Abstract
Cryptocurrencies acquire user confidence by making the whole creation and transaction history transparent to the public. In exchange, the transaction history accurately captures the complete range of user activities related to cryptocurrencies. In this paper, the use of data mining methods in Bitcoin transactions is analyzed and summarized. Cryptocurrencies, similar to the well-known Bitcoin, were targeted to ensure transaction security and privacy and overcome the drawbacks of traditional banking systems as well as other centralized systems. We also conduct a thorough analysis of the literature on the challenges and applications of electronic currencies. We outline the evolution of digital currency from electronic cash to cryptocurrencies and put the spotlight on the methods used to increase user privacy. We also highlight security threats in the existing cryptocurrency systems that jeopardize the privacy of Bitcoin users. Finally, we identify several research gaps and trends that need to be looked at further.