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But the blockchain records all movements of bitcoin, so if I have a coin's hash, I can trace it's movement in transactions from A->C->X wallets? A mixer or exc

But the blockchain records all movements of bitcoin, so if I have a coin's hash, I can trace it's movement in transactions from A->C->X wallets? A mixer or exchange is the best bet, but then you're relying on a third party. A mixer may record it's transactions with people to say which coin was given out for which coin moved in. At least this is my understanding of how the blockchain works. I may be wrong (likely!)

olegkikin 9y ago
No, you can't. Bitcoins are fungible. There's no way to mark stolen coins. That's why I asked - where is the stolen money, is it in X or in Y or in both? The best we can do to reduce crime is to convince most of the exchanges not to take the stolen coins (or take them, but give them back to the real owners). But there are so many of them, and many of them are anonymous, I don't see how we can do that.
- philbarr 9y ago
  No, but you can mark the transactions right? So if I know all the bitcoins in that "bad" wallet, I can follow all transactions from that wallet and see where the coins end up?
  - olegkikin 9y ago
    What will that achieve? After mixing you end up with addresses that contain coins that are partially stolen, partially clean (tainted). You could, theoretically, convince some providers of goods/services not to accept any tainted coins. It is doable, but most business owners don't care about that, as long as the money is not pure stolen (in both Bitcoin and physical world). Consider that some money in your bank account has previously gone through being stolen, traded for drugs, guns, slaves, being laundered. Pretty much nobody but the Central Banks has clean money.
    - philbarr 9y ago
      Right - now we're talking about it as if it's been mixed. I originally said that his best bet would be to use a mixer, otherwise the transactions can be traced. And by mixing he's relying on a third party.
  - joncrocks 9y ago
    Sure, this works if the mixing moves all coins through a single wallet. By using a set of different wallets where the control is shared but unknown outside of the mixer, you can end up with coins that are not traceable through wallets. A bit like you giving money to a third party, who calls up his friend, and then his friend gives the same amount of money to your friend. 'Your money' then ends up being used for something else (unrelated to you).
    - thaumasiotes 9y ago
      Fundamentally, your money must end up going to your hawala dealer's friend. However, under this system, your money can move from the dealer to his friend after it moves from his friend to your friend, violating the normal temporal order of things.
- vadansky 9y ago
  Can't you trace by amount? If I put 1.114596 bitcoins and pass them through the mixer, won't there be an account X with the same amount?
  - olegkikin 9y ago
    No. First of all, there are fees. Second of all, if the criminal is not an idiot, they will split the final output into randomized amounts. They can also sacrifice some coins, so they don't end up with the same exact amount.
- positivecomment 9y ago
  Disclaimer: I'm not well informed about crypto-currencies. This is just to test if I'm understanding correctly. So you are doing mixing. One of your users is a criminal, and that is apparent to you as you can trace where their coins came from. In your stash, you have 100BTC, 10 of which is the share from the criminal. He/she orders 1BTC to be transferred to a private wallet. You make a transfer to the private wallet from your stash, but you know exactly who gave the order. When the police comes to you, you will be forced to tell them who gave the order. Am I missing something? If I'm correct, then the attacker has to trust the mixer.
