Monero privacy bug decreased anonymity for 3 years

A recently disclosed bug in the privacy-centric cryptocurrency monero (XMR) has compromised user anonymity for the past three years.

The bug, which affected the decoy selection process in monero transactions, has been patched in the latest version of the monero wallet, but its impact on past transactions remains significant.

Bug and its impact

Monero transactions use a system of decoys, or “ring members,” to obscure the actual sender of a transaction. When a user sends a transaction, their wallet selects several decoys from past transactions to include in the new one. This makes it difficult for an observer to determine which of the inputs in the transaction is the real one being spent.

Monero-powered anonymous shopping service Anon Industries explained in a tweet:

“A monero wallet “looks at the blockchain and selects 15 other payments and mixes your payment with them. This means that to the public, your payment could have been 1 out of 16 payments. If a government were to try and identify what the real payment was and they randomly guessed, they would have a roughly 6% chance of guessing correctly.”

There was a Privacy Bug in Monero for the last 3 years 😨

How Bad was the bug?
How does this bug affect users of Monero?

This thread answers all of these questions and more! pic.twitter.com/P6w7tILXRV

— Anon Industries (@AnonIndustries_) May 29, 2023

The bug, disclosed on GitHub by user jeffro256, affected the selection process of these decoys. Specifically, it prevented the selection of decoys that were precisely ten blocks old. This meant that if a transaction included an input ten blocks old, an observer could guess with a high likelihood that this was the real input being spent, thereby compromising the sender’s anonymity.

The bug was present in monero wallet versions v0.13.0.0 to v0.18.2.1 and has been patched in version v0.18.2.2. Users are strongly encouraged to update their wallets to the latest version to protect their privacy.

You might also like: Privacy-Threatening Flaw Discovered in Monero’s (XMR) Wallet Code

Disclosure and response by Monero

The bug was discovered and disclosed on GitHub, where the monero project hosts its source code and tracks issues. The disclosure included a detailed technical explanation of the bug and its impact and a post-mortem analysis of how the bug was introduced and why it went unnoticed for so long.

The monero community has responded to the disclosure with calls for improved processes for handling such issues in the future. Some users have expressed concern about the delay between the patched wallet version’s release and the bug’s public disclosure. Others have called for a more rigorous analysis of the statistical distributions used in decoy selection to prevent similar bugs from occurring in the future.

The Broader Implications

This incident highlights the challenges of maintaining privacy in cryptocurrency technology’s complex and evolving landscape. It also underscores the importance of transparency and rigorous analysis in developing and maintaining privacy-preserving systems.

While the bug has been fixed and the immediate threat to user privacy has been mitigated, the incident serves as a reminder of the ongoing challenges faced by privacy-centric cryptocurrencies like monero. Maintaining user privacy will require constant vigilance, rigorous analysis, and a commitment to transparency and open communication as these technologies evolve.

Source