When Sarah Meiklejohn first discovered cryptocurrency, she was a grad student in computer science at University of California, San Diego. 

“In the beginning we all were just like ‘whoa, Bitcoin what’s anyone doing with it,” she said. 

This was back in 2013, four years after Bitcoin was dreamed up in a white paper by someone named Satoshi Nakamoto, and back then it was generally accepted that Bitcoin was untraceable, which was odd because Bitcoin transactions are public. 

They are all represented by a meaningless string of characters — or hashes — on a digital ledger called the blockchain. 

Meiklejohn believed once a cryptocurrency transaction touched the real world, the supposed meaninglessness of those hashes would fall away, and the transactions would reveal a lot about the people who made them. 

“I kind of knew beyond any shadow of a doubt that Bitcoin was not anonymous,” she said.

It turns out you could figure out a lot by seeing how Bitcoin transactions are related to each other. At the simplest level, if a string of Bitcoin characters is initiating lots of crypto transactions and another string, or wallet, is receiving them, that gives you a relationship to work with. So Meiklejohn decided to prove that in an unusual way: by shopping.

Stefan Savage was her thesis advisor at UCSD. He still has a lot of the stuff she bought, and he went through it. “So we have a Guy Fawkes mask — very on brand for the time — some earrings, organic Colombian coffee beans, I’m sure those are still good after fifteen years,” he said.

This was part of the collection of things he and Meiklejohn bought with crypto to watch the transactions go from buyer to seller. 

“It was, I need to get a purchase from some wallet in this cluster that my algorithm has identified,” Savage said, explaining how they came to choose their purchases. “Let me go and see things that are likely to get me there.”

What Meiklejohn didn’t know at the time was that a man named Michael Gronager was following her project and had read her research paper. He was writing an algorithm that would allow him to trace transactions at scale. 

In fact, he used that algorithm to figure out where a bunch of stolen Bitcoin had gone when a crypto exchange called Mt. Gox went bankrupt in 2014. He eventually turned all this into the company Chainalysis.

He said his algorithm essentially automated and sweetened Meiklejohn’s tracing process. “I can see an automated pattern that is running all the time,” he said. Now he’s using it to help financial institutions and governments track stolen money and identify bad players in the crypto world.

An earlier version of this story appeared on the Click Here podcast from Recorded Future News. Additional reporting by Sean Powers and Will Jarvis.