  - olegkikin 9y ago
    Most bitcoin tumblers are anonymous. You deposit the money and you specify the withdrawal addresses. The owner of the tumbler doesn't know you personally. The tumbler itself is just some code running on some anonymously rented server. And then we have things like ZCash, which are designed to make tracing impossible.
- aethertron 9y ago
  The ill-gotten money's in both X and Y. 0.5 BTC each. Where else can it be? Here's an approach to deter crime here: explicitly expose the implicit information about stolen coins. Wallets containing stolen coins are to be considered tainted to a specific amount of BTC. Receiving from them means your wallets gets that taint, proportionally to the amount received. The only way to un-taint a wallet is to return the stolen money. This assumes certain infrastructure, of course.
  - olegkikin 9y ago
    > The ill-gotten money's in both X and Y. 0.5 BTC each. How did you reach this conclusion? Why not 0.1 in X and 0.9 in Y? Why not 1 in X and 0 in Y? > This assumes certain infrastructure, of course. Will not happen any time soon. Just like it doesn't happen with the dollars / euros / etc. Even if you somehow magically force this kind of filtering at the node level, people who desire freedom will move to some other cryptocurrency. Bitcoin is actually quite simple compared to more modern and more anonymous offerings.
    - aethertron 9y ago
      The equal split would be a matter of convention. I think this is what people would consider fair. The amount was split evenly, so the taint is split evenly too. Here's a more detailed proposal to show it can be done as a distributed system. http://www.loper-os.org/?p=988 http://www.loper-os.org/?p=988 It's not about forcing nodes to do anything. It's about publishing data about what they're doing. Then people can make informed decisions. Some people won't like it, but precisely what freedom would be be trying to preserve, if they're fighting this? Freedom to foist off dirty money to people who don't want to receive it?
      - olegkikin 9y ago
        > The equal split would be a matter of convention. But you see, that's not the question I asked. I asked where the stolen money actually is. And the only truthful answer you can give is "I don't know". I agree that we could create a system to track "tainted money" and use the proportional tracking in case of merge-splits (50-50 in our example). But you will quickly run out of untainted money (besides the freshly-mined coins), because 1) everything that touches the hot wallet in any exchange will be considered tainted 2) Even if #1 were not true, every time an exchange does a withdrawal, they don't do it in 1 transaction per address, they do it in batches, where they withdraw from the hot wallet into dozens/hundreds of addresses. They do it to massively save on the transaction fees.
DSMan195276 9y ago
I think you have the wrong idea about what a "coin" is (I also had this misconception for a while). A "coin" has nothing to do with the hash found to mine the block. All that happens is that when a block is mined, it includes a transaction that gives the miner 25 coins (Or whatever the current bitcoin reward is). So the coins are just a number, there's nothing that separates one "coin" from another "coin". It's like handing out dollar bills without a serial number on them. So if you move 20 coins from wallets A and B to wallet C, and then Wallet C moves those coins to wallets D and E, there's no concept of "whos" coins from A and B you moved into each wallet, it's just a count.
- philbarr 9y ago
  I'm talking more about following the transactions than the "coins". Unfortunately I've messed up my semantics along the way which doesn't help anyone. So in this case wallets A,B,C,D, and E are all suspect, and at some point they're going to try and buy something tangible or convert to real currency from one of those wallets.

