Privacy concerns of a Transaction and it's implication in Coinselection

Typically when a bitcoin transaction is created using bitcoin client or a wallet for a single user one can conclude that all the inputs in the transaction belong to a single user. We might not able to deduce who the user is but it's clear that all the addresses in that partucular transaction inputs belong to a single user.

More unique addresses in a transaction means an attacker can deduce that all those different addresses belongs to a single user, this gives the attacker an ability to group addresses together for single users using this heuristic. In most crypto exchanges because of KYC and other login details one can clearly associate some addresses with a known user. Now if the attacker can successfully group certain addresses together it means they can potentially deduce that the particular known user has at least n amount of bitcoin.

The goal of the tutorial is to demonstrate how coinselection impacts the privacy of users in bitcoin blockchain.

Counting number of unique addresses in a transaction using rust

In our analysis we are going to fetch a block of certain height and analyze the transactions within it.

The following code snippet demonstrates how to do this using rust-bitcoincore_rpc crate.

fn get_block(client: &Client, block_height: u64) -> Result<bitcoin::Block, bitcoincore_rpc::Error> {
    let block = client.get_block_hash(block_height)?; // fetch the hash of the block
    client.get_block(&block) // return the complete block with another rpc call
}

The following is the function that we want to complete

fn txs_sort_unique_input_addrs(client: &Client, block_height: u64) -> Result<Vec<(Transaction, u32)>, bitcoincore_rpc::Error> {

    // Fetching the basic data necessary and intializing the variables
    let block = get_block(client, block_height)?;
    let txs = block.txdata;
    
    let mut result: Vec<(Transaction, u32)> = vec![];
}

We need to keep track of unique addresses, the datastructure that helps us achieve that goal is a Hashset. Now we iterate through every transaction and compute the unique addresses used in each of them, using HashSet.

for tx in txs.iter() {
    let mut input_addrs: HashSet<Address> = HashSet::new();

    // For coinbase transactions the input Vec will be empty so it will be safely ignored.

    // Iterate through every input
    for input in tx.input.iter() {
        // Do more processing to extract address from the input
        let address = extract_from_TxIn(input);
        input_addrs.insert(address);
    }
    result.push((tx.clone(), input_addrs.len() as u32));
}

The extract_from_TxIn function looks like this,

fn extract_from_TxIn(input: TxIn) -> bitcoin::Address {
    // TODO

}

// In bitcoin crate TxIn is defined like the following
struct TxIn {
    pub previous_output: OutPoint,
    pub script_sig: ScriptBuf, // contains signature and public key data
    pub sequence: Sequence,
    pub witness: Witness,
}

// OutPoint is defined as follows
struct OutPoint {
    /// The referenced transaction's txid.
    pub txid: Txid,
    /// The index of the referenced output in its transaction's vout.
    pub vout: u32,
}

So in order to extract address from the transaction input we have to get information about the transaction where the input was the output (TxOut). The following code demonstrates how to do it,

let prev_tx: Transaction = client.get_raw_transaction(&input.previous_output.txid, Some(&block_hash)).unwrap();
let prev_tx_output = &prev_tx.output[input.previous_output.vout as usize];

// TxOut Struct is defined like the following
struct TxOut {
    /// The value of the output, in satoshis.
    pub value: Amount,
    /// The script which must be satisfied for the output to be spent.
    pub script_pubkey: ScriptBuf, // We can extract address from here
}

From the script_pubkey of the previous output it is possible to extract the address of the current transaction input using the following,

let prev_tx_script = &prev_tx_output.script_pubkey;
let input_address = bitcoin::Address::from_script(prev_tx_script, Network::Bitcoin).expect("Failed to parse address from scriptPubKey");

Putting it all together the entire code can be found here