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>It's impossible to track bitcoin laundering when people transfer in and out of other currencies, between bitcoin addresses. >The process is called tumbling, a

>It's impossible to track bitcoin laundering when people transfer in and out of other currencies, between bitcoin addresses. >The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public" ledger. I very briefly addressed this at the bottom of my comment. In short order: - Tumbling is traceable: throw a beefy server at the list of transactions, and since you know how much money arrived in someone's possession on a given date, you can now trace it backwards by crunching the numbers. Analysing long lists of transactions like this is something computers are really good at. - But that doesn't matter, because tumbling sites can't work: they don't have enough capital in them to successfully launder more than a few play dollars at a time.

bduerst 11y ago
I think you're under the assumption that currency conversions are traceable. Once you convert bitcoins to dollars or yuan, your beefy server can't see the remaining transactions. For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC The only way to trace these is to compromise the exchange servers, get account information, and subpoena transactions from the banks. Very difficult to do given the international nature of these exchanges and banks.
- mootothemax 11y ago
  >I think you're under the assumption that currency conversions are traceable. I was specifically addressing tumbling services. I'm guessing that you accept those services are easy to compromise (heck, for all we know, various governments might operate the current ones) which is why you bring up currency conversion. >For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC Let's turn this around: you have a list of transactions, you know when they took place, you know where the money ended up, and now you're tracing the line backwards, knowing that at some point, there will be a connection (or connections) to other transactions at least as big as this one; why do you think this is so hard to analyse? >The only way to trace these is to compromise the exchange servers, get bank account information, and get transactions from the banks. Very difficult to do given the international nature of these exchanges. Not really, given how little is known about some exchanges' operators.
  - ramblerman 11y ago
    > why do you think this is so hard to analyse? Why do you insist it isn't. 1) bitcoin to cash or cash to bitcoin is pretty hard to trace unless you catch the actual handover. 2) As for the 'connections'. Anyone who knows what they are doing would spin up a wallet per transaction making connections non existant. Of course mistakes can and will be made, at which point using bitcoin can become a bigger liability than cash/banks because everything is public. But given perfect usage, it is extremely difficult to ascertain any information.
  - celticninja 11y ago
    huge list of assumptions there, but having read your responses you dont really understand bitcoin, transactions or tumblers. Tumblers can delay sending transactions by anywhere from hours to days, so matching 1 input with 1 output would be dificult at the very least. If 1 input is split into 6 outputs of varying sizes, sent at various times how would a beefy server help you. Say I send in 10BTC to a tumbler and my output is split into 6 outputs of between 1 and 2 btc each, these are issued to different addresses over a 5 day period. How do you trace that in amongst all of the other several thousand transactions that occurred in that 5 day period? I would genuinely be interested in how you think this would work, as would many in law enforcement and the bitcoin ecosystem.
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dsmithatx 11y ago
You can not trace it backwards, that's not how tumbling works. If I take a 1000 inputs and combine them. Then I split it into 100,000 outputs you can not trace that. You could trace it if the person getting the outputs was dumb enough to recombine them or spend them in all the same way. I suspect most people who tumble store the coins in those addresses and only spend small amounts later. Tumbling has been used by people being tracked and has been effective at them not being caught. Read the bitcoin forums.
hippich 11y ago
Back in 2012 someone stole worth of $1M bitcoins in today's prices from project I had. Do you think you can help me find who did it? Since if we could - there is certainly a case and enough to pay lawyers and for beefy server and whatever else.
celticninja 11y ago
It is not traceable if done correctly, regardless of how many beefy servers you throw at the problem. As long as you don't collate all BTC in one address at the end of your tumbling then there is no way to absolutley link it to the original sending address.
wyager 11y ago
> throw a beefy server at the list of transactions, and since you know how much money arrived in someone's possession on a given date, you can now trace it backwards by crunching the numbers. I hope you realize that you haven't actually described a process for tracing Bitcoin transactions. You can't just take an arbitrary problem, say "throw a computer at it", and consider it solved. I don't mean to be abrasive, but you are clearly ignorant of the state of affairs of Bitcoin anonymity systems. Look up coinjoin, for starters. When you have highly-connected (in the graph sense), properly conducted mixing systems, you can't just "trace the transactions".
sneak 11y ago
It doesn't matter how beefy your server is when I trade that Bitcoin for a different cryptocurrency using an exchange via Tor, and back again. Factor in a few exchanges and unless you're running all of them, good luck. Bitcoin is indeed untraceable, with care.

