Mastercard Files Patent for Blockchain Transactions Anonymization Method

Mastercard has filed a patent application for a method to keep blockchain-based transactions anonymous. The patent application, published on Thursday, details a system of conducting transactions over a blockchain which obscures the source and destination of funds to increase anonymity of entities associated with blockchain addresses.

The patent application notes that the nature of a blockchain as an immutable ledger is such that every transaction can be traced and followed back to the genesis block, making it possible for anyone to identify and view all of the transaction associated with a specific blockchain wallet.

This can pose problem for some users as such data may, as it is accumulated and analyzed, eventually reveal who’s behind a wallet or at least provide information about them, such as geographic location, interests, spending habits, etc.

“Thus, there is a need for a technical solution to increase the anonymization of a wallet and the user associated therewith in a blockchain,” the patent application reads.

The methods and systems discussed use intermediary addresses to obfuscate the source and destination of funds, resulting in showing the user only transferring funds to and receiving funds from a small number of addresses that are also involved in a significantly large volume of transactions with various other users. This renders the data innocuous, it says.

In some cases, the amounts themselves may also be obscured through the use of multiple transfers involving multiple addresses, further increasing the anonymity provided by the systems and methods.

The method is very similar to what’s already provided by cryptocurrency tumblers or mixing services. Cryptocurrency tumblers mix potentially identifiable or “tainted” cryptocurrency funds with others so as to obscure the trail back to the fund’s original source. Mixing helps protect privacy and can also be used for money laundering by mixing illegally obtained funds.

California-based blockchain and cryptocurrency security firm CipherTrace estimates that about US$1.2 billion has been laundered through cryptocurrency tumblers and privacy-centric altcoins such as ZCash and Monero.

Mastercard has filed for previous patents too that dabbled in blockchain and cryptocurrencies. The firm has been awarded several of them this year, including one for a method to partition a blockchain, making it possible to store multiple transaction types and formats, and a method of linking blockchain-based assets to fiat currency accounts.