A PROPOSAL FOR AN OPEN-SOURCE BITCOIN FORENSICS TOOL

International Journal on Cybernetics & Informatics (IJCI) Vol.12, No.6, December 2023
Dhinaharan Nagamalai (Eds): NLAII, VISCOM, CCSITA, AIDD, BCYIoT -2023
pp. 173-178, 2023. IJCI – 2023 DOI:10.5121/ijci.2023.1206013
A PROPOSAL FOR AN OPEN-SOURCE BITCOIN
FORENSICS TOOL
Pedro Henrique Resende Ribeiro, Pedro Leale and Ivan da Silva Sendin
Faculdade de Computação, Federal University of Uberlândia, Uberlândia, Brazil
ABSTRACT
Over recent decades, the global financial paradigm has experienced significant transformations, notably
the emergence and adoption of cryptocurrencies. The escalating prominence of assets like Bitcoin has
inadvertently catalysed a surge in illicit activities associated with the currency. Consequently, the forensic
examination of transactions within blockchains becomes imperative for the detection and surveillance of
malevolent undertakings. This research delineates a preliminary pipeline for a Bitcoin forensic analysis
tool. Moving forward, the ambition is to conceptualize and empirically validate this tool utilizing data
procured from blockchain and ancillary sources. The methodology will harness Open-Source Intelligence
(OSINT), clustering of Bitcoin addresses, and an exhaustive financial analysis. Upon finalizing the
pipeline, the implementation of an open-source instrument is envisioned, poised to confer substantial
advantages to the broader cryptocurrency milieu.
KEYWORDS
Cryptocurrency, Bitcoin, Forensic Analysis, OSINT, Clustering.
1. INTRODUCTION
In the contemporary era, technological advancements have catalysed the proliferation and
ubiquitous integration of myriad technologies, notably cryptocurrencies. Such innovations
facilitate internet-centric payment systems, obviating the necessity for traditional financial
intermediaries in transactional processes [1]. Bitcoin, conceived in 2008, stands as a
quintessential exemplar of cryptocurrencies, witnessing an exponential surge in its acclaim over
the past years [2]. Nonetheless, the adoption of this technology is not devoid of pitfalls,
encompassing potential transactional fraudulence and its exploitation for illicit endeavours,
encompassing money laundering [3], Ponzi Schemes [4], and illicit trade like drugs and sex
commerce [5].
The confidentiality inherent in cryptocurrency transactions has garnered considerable attention in
academic literature. While privacy remains pivotal for the mainstream assimilation of
cryptocurrencies, it concurrently invites scrutiny, particularly in the context of malevolent
activities leveraging cryptocurrencies for remuneration [6]. The employment of pseudonymous
protocols within the Bitcoin ecosystem facilitates malefactors in obfuscating transactional
provenance, geolocation, and financial dominion [3] [7]. Consequently, there emerges an
imperative for the formulation of analytical tools accentuating the potential misappropriation of
Bitcoin.
The Bitcoin Blockchain epitomizes transactional lucidity. Its architecture permits accessibility
and manipulation, especially when synergized with potent clustering heuristics like the multi-
input heuristic [8]. This heuristic, when initialized with a specific address set, endeavours to

