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The quotes in the article mention anonymity as one of the problems, but all Bitcoin transactions are public. Is it really that difficult to tie people to these

by dom96 9y ago

The quotes in the article mention anonymity as one of the problems, but all Bitcoin transactions are public. Is it really that difficult to tie people to these transactions?

philfrasty 9y ago
If I remember correctly the founder of TenX said in a video that 40% of all Fiat <-> Crypto money goes through Coinbase alone...which ties (a lot of) future transactions to a passport verified person.
- ReverseCold 9y ago
  Not if you also have a local wallet and transact with non centralized entities (ie other people) often. Local wallets cycle addresses often.
- bufferoverflow 9y ago
  Even that doesn't really tell you who the real owner of the coins is. What if you bought bitcoins for your friend and withdrew to his address? Or you got hacked, or blackmailed, or ransomwared.
benashford 9y ago
The headline says "Bitcoin", the speech which included the anonymity claim said "cryptocurrencies".
chatmasta 9y ago
This is the UK government we’re talking about, the same government with representatives who think “real people don’t need end-to-end encryption” and that “we should get people who understand the necessary hashtags [sic]” to implement back doors. So more likely than not, the people calling for regulations on bitcoin have little to no understanding of its basic properties.
- cinquemb 9y ago
  >So more likely than not, the people calling for regulations on bitcoin have little to no understanding of its basic properties. How many on HN would gladly jump at the opportunity to "understand the necessary hashtags", and write the software with skinner box like interfaces for our glorious institutions that we owe our mind and body to in order to protect us from ourselves? Excluding those of you who already work on these profitable boondoggles of course… ;)
- deleted 9y ago
  [deleted]
bufferoverflow 9y ago
Yes, very. Anyone can create a thousand valid bitcoin addresses a second, and then send coins between them. There's no way of knowing who created the address. Technically, you can even send coins to a random address with the correct checksum, thus losing these coins forever. That address will not have an owner.
- SonicSoul 9y ago
  while this is true, there are plenty of ways to de-anonymize transactions. you'd have to take extra measures to stay anonymous. meaning, can't rely purely on bitcoin protocol https://decentralize.today/a-new-attack-vector-to-deanonymize-bitcoin-users-9c6dc433d4b6 https://decentralize.today/a-new-attack-vector-to-deanonymiz... https://www.coursera.org/learn/cryptocurrency/lecture/qnS76/how-to-de-anonymize-bitcoin https://www.coursera.org/learn/cryptocurrency/lecture/qnS76/...
  - squeegee5 9y ago
    This describes methods to de-anonymize transactions passed through fiat interfaces that comply with AML/KYC. Play stupid games, win stupid prizes.
justboxing 9y ago
> but all Bitcoin transactions are public. Is it really that difficult to tie people to these transactions? I think it is. From my limited understanding of cryptocurrency wallets and transaction, I believe the distributed ledger is public, so anyone (incl. Govt.) can see which wallet address has how much coins / funds in it. But you can't see which physical human or institution owns that wallet / address. That's how it's widely known that just about 1,650 wallets hold a majority of the world's bitcoins. These are wallets with > 1000 bitcoins. They are called 'Whales'. But it's almost impossible to tie a Whale account to, say, Richard Branson or Ross Ulbricht. If you take Paypal payments as example, this is similar to everyone knowing your email address for paypal, but only paypal knowing that the email address is tied to you.
- EthanHeilman 9y ago
  >I believe the distributed ledger is public, so anyone (incl. Govt.) can see which wallet address has how much coins / funds in it. Not only is the wallet address public you can see entire transaction history of each address. Keeping a Bitcoin address separate from your true name is exceedingly difficult. 1. When you trade Bitcoins into fiat money with an exchange you reveal your true name. 2. When you purchase something with Bitcoin you reveal the mapping between your Bitcoin address and your mailing address. 3. Unless you are using TOR when you announce a transaction on the network you reveal the mapping from IP address to Bitcoin address. 4. When someone sends you Bitcoins they can track how those Bitcoins and spent and what Bitcoin addresses they are moved to. 5. Companies have large databases of known identity to Bitcoin address mappings allowing process of elimination or guilt by association privacy attacks. "Bitcoin offers privacy—as long as you don't cash out or spend it" - PC World Disclaimer: I do Bitcoin privacy research.
