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Exclusive Mining: Blockchain Facing Dilemma

6


One of the most controversial cryptocurrency transaction techniques through the Blockchain network is the so-called Exclusive Mining. It is a procedure that is used for several purposes, including crime.

In a recent study published by Elias Strehle of Blockchain Research Lab and Lennart Ante, from the University of Hamburg, this issue was thoroughly analyzed. The article concludes that Exclusive Mining is difficult to detect, making it ideal for money laundering.

On the other hand, this technique can have less sinister purposes. In this case, you could be talking about paying low commissions. In either case, the security of the Blockchain network prevents knowing for what purpose the Exclusive Mining is being carried out.

What does it mean to do Exclusive Mining on Blockchain?

Generally, when a transaction is made, the first function it fulfills is to inform the miners that it is pending. Once confirmed, the transaction is sent over the peer-to-peer network.

However, some people want to make transactions avoiding this modality of Regular Mining. In this sense, they choose to send their transactions directly to the miners outside the Blockchain, without spreading it through the Blockchain, this process is known as Exclusive Mining.

In other words, Exclusive Mining is presented to certain miners (and not to the Blockchain in general) with attractive commissions, which they cannot refuse. The main motivation for this is tax evasion and money laundering.

“Between the person who sends the transaction and the miner who receives it, an exclusive channel of communication is created outside the Blockchain network. Through this channel, the miner sends the transaction to the recipient. Neither the sender nor the miner propagate the transaction through the peer-to-peer blockchain network “explains the article.

, Exclusive Mining: Blockchain Facing Dilemma, Forex-News, Forex-News
Unlike Regular Mining, Exclusive Mining creates an exclusive channel between the sender and the miner, all outside of the peer-to-peer blockchain network. Source: Blockchainresearchlab.org

Ideal for money laundering

The fact that a transaction is invisible to any other member of the Blockchain makes Exclusive Mining very attractive for criminal activities. As already listed above, the most common are money laundering and tax evasion.

Avoiding these crimes is really difficult, the study points out, since it depends on the honesty of the miner who receives the transaction proposal. “And the reality is that not all miners are necessarily honest.”

To make sure to make a really hidden transaction, criminals offer high commissions to miners. In this way, it is practically impossible to follow the trajectory of a transaction, since Exclusive Mining operates in the opposite way to Regular Mining within the Blockchain.

“Exclusive Mining allows miners to retain a transaction and integrate it exclusively in their own block. In this way, the miner ensures a transaction with a high commission, which cannot be processed and shared with other miners “, the investigation asserts.

These transactions are likely to be detected in the future

But impunity cannot be eternal. In this sense, the research confirms that the tools of the Blockchain network will allow the detection of transactions made with Exclusive Mining.

There are mysterious transactions, which are highlighted by Blockchain researchers. It is noteworthy that Exclusive Mining operations leave their mark once they have already been processed by the miner.

Bearing that in mind, the aforementioned “mysterious” transactions that leave a trace on the Blockchain of some cryptocurrencies are countless. An example of these occurred on June 10, 2020, when an address sent 0.55 ETH (136 USD at that time), while its commission was 10,699 ETH (2.6 million USD).

The next day, from that same address, the amount of 350 ETH was sent, with a commission of 10,699 ETH. Although it is not clear what their purposes were, it is almost certain that they were made through Exclusive Mining.

With a series of analyzes, the study concludes stating that there are real possibilities of detecting this type of action. The Blockchain network is designed to be transparent and open, and the bases for the detection of Exclusive Mining are already present, they say.

Data to take into consideration

  • There are two ways to send cryptocurrencies from one address to another. These are, Regular Mining and Exclusive Mining.
  • Unlike Regular Mining, Exclusive Mining does not manifest itself openly to the entire network, but for specific purposes.
  • The main use of this type of transaction is for criminal activities such as money laundering and tax evasion.
  • The study ensures that in a short time, this type of secret shipments will be able to be detected.
  • Not all uses of Exclusive Mining are criminal, but given its characteristics, it is generally used for it.

Reliable sources

The information in this content has been extracted from reliable sources detailed below.:

1- Professional content management by the authors of CriptoTendencia.
2- External sources: Blockchainresearchlab.org.



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