174
identify additional addresses potentially under analogous ownership, thereby enriching the data
reservoir for subsequent forensic dissection.
Open-Source Intelligence (OSINT) is predicated on the systematic aggregation of data to distil
strategic insights on a designated subject [9]. Within the ambit of decentralized finance, OSINT
has manifested its indispensability as an instrumental apparatus for the meticulous analysis of
transactional integrity within blockchain network. The proficiency in tracing transactions and
pinpointing users within blockchain infrastructures can yield invaluable intelligence for fraud
deterrence, criminal investigations, and the surveillance of dubious undertakings [10].
The objective of this work is to elucidate the confluence of clustering methodologies and OSINT
in discerning illicit blockchain activities and their correlation to tangible users. The strategy
encompasses grouping data, such as Bitcoin transactional inputs, attributable to a specific entity,
be it collective or individual. Subsequent phases involve the extraction of intelligence from
digital platforms, including social media, discussion forums, and pertinent websites, with the
intent of associating discovered addresses with the personal data of the transactional agents.
2. BACKGROUND
This segment endeavours to elucidate extant instruments for blockchain analysis and furnish the
requisite technical minutiae of the blockchain imperative for analytical undertakings.
2.1. Economic and Behavioural Aspects
Subsequent to its genesis, Bitcoin has garnered the allegiance of multitudes, facilitating
transactions of substantial magnitude and thereby engendering a pronounced economic
reverberation. Its inherent autonomy has engendered polarized discourses, inciting deliberations
regarding its prospective trajectories and the environmental impacts it has already caused [11].
The inherent freedom and higher level of anonymity compared to traditional currency, has
rendered it a magnet for illicit endeavours, such as the online sale of narcotics following early
proof-of-concept transactions [12]. It has also been utilized for ransomware payments [13].
Several works available in the academic literature underscore the utility of economic attributes as
forensic analytical tools, encompassing transactional history [14], the Gini coefficient, address
lifetime, transactional frequency, and transacted values [4], inter alia.
The transactional historic facilitates the tracing of fund provenance and the discernment of
antecedent transactions tethered to a specific address, thereby unveiling interconnections amongst
entities, and bolstering financial malefaction probes [14]. The Gini coefficient quantifies
affluence concentration within addresses or transactions, potentially flagging nefarious activities
such as capital hoarding by malevolent actors [15].
Address lifetime possesses salience; short-term addresses might insinuate surreptitious
endeavours, such as transient address utilization to obfuscate fund origins. Conversely, enduring
addresses proffer insights into transactional histories and user credibility [14]. Elevated
transactional frequencies or substantial cryptocurrency volumes might be harbingers of money
laundering, market manipulation, or other illicit activities, spotlighting atypical patterns
warranting in-depth analysis [4].

175
2.2. Open-Source Intelligence
OSINT, originally conceived to satiate military requisites for public domain strategic intelligence,
facilitates the extraction of pivotal information [9]. Since its inception, myriad proposals have
been proffered, advocating its application across diverse domains.
Cryptocurrency transactional network analysis emerges as a paramount application of OSINT in
contemporary times. [16] accentuate that such analytical endeavours potentiate the identification
of dubious transactions and the interrelations amongst implicated users. This modus operandi has
been harnessed to buttress criminal investigations tethered to cryptocurrency misuse in illicit
activities.
Fraud detection in cryptocurrency transactions represents another OSINT application delineated
in academic treatises. [17] underscore the efficacy of machine learning in pinpointing suspicious
cryptocurrency transactions, enabling the recognition of patterns indicative of illicit undertakings.
OSINT's synergy with data analysis can be instrumental in unearthing cryptocurrency
transactional fraud and pre-empting financial malefactions.
The emergence of Bitcoin and its cryptocurrency counterparts has precipitated a gamut of
apprehensions encompassing security, discretion, and regulatory dimensions. Within this milieu,
OSINT has manifested as an invaluable analytical tool. Its prowess in transactional tracing and
user identification within blockchain ecosystems proffers invaluable intelligence for fraud
mitigation, criminal probes, and the surveillance of suspect activities [10].
Furthermore, OSINT's applicability extends to issues tethered to cryptocurrency confidentiality.
While Bitcoin operates within a relatively transparent network, alternative cryptocurrencies
endeavour to proffer augmented user anonymity. In this scenario, OSINT methodologies can
critically assess these stratagems and pinpoint potential vulnerabilities [18].
2.3. Clustering
In simple terms, Bitcoin transactions involve input and output addresses. Inputs are linked to
outputs from previous transactions, creating a chain [19]. During a transaction, inputs are used
up, and outputs are labelled as Unspent Transaction Outputs (UTXOs). Each UTXO represents a
certain amount of Bitcoin linked to an address. A user's balance is the total of all UTXOs
connected to their addresses [19].
Given this, we can use clustering methods, like the multi-input heuristic, to group sets of
addresses in Bitcoin transactions that might belong to the same user [8]. This method assumes
that if transactions share inputs, then all those inputs belong to the same user.
Another method, the one-time change heuristic, looks at Bitcoin transactions that need a change
address. This address is usually used once and belongs to the same user as the input addresses
[20]. Besides these methods, other techniques are discussed in the literature, like analysing
mixing services and mining payments [21].
3. PIPELINE PROPOSAL
Given the technological paradigms delineated, specifically blockchain forensic clustering
methodologies and OSINT, the envisaged pipeline is predicated upon the integration of a pre-
defined ensemble of potentially dubious addresses into a clustering algorithm, exemplified by the