  - squeegee5 9y ago
    All of this holds up until you remember that Bitcoin is fungible and take these items into consideration: 1. There is no logical relationship between address A that spends to address B. 2. A could be part of the same wallet as B, or not. 3. A or B could be undisclosed addresses of merchants, or unrelated parties entirely. You may have to ask, and they may choose to tell you. Defeating your inferences is trivial. A blockchain analysis may reveal that A sent to B, who sent to C, but there is no logical relationship between A and C based on this transmission alone. Moreover, A can send to B, B' sends to C. You derive no information.
osteele 9y ago
Once an address has been doxxed, you've got a lead on any address used in a common transaction. It doesn't conclusively unmask these other addresses, so whether this counts as “really that difficult” depends on your investigative powers and your definition of “difficult”. Because of KYC[1] and AML[2], an address belonging to an exchange wallet should probably be considered doxxed. An authority can say “Hey Coinbase, I see you sent coin from address A on this date. Show me what account that came from.” CoinJoin[3] was intended to solve this problem, but apparently doesn't[6]. I was going to say that a decentralized cross-chain trading scheme[4][5] to launder through an anonymous currency such as Monero or ZCash might provide anonymity, but it looks like there's enough information to correlate the transactions across chains. (Even if there weren't, cross-chain trading might practically have one of the same issues as CoinJoin: that the transaction volume is just too low to provide anonymity.) There's other cryptocurrencies designed to provide anonymity[8]. The Lighting Network[10] might add this to Bitcoin[11]; I don't know if that's still one of their goals. EDIT: I somehow missed EthanHeilman's comment, above, when I wrote this. He says pretty much everything I said about why it's hard to keep Bitcoin activity private, more clearly. I included more links, though :-) [1] "Know Your Customer", https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer [2] "Anti Money-Laundering", https://en.wikipedia.org/wiki/Money_laundering#Anti-money-laundering_measures_by_region https://en.wikipedia.org/wiki/Money_laundering#Anti-money-la... [3] "CoinJoin", https://en.wikipedia.org/wiki/CoinJoin https://en.wikipedia.org/wiki/CoinJoin [4] "Atomic cross-chain trading", https://en.bitcoin.it/wiki/Atomic_cross-chain_trading https://en.bitcoin.it/wiki/Atomic_cross-chain_trading [5] "First Ever Cross Chain Atomic Swap Between Bitcoin and Litecoin a Success", http://bitcoinist.com/first-ever-cross-chain-atomic-swap-between-bitcoin-and-litecoin-has-now-taken-place/ http://bitcoinist.com/first-ever-cross-chain-atomic-swap-bet... [6] S. Goldfeder et al, "When the cookie meets the blockchain: Privacy risks of web payments via cryptocurrencies" (2017) https://arxiv.org/pdf/1708.04748.pdf https://arxiv.org/pdf/1708.04748.pdf. [7] "Bitcoin Transactions Aren’t as Anonymous as Everyone Hoped ", Technology Review Aug, 2013, https://www.technologyreview.com/s/608716/bitcoin-transactions-arent-as-anonymous-as-everyone-hoped/ https://www.technologyreview.com/s/608716/bitcoin-transactio... summarizes [6]. [8] "Keybase chooses Zcash" https://keybase.io/blog/keybase-and-zcash https://keybase.io/blog/keybase-and-zcash has a fun example of address linkage. [9] Sudhir Khatwani, "9 Anonymous Cryptocurrencies You Should Know About", 2/02/18. https://coinsutra.com/anonymous-cryptocurrencies/ https://coinsutra.com/anonymous-cryptocurrencies/ [10] Lightning Network, https://lightning.network https://lightning.network. [11] Aaron van Wirdum, "How the Lightning Network Layers Privacy on Top of Bitcoin", Bitcoin Magazine, Dec 19 2016. https://bitcoinmagazine.com/articles/how-the-lightning-network-layers-privacy-on-top-of-bitcoin-1482183775/ https://bitcoinmagazine.com/articles/how-the-lightning-netwo...

by dom96 9y ago

The quotes in the article mention anonymity as one of the problems, but all Bitcoin transactions are public. Is it really that difficult to tie people to these transactions?

philfrasty 9y ago

If I remember correctly the founder of TenX said in a video that 40% of all Fiat <-> Crypto money goes through Coinbase alone...which ties (a lot of) future transactions to a passport verified person.