bduerst 11y ago

I think you're under the assumption that currency conversions are traceable. Once you convert bitcoins to dollars or yuan, your beefy server can't see the remaining transactions. For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC The only way to trace these is to compromise the exchange servers, get account information, and subpoena transactions from the banks. Very difficult to do given the international nature of these exchanges and banks.

mootothemax 11y ago
>I think you're under the assumption that currency conversions are traceable. I was specifically addressing tumbling services. I'm guessing that you accept those services are easy to compromise (heck, for all we know, various governments might operate the current ones) which is why you bring up currency conversion. >For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC Let's turn this around: you have a list of transactions, you know when they took place, you know where the money ended up, and now you're tracing the line backwards, knowing that at some point, there will be a connection (or connections) to other transactions at least as big as this one; why do you think this is so hard to analyse? >The only way to trace these is to compromise the exchange servers, get bank account information, and get transactions from the banks. Very difficult to do given the international nature of these exchanges. Not really, given how little is known about some exchanges' operators.
- ramblerman 11y ago
  > why do you think this is so hard to analyse? Why do you insist it isn't. 1) bitcoin to cash or cash to bitcoin is pretty hard to trace unless you catch the actual handover. 2) As for the 'connections'. Anyone who knows what they are doing would spin up a wallet per transaction making connections non existant. Of course mistakes can and will be made, at which point using bitcoin can become a bigger liability than cash/banks because everything is public. But given perfect usage, it is extremely difficult to ascertain any information.
- celticninja 11y ago
  huge list of assumptions there, but having read your responses you dont really understand bitcoin, transactions or tumblers. Tumblers can delay sending transactions by anywhere from hours to days, so matching 1 input with 1 output would be dificult at the very least. If 1 input is split into 6 outputs of varying sizes, sent at various times how would a beefy server help you. Say I send in 10BTC to a tumbler and my output is split into 6 outputs of between 1 and 2 btc each, these are issued to different addresses over a 5 day period. How do you trace that in amongst all of the other several thousand transactions that occurred in that 5 day period? I would genuinely be interested in how you think this would work, as would many in law enforcement and the bitcoin ecosystem.
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dsmithatx 11y ago

You can not trace it backwards, that's not how tumbling works. If I take a 1000 inputs and combine them. Then I split it into 100,000 outputs you can not trace that. You could trace it if the person getting the outputs was dumb enough to recombine them or spend them in all the same way. I suspect most people who tumble store the coins in those addresses and only spend small amounts later. Tumbling has been used by people being tracked and has been effective at them not being caught. Read the bitcoin forums.

hippich 11y ago

Back in 2012 someone stole worth of $1M bitcoins in today's prices from project I had. Do you think you can help me find who did it? Since if we could - there is certainly a case and enough to pay lawyers and for beefy server and whatever else.

celticninja 11y ago

It is not traceable if done correctly, regardless of how many beefy servers you throw at the problem. As long as you don't collate all BTC in one address at the end of your tumbling then there is no way to absolutley link it to the original sending address.

wyager 11y ago

> throw a beefy server at the list of transactions, and since you know how much money arrived in someone's possession on a given date, you can now trace it backwards by crunching the numbers. I hope you realize that you haven't actually described a process for tracing Bitcoin transactions. You can't just take an arbitrary problem, say "throw a computer at it", and consider it solved. I don't mean to be abrasive, but you are clearly ignorant of the state of affairs of Bitcoin anonymity systems. Look up coinjoin, for starters. When you have highly-connected (in the graph sense), properly conducted mixing systems, you can't just "trace the transactions".

sneak 11y ago

It doesn't matter how beefy your server is when I trade that Bitcoin for a different cryptocurrency using an exchange via Tor, and back again. Factor in a few exchanges and unless you're running all of them, good luck. Bitcoin is indeed untraceable, with care.