olegkikin 9y ago

No, you can't. Bitcoins are fungible. There's no way to mark stolen coins. That's why I asked - where is the stolen money, is it in X or in Y or in both? The best we can do to reduce crime is to convince most of the exchanges not to take the stolen coins (or take them, but give them back to the real owners). But there are so many of them, and many of them are anonymous, I don't see how we can do that.

philbarr 9y ago
No, but you can mark the transactions right? So if I know all the bitcoins in that "bad" wallet, I can follow all transactions from that wallet and see where the coins end up?
- olegkikin 9y ago
  What will that achieve? After mixing you end up with addresses that contain coins that are partially stolen, partially clean (tainted). You could, theoretically, convince some providers of goods/services not to accept any tainted coins. It is doable, but most business owners don't care about that, as long as the money is not pure stolen (in both Bitcoin and physical world). Consider that some money in your bank account has previously gone through being stolen, traded for drugs, guns, slaves, being laundered. Pretty much nobody but the Central Banks has clean money.
  - philbarr 9y ago
    Right - now we're talking about it as if it's been mixed. I originally said that his best bet would be to use a mixer, otherwise the transactions can be traced. And by mixing he's relying on a third party.
- joncrocks 9y ago
  Sure, this works if the mixing moves all coins through a single wallet. By using a set of different wallets where the control is shared but unknown outside of the mixer, you can end up with coins that are not traceable through wallets. A bit like you giving money to a third party, who calls up his friend, and then his friend gives the same amount of money to your friend. 'Your money' then ends up being used for something else (unrelated to you).
  - thaumasiotes 9y ago
    Fundamentally, your money must end up going to your hawala dealer's friend. However, under this system, your money can move from the dealer to his friend after it moves from his friend to your friend, violating the normal temporal order of things.
vadansky 9y ago
Can't you trace by amount? If I put 1.114596 bitcoins and pass them through the mixer, won't there be an account X with the same amount?
- olegkikin 9y ago
  No. First of all, there are fees. Second of all, if the criminal is not an idiot, they will split the final output into randomized amounts. They can also sacrifice some coins, so they don't end up with the same exact amount.
positivecomment 9y ago
Disclaimer: I'm not well informed about crypto-currencies. This is just to test if I'm understanding correctly. So you are doing mixing. One of your users is a criminal, and that is apparent to you as you can trace where their coins came from. In your stash, you have 100BTC, 10 of which is the share from the criminal. He/she orders 1BTC to be transferred to a private wallet. You make a transfer to the private wallet from your stash, but you know exactly who gave the order. When the police comes to you, you will be forced to tell them who gave the order. Am I missing something? If I'm correct, then the attacker has to trust the mixer.
- olegkikin 9y ago
  Most bitcoin tumblers are anonymous. You deposit the money and you specify the withdrawal addresses. The owner of the tumbler doesn't know you personally. The tumbler itself is just some code running on some anonymously rented server. And then we have things like ZCash, which are designed to make tracing impossible.
aethertron 9y ago
The ill-gotten money's in both X and Y. 0.5 BTC each. Where else can it be? Here's an approach to deter crime here: explicitly expose the implicit information about stolen coins. Wallets containing stolen coins are to be considered tainted to a specific amount of BTC. Receiving from them means your wallets gets that taint, proportionally to the amount received. The only way to un-taint a wallet is to return the stolen money. This assumes certain infrastructure, of course.
- olegkikin 9y ago
  > The ill-gotten money's in both X and Y. 0.5 BTC each. How did you reach this conclusion? Why not 0.1 in X and 0.9 in Y? Why not 1 in X and 0 in Y? > This assumes certain infrastructure, of course. Will not happen any time soon. Just like it doesn't happen with the dollars / euros / etc. Even if you somehow magically force this kind of filtering at the node level, people who desire freedom will move to some other cryptocurrency. Bitcoin is actually quite simple compared to more modern and more anonymous offerings.
  - aethertron 9y ago
    The equal split would be a matter of convention. I think this is what people would consider fair. The amount was split evenly, so the taint is split evenly too. Here's a more detailed proposal to show it can be done as a distributed system. http://www.loper-os.org/?p=988 http://www.loper-os.org/?p=988 It's not about forcing nodes to do anything. It's about publishing data about what they're doing. Then people can make informed decisions. Some people won't like it, but precisely what freedom would be be trying to preserve, if they're fighting this? Freedom to foist off dirty money to people who don't want to receive it?
    - olegkikin 9y ago
      > The equal split would be a matter of convention. But you see, that's not the question I asked. I asked where the stolen money actually is. And the only truthful answer you can give is "I don't know". I agree that we could create a system to track "tainted money" and use the proportional tracking in case of merge-splits (50-50 in our example). But you will quickly run out of untainted money (besides the freshly-mined coins), because 1) everything that touches the hot wallet in any exchange will be considered tainted 2) Even if #1 were not true, every time an exchange does a withdrawal, they don't do it in 1 transaction per address, they do it in batches, where they withdraw from the hot wallet into dozens/hundreds of addresses. They do it to massively save on the transaction fees.

DSMan195276 9y ago

I think you have the wrong idea about what a "coin" is (I also had this misconception for a while). A "coin" has nothing to do with the hash found to mine the block. All that happens is that when a block is mined, it includes a transaction that gives the miner 25 coins (Or whatever the current bitcoin reward is). So the coins are just a number, there's nothing that separates one "coin" from another "coin". It's like handing out dollar bills without a serial number on them. So if you move 20 coins from wallets A and B to wallet C, and then Wallet C moves those coins to wallets D and E, there's no concept of "whos" coins from A and B you moved into each wallet, it's just a count.

philbarr 9y ago
I'm talking more about following the transactions than the "coins". Unfortunately I've messed up my semantics along the way which doesn't help anyone. So in this case wallets A,B,C,D, and E are all suspect, and at some point they're going to try and buy something tangible or convert to real currency from one of those wallets.