ReverseCold 9y ago
Not if you also have a local wallet and transact with non centralized entities (ie other people) often. Local wallets cycle addresses often.
bufferoverflow 9y ago
Even that doesn't really tell you who the real owner of the coins is. What if you bought bitcoins for your friend and withdrew to his address? Or you got hacked, or blackmailed, or ransomwared.

benashford 9y ago

The headline says "Bitcoin", the speech which included the anonymity claim said "cryptocurrencies".

chatmasta 9y ago

This is the UK government we’re talking about, the same government with representatives who think “real people don’t need end-to-end encryption” and that “we should get people who understand the necessary hashtags [sic]” to implement back doors. So more likely than not, the people calling for regulations on bitcoin have little to no understanding of its basic properties.

cinquemb 9y ago
>So more likely than not, the people calling for regulations on bitcoin have little to no understanding of its basic properties. How many on HN would gladly jump at the opportunity to "understand the necessary hashtags", and write the software with skinner box like interfaces for our glorious institutions that we owe our mind and body to in order to protect us from ourselves? Excluding those of you who already work on these profitable boondoggles of course… ;)
deleted 9y ago
[deleted]

bufferoverflow 9y ago

Yes, very. Anyone can create a thousand valid bitcoin addresses a second, and then send coins between them. There's no way of knowing who created the address. Technically, you can even send coins to a random address with the correct checksum, thus losing these coins forever. That address will not have an owner.

SonicSoul 9y ago
while this is true, there are plenty of ways to de-anonymize transactions. you'd have to take extra measures to stay anonymous. meaning, can't rely purely on bitcoin protocol https://decentralize.today/a-new-attack-vector-to-deanonymize-bitcoin-users-9c6dc433d4b6 https://decentralize.today/a-new-attack-vector-to-deanonymiz... https://www.coursera.org/learn/cryptocurrency/lecture/qnS76/how-to-de-anonymize-bitcoin https://www.coursera.org/learn/cryptocurrency/lecture/qnS76/...
- squeegee5 9y ago
  This describes methods to de-anonymize transactions passed through fiat interfaces that comply with AML/KYC. Play stupid games, win stupid prizes.

justboxing 9y ago

> but all Bitcoin transactions are public. Is it really that difficult to tie people to these transactions? I think it is. From my limited understanding of cryptocurrency wallets and transaction, I believe the distributed ledger is public, so anyone (incl. Govt.) can see which wallet address has how much coins / funds in it. But you can't see which physical human or institution owns that wallet / address. That's how it's widely known that just about 1,650 wallets hold a majority of the world's bitcoins. These are wallets with > 1000 bitcoins. They are called 'Whales'. But it's almost impossible to tie a Whale account to, say, Richard Branson or Ross Ulbricht. If you take Paypal payments as example, this is similar to everyone knowing your email address for paypal, but only paypal knowing that the email address is tied to you.

EthanHeilman 9y ago
>I believe the distributed ledger is public, so anyone (incl. Govt.) can see which wallet address has how much coins / funds in it. Not only is the wallet address public you can see entire transaction history of each address. Keeping a Bitcoin address separate from your true name is exceedingly difficult. 1. When you trade Bitcoins into fiat money with an exchange you reveal your true name. 2. When you purchase something with Bitcoin you reveal the mapping between your Bitcoin address and your mailing address. 3. Unless you are using TOR when you announce a transaction on the network you reveal the mapping from IP address to Bitcoin address. 4. When someone sends you Bitcoins they can track how those Bitcoins and spent and what Bitcoin addresses they are moved to. 5. Companies have large databases of known identity to Bitcoin address mappings allowing process of elimination or guilt by association privacy attacks. "Bitcoin offers privacy—as long as you don't cash out or spend it" - PC World Disclaimer: I do Bitcoin privacy research.
- squeegee5 9y ago
  All of this holds up until you remember that Bitcoin is fungible and take these items into consideration: 1. There is no logical relationship between address A that spends to address B. 2. A could be part of the same wallet as B, or not. 3. A or B could be undisclosed addresses of merchants, or unrelated parties entirely. You may have to ask, and they may choose to tell you. Defeating your inferences is trivial. A blockchain analysis may reveal that A sent to B, who sent to C, but there is no logical relationship between A and C based on this transmission alone. Moreover, A can send to B, B' sends to C. You derive no information.

