physics leaving less room for the kinds of things Rupert Sheldrake talks about (Morphic Resonance and the like)? How astoundingly dull that would be.

Answers on a postcard please:). Rupert - I'd love to hear your thoughts on this development.

Is the universe a giant simulation?

Last year I read Rupert Sheldrake's book "The Science Delusion" having seen his banned TED talk. His main theme is that science knows far too little about the universe to pronounce on what can and can't occur within it - which is the counter argument to Richard Dawkins materialist view, as discussed in "The God Delusion" which asserts that science knows everything and there's no room for god. Personally I take Rupert's side (and I do have a PhD in Physics in which to ground my disbelief in the all-powerful nature of science!).

One of Rupert's theories is "Morphic Resonance" - the observation that once a complex interaction has occurred once in nature, it appears to be more likely to occur again. He cites a simple example of newly synthesized materials (never seen before in nature), which initially fail to crystallise anywhere in the world, but magically once someone has done it once, it becomes easy to replicate the process all over the world. Another is animal behaviour. Once a bunch of monkeys in one group work out a new thing to do with a bean tin, other troops seem more likely to come up with the very same idea. His morphic resonance theory suggests that wherever similarity of form occurs there is some kind of connection between the similar entities that transcends physical distance. I guess the fascination of ancient cultures around the world with building pyramids could be caused by the same effect, rather than  those oft-speculated ancient ship journeys.

It suddenly occurred to me (having worked a lot with computer simulations and models) that one way a simulation can be made more efficient is to store the results of very complex calculations so they can be reused each time the same situation needs to be simulated. Its an essential technique when pushing the bounds of the possible and simulating very complex situations.

Bizarrely, if you believe Rupert Sheldrake's many examples of Morphic Resonance, it appears the universe may do something very similar - caching the solutions to complex problems so they can be used again elsewhere! But why and how? I have no answer to that (as yet :) ). But if the universe was actually like a giant simulation - running in some all-encompassing Turing machine, it might well exhibit these kinds of behaviours. Its a weird thought.