176
multi-input heuristic. In the ensuing phase, the addresses discerned from this procedure will be
harnessed in OSINT methodologies to ascertain the tangible entities concomitant with them.
Figure 1 provides a schematic representation of the pipeline as postulated in this research.
Moreover, the proposal advocates for the adoption of a data structure optimized for Bitcoin
heuristics. This data structure integrates a Bloom filter and a search tree to efficiently store and
execute intersection and union operations required by the clusterization algorithm. The data
structure will be developed in Rust language, due to its innovative memory management system
and fast execution speed.
The OSINT facet will be implemented in Python, imbibing web scraping methodologies and
harnessing API-driven data retrieval to collate pertinent information. Additionally, the integration
of artificial intelligence methodologies is contemplated to bolster the analytical rigor of the
information.
Figure 1. Pipeline proposed to implement a Bitcoin forensics. Once an addressof interest exists, addresses
owned by the same entities can be inferredby clusterization, and related addresses are obtained from the
Blockchain.Further analyses can be done using OSINT and economic features.
4. CONCLUSIONS
The development of forensic instruments tailored for Bitcoin holds significant promise in
bolstering the security of transactions executed within the Blockchain. Within the purview of this
research, the amalgamation of clustering techniques, in tandem with Open-Source Intelligence
(OSINT), empowers the elucidation of transactional trends and the identification of transactions
that bear hallmarks of suspicion. Consequently, this paves the way for pre-emptive measures to
discern and thwart malevolent undertakings, thereby fortifying the security apparatus of the
financial milieu.
Moreover, a plethora of enterprises, including but not limited to Chainalysis, Ciphertrace, and
Elliptic, have entrenched themselves in the realm of Bitcoin forensics, curating tools that are
instrumental in pinpointing and probing illicit transactions. This underscores the palpable demand
for cryptocurrency forensic instruments in the contemporary market, accentuating the pertinence
of this research endeavour.
In conclusion, the judicious deployment of these forensic tools, complemented by proper
regulations and awareness initiatives, is paramount to safeguarding the integrity of the
decentralized financial architecture and mitigating criminal transgressions. The relentless
evolution of Bitcoin forensic methodologies and the refinement of employed techniques are
indispensable in navigating the ever-evolving intricacies of malevolent activities, thereby
ensuring sustained trust in this burgeoning financial paradigm.
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AUTHORS

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Pedro Henrique Resende Ribero Graduated in Mechanical Engineering (2019) from
the Federal University of Uberlândia (UFU). Currently, he is a Computer Science
undergraduate student at UFU and in the Software Engineering program at the
International University Center (UNINTER). Currently enrolled in a postgraduate
program in Data Science and Big Data Analytics at the University of Uberaba
(UNIUBE)
Pedro Leale Computer Science undergraduate student at Universidade Federal de
Uberlândia (UFU). Conducted research in the field of bitcoin forensics, focusing on the
development of a hybrid data structure.
Ivan da Silva Sendin Graduated in Computer Science from the State University of
Londrina (1996) and completed Master's (1999) and Ph.D. (2012) degrees in Computer
Science from the State University of Campinas. Currently, he is a professor at the School
of Computing at the Federal University of Uberlândia.

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