osteele 9y ago

Once an address has been doxxed, you've got a lead on any address used in a common transaction. It doesn't conclusively unmask these other addresses, so whether this counts as “really that difficult” depends on your investigative powers and your definition of “difficult”. Because of KYC[1] and AML[2], an address belonging to an exchange wallet should probably be considered doxxed. An authority can say “Hey Coinbase, I see you sent coin from address A on this date. Show me what account that came from.” CoinJoin[3] was intended to solve this problem, but apparently doesn't[6]. I was going to say that a decentralized cross-chain trading scheme[4][5] to launder through an anonymous currency such as Monero or ZCash might provide anonymity, but it looks like there's enough information to correlate the transactions across chains. (Even if there weren't, cross-chain trading might practically have one of the same issues as CoinJoin: that the transaction volume is just too low to provide anonymity.) There's other cryptocurrencies designed to provide anonymity[8]. The Lighting Network[10] might add this to Bitcoin[11]; I don't know if that's still one of their goals. EDIT: I somehow missed EthanHeilman's comment, above, when I wrote this. He says pretty much everything I said about why it's hard to keep Bitcoin activity private, more clearly. I included more links, though :-) [1] "Know Your Customer", https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer [2] "Anti Money-Laundering", https://en.wikipedia.org/wiki/Money_laundering#Anti-money-laundering_measures_by_region https://en.wikipedia.org/wiki/Money_laundering#Anti-money-la... [3] "CoinJoin", https://en.wikipedia.org/wiki/CoinJoin https://en.wikipedia.org/wiki/CoinJoin [4] "Atomic cross-chain trading", https://en.bitcoin.it/wiki/Atomic_cross-chain_trading https://en.bitcoin.it/wiki/Atomic_cross-chain_trading [5] "First Ever Cross Chain Atomic Swap Between Bitcoin and Litecoin a Success", http://bitcoinist.com/first-ever-cross-chain-atomic-swap-between-bitcoin-and-litecoin-has-now-taken-place/ http://bitcoinist.com/first-ever-cross-chain-atomic-swap-bet... [6] S. Goldfeder et al, "When the cookie meets the blockchain: Privacy risks of web payments via cryptocurrencies" (2017) https://arxiv.org/pdf/1708.04748.pdf https://arxiv.org/pdf/1708.04748.pdf. [7] "Bitcoin Transactions Aren’t as Anonymous as Everyone Hoped ", Technology Review Aug, 2013, https://www.technologyreview.com/s/608716/bitcoin-transactions-arent-as-anonymous-as-everyone-hoped/ https://www.technologyreview.com/s/608716/bitcoin-transactio... summarizes [6]. [8] "Keybase chooses Zcash" https://keybase.io/blog/keybase-and-zcash https://keybase.io/blog/keybase-and-zcash has a fun example of address linkage. [9] Sudhir Khatwani, "9 Anonymous Cryptocurrencies You Should Know About", 2/02/18. https://coinsutra.com/anonymous-cryptocurrencies/ https://coinsutra.com/anonymous-cryptocurrencies/ [10] Lightning Network, https://lightning.network https://lightning.network. [11] Aaron van Wirdum, "How the Lightning Network Layers Privacy on Top of Bitcoin", Bitcoin Magazine, Dec 19 2016. https://bitcoinmagazine.com/articles/how-the-lightning-network-layers-privacy-on-top-of-bitcoin-1482183775/ https://bitcoinmagazine.com/articles/how-the-lightning-netwo...