One of the most controversial techniques of transactions of crypto currencies through the Blockchain network, is the so-called Exclusive Mining. This is a procedure that is used for various purposes, including crime.
In a recent study published by Elias Strehle, from Blockchain Research Lab and Lennart Ante, from the University of Hamburg, this topic was analyzed in depth. 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, one could be talking about paying low commissions. In any case, the security of the Blockchain network prevents to know with what purpose the Exclusive Mining is being done.
What does it mean to do Exclusive Mining in 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 through 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 propagating 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 propagates the transaction over the Blockchain peer-to-peer network,“ the article explains.
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Ideal for money laundering
The fact that a transaction is invisible to any other member of The News Spy, makes Exclusive Mining very attractive for criminal activities. As listed above, the most common ones 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 ensure that a really hidden transaction is made, the criminals offer high commissions to the miners. In this way, it is practically impossible to trace a transaction, as Exclusive Mining operates in the opposite way to Regular Mining within Blockchain.
„Exclusive Mining allows the miners to retain a transaction and integrate it exclusively into their own block. In this way, the miner secures a transaction with a high commission, which cannot be processed and shared with other miners,“ states the investigation.