AUTHOR=Fischer Jan Alexander , Palechor Andres , Dell’Aglio Daniele , Bernstein Abraham , Tessone Claudio J. 

TITLE=The Complex Community Structure of the Bitcoin Address Correspondence Network

JOURNAL=Frontiers in Physics

VOLUME=Volume 9 - 2021

YEAR=2021

URL=https://www.frontiersin.org/journals/physics/articles/10.3389/fphy.2021.681798

DOI=10.3389/fphy.2021.681798

ISSN=2296-424X

ABSTRACT=Bitcoin is built on a blockchain, an immutable decentralised ledger that allows entities (users) to exchange Bitcoins in a pseudonymous manner. Bitcoins are associated with alpha-numeric addresses and are transferred via transactions.
Each transaction is composed of a sets of input addresses (associated with unspent outputs received from previous transactions) and a set of output addresses (to which Bitcoins are transferred).
While built with anonymity in mind, different heuristic approaches exist to detect which addresses in a specific transaction belong to the same entity. 
The successive application of these heuristics allow us to build an Address Correspondence Network: in this representation, addresses are nodes and edges are drawn between addresses detected as belonging to the same entity by at least one  heuristic. In this network, connected components represent sets of addresses controlled by the same entity.
In this paper, we analyse for the first time the Address Correspondence Network, and show it to have a complex topology, signalled by a broad, skewed degree distribution and a power-law component size distribution. Using a large-scale dataset of addresses for which the controlling entities are known, we show that a combination of external data coupled with standard community detection algorithms can be reliably used to identify entities.
The complex nature of the Address Correspondence Network reveals that usage patterns of individual entities create statistical regularities; and that these regularities can be leveraged to more accurately identify entities and gain a deeper understanding of the Bitcoin economy as a whole.