It is a common narrative that blockchains are immutable and so it is technically impossible to erase data stored on them. For legal and ethical reasons, however, individuals and organizations might be compelled to erase locally stored data, be it encoded on a blockchain or not. The common assumption for blockchain networks like Bitcoin is that forcing nodes to erase data contained on the blockchain is equal to permanently restricting them from participating in the system in a full-node role. Challenging this belief, in this paper, we propose and demonstrate a pragmatic approach towards functionality-preserving local erasure (FPLE). FPLE enables full nodes to erase infringing or undesirable data while continuing to store and validate most of the blockchain. We describe a general FPLE approach for UTXO-based (i.e., Bitcoin-like) cryptocurrencies and present a lightweight proof-of-concept tool for safely erasing transaction data from the local storage of Bitcoin Core nodes. Erasing nodes continue to operate in tune with the network even when erased transaction outputs become relevant for validating subsequent blocks. Using only our basic proof-of-concept implementation, we are already able to safely comply with a significantly larger range of erasure requests than, to the best of our knowledge, any other full node operator so far.
When considering data protection as a reason for erasure (cf. sub:data_protection ), it also noteworthy that a large body of works deal with the challenge of providing to blockchain users (see e. ,g. @cite_24 for a recent survey). However, most transactions in popular systems like Bitcoin do not use any additional means of increasing anonymity @cite_23 and are reidentifiable using well-known techniques @cite_24 . Even when strong privacy guarantees can be achieved through technical means, this provides no solution for cases where identifiable data is posted to the blockchain on purpose, e. ,g., as part of doxing.
@cite_24 @cite_23
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Bitcoin is a popular cryptocurrency that records all transactions in a distributed append-only public ledger called blockchain . The security of Bitcoin heavily relies on the incentive-compatible proof-of-work (PoW) based distributed consensus protocol, which is run by the network nodes called miners . In exchange for the incentive, the miners are expected to maintain the blockchain honestly. Since its launch in 2009, Bitcoin economy has grown at an enormous rate, and it is now worth about 150 billions of dollars. This exponential growth in the market value of bitcoins motivate adversaries to exploit weaknesses for profit, and researchers to discover new vulnerabilities in the system, propose countermeasures, and predict upcoming trends. In this paper, we present a systematic survey that covers the security and privacy aspects of Bitcoin. We start by giving an overview of the Bitcoin system and its major components along with their functionality and interactions within the system. We review the existing vulnerabilities in Bitcoin and its major underlying technologies such as blockchain and PoW-based consensus protocol. These vulnerabilities lead to the execution of various security threats to the standard functionality of Bitcoin. We then investigate the feasibility and robustness of the state-of-the-art security solutions. Additionally, we discuss the current anonymity considerations in Bitcoin and the privacy-related threats to Bitcoin users along with the analysis of the existing privacy-preserving solutions. Finally, we summarize the critical open challenges, and we suggest directions for future research towards provisioning stringent security and privacy solutions for Bitcoin. This paper contributes a systematic account of transaction anonymization techniques that do not require trust in a single entity and support the existing cryptographic currency Bitcoin. It surveys and compares four known techniques, proposes tailored metrics to identify the use of each technique (but not necessarily its users), and presents longitudinal measurements indicating adoption trends and teething troubles. There is a tradeoff between the choice of users' preferred protection mechanisms and the risk that pertaining transactions can be singled out, which hurts privacy due to smaller anonymity sets unless a critical mass adopts the mechanism.