Doesn’t this identify Bitcoin wallets through IP addresses?

An anonymous “entity” that has been opening connections to Bitcoin nodes and listening to transaction announcements is likely a company performing some sort of blockchain analysis, according to pseudonymous Bitcoin app developer 0xB10C.

In a blog post published on Tuesday, 0xB10C described how the unknown person or group (dubbed ‘LinkingLion’ because the IP addresses associated with it go through the LionLink network’s data center) appears to be trying to collect IP addresses of Bitcoin users and connect them to their BTC addresses.

According to 0xB10C, it does this by using 812 IP addresses to open connections with nodes and ask what Bitcoin software they are using. When it receives a version number, it closes the connection 82% of the time. But in the remaining 18% of cases, as described by 0xB10C, it listens for inventory messages that contain transactions or request an address.

0xB10C claims it this may be because it is trying to determine if a node is reachable at a particular IP address. If this is what the device is up to, as outlined by Cointelegraph, it could be “recording the timing of transactions to determine which node first received a transaction, information that can then be used to determine the IP address associated with a particular Bitcoin address.”

Read more: Bitcoin Core developer proposes new type of pruned node

Who is behind this?

As described in 0xB10C’s post, the majority of Bitcoin P2P anomalies can be traced back to individuals playing with the open network, companies looking to make money by selling data to other firms, law enforcement or academic researchers.

While it’s impossible to know for sure what’s going on in this particular case, 0xB10C has a number of theories. According to the anonymous developer, it is unlikely that a person will maintain this kind of behavior over several years (LinkingLion has been active since 2018) due to the fact that the IP address ranges and servers cost money. It is also unlikely to be an academic experiment, they argued, because papers must be published at some point.

So, reasons 0xB10C, it makes the most sense for a company performing blockchain analysis to be behind the activity. After all, it may be worth paying for said IP addresses and servers if a company can either sell on the collected data or use it to improve its existing product.

Protos has contacted 0xB10C for further details and we will update this article if we hear back.

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