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I'm not very familiar with the inner parts of the system, but I thought each and every transaction in the bitcoin ecosystem is traceable. How does one can "unli
by fbnlsr 9y ago
I'm not very familiar with the inner parts of the system, but I thought each and every transaction in the bitcoin ecosystem is traceable. How does one can "unlink" bitcoin from this sale?
- noddy1 9y agoA few options - in practice you would probably do some/all of these: 1) Put them through a mixer 2) Put them through an anonymous exchanger like shapeshift and convert into a privacy focused cryptocurrency like monero/zcash 3) Sell on offshore/low-regulation exchange, or via an anonymous credit card service
- PhasmaFelis 9y agoHow does tumbling/mixing work?
- icelancer 9y agoDecent enough read here on the subject: https://darknetmarkets.org/a-simple-guide-to-safely-and-effectively-mixing-bitcoins/ https://darknetmarkets.org/a-simple-guide-to-safely-and-effe...
- 0xcde4c3db 9y ago(n.b. I'm not a cryptocurrency expert; this is probably a bit oversimplified, but should get the idea across) It works by lumping the coins of all the users together, breaking any direct connection between the endpoints of any given transaction. Suppose Alice makes a deposit at the bank, but in the margin of the deposit slip she writes "for Bob". The cashier at this particular bank records a credit of $1000 from Alice, then prints and mails $1000 of cashier's checks to Bob, recording that series of debits as well. Later, the authorities raid the bank and seize its ledger. They can see a credit from Alice and a bunch of debits to Bob, but there is no transfer between Alice's account and Bob's account; this only proves that Alice could have paid Bob. If this bank has hundreds of other customers making similar transactions every day, it's basically impossible to use the ledger alone to prove any connection between Alice and Bob. Now scale that up so that "the bank" is actually a consortium of banks that also perform a bunch of transactions among themselves to further obscure any associations among customers.
- icelancer 9y agoExchanging it for XMR/Monero would be a good start, after tumbling/mixing it.
- the_stc 9y agoYes, a combination of Tumbling and Monero is a good step. I do this as part of my living. To bootstrap our company it took me over a month to get linked-bitcoins to unlinked-bitcoins. Monero is not a magic-cure-all! Monero needs a very big warning like Tor Project says, how Tor is not alone going to save you. Another big piece of management is a tree-shaped wallet-graph. You want to split your money regularly, then churn and obfuscate each wallet. And NEVER JOIN THEM. Even with Monero there is no safe way to join amounts. If you split into Wallet1 and Wallet2, then 10 transactions later they are running low and you want to consolidate, then you run a high risk of correlating all those transactions. At this time, there is no official guidance on how to use Monero safely.
- deleted 9y ago[deleted]
- icelancer 9y ago>>official guidance on how to use Monero safely I don't think there ever will be :) It all depends on risk tolerance, as you correctly noted.
- IkmoIkmo 9y agoSay you have 1000 $1 bills marked with an identification number. It's now easy to tell you're the thief as you own all the bills with all the ID numbers that were registered as used for the sale. You then put it in a big box together with a thousand others who all also have $1k. You then shake and tumble the box, and then hand out $1k to each and everyone of them. It's now quite hard to determine who is the thief, as everyone has about 1 registered bill, but 999 unregistered bills. Then magnify that by a lot and throw in some extras, and it gets tricky.
- icelancer 9y agoAnd convert your USD into EUR and then into JPY, back into USD.
- the_stc 9y agoThis does very small amount to enhance your privacy. Whatever exchange you use will track those trades. If the exchange is not tracking you then making multiple trades will not help very much.
- fbnlsr 9y agoThat's a great explanation. Thanks a lot for that. :)
- richardknop 9y agoBy not having your identity linked with bitcoin address. This means never use bitcoin exchange because KYC will link your addresses to you. Instead only buy and sell bitcoins for cash via local bitcoins. Then in theory there is no way to link your bitcoin stash to you.
- paulpauper 9y agotracing tumbled bitcoin is like finding needle in a silo. in other words, practically impossible, which is why the service exists
- the_stc 9y agoThis is not correct. If the tumbler is compromized then your records are trivially known. It is a bad assumption to think tumblers are not honeypots or do not sell their records to LE.