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> A counterparty that is willing to swap anonymously acquired and sent altcoins for Bitcoin can provide a privacy conscious individual with anonymous Bitcoins.

by ColanR 7y ago

> A counterparty that is willing to swap anonymously acquired and sent altcoins for Bitcoin can provide a privacy conscious individual with anonymous Bitcoins. Not if amounts are tracked, rather than addresses. "oh look, this gal X just lost 5.3876BTC and gained 3.76549ALTCOIN, and this other dude Y just gained 5.3876BTC and lost 3.76549ALTCOIN. Geeze, I wonder if they traded." And with the proper graph theory tools, much more complex interactions could be tracked.

nybble41 7y ago
The first problem here is that there is no link between the identities across the two currencies. You don't know that X lost some BTC and gained some altcoin. You just know that some BTC was transferred from X to Y and some altcoins were transferred from Z to W—completely different addresses. You also don't know precisely what exchange rate was used, and a privacy-minded service would round to a small number of significant digits (5.4BTC for 3.8ALT) rather than using exact, traceable figures. A proper mixer would probably also use fixed denominations and send each piece to a different address over a randomized timespan. It's still not immune to tracing, obviously, but it's a much harder problem than just looking for symmetric transactions. The simplest system, though, is probably just to spend some BTC renting time on a mining rig. It doesn't have to be profitable, just break even. Newly mined bitcoins have no official history to show who paid for the mining.
- ColanR 7y ago
  > It's still not immune to tracing, obviously, but it's a much harder problem than just looking for symmetric transactions. "And with the proper graph theory tools, much more complex interactions could be tracked." > The simplest system, though, is probably just to spend some BTC renting time on a mining rig. It doesn't have to be profitable, just break even. Newly mined bitcoins have no official history to show who paid for the mining. That is a good idea.
  - nybble41 7y ago
    > "And with the proper graph theory tools, much more complex interactions could be tracked." So you've said, and I already agreed that it isn't impossible. But do you have any real-world examples where someone followed reasonable OPSEC (fixed denominations, mixers, randomized timing) and still had their transactions successfully traced via these "proper graph theory tools"?
    - ColanR 7y ago
      Who would have published such an example? When we deal with opsec, we have to consider what is possible, rather than what has been done in the past. We have to do better than merely "locking the house after the thief has gone".
      - nybble41 7y ago
        > Who would have published such an example? Typically that would be either the academic researcher attempting to prove that their investigation technique works, or the prosecutor looking to use the results of such an investigation as evidence in a trial. > When we deal with opsec, we have to consider what is possible... Anything is possible. Even ideal encryption algorithms—other than one-time pads—have some non-zero probability of being broken within a reasonable timeframe by a brute-force search, but that doesn't make them useless. As long as it's not cost-effective to trace the transfer, that's enough. It doesn't need to be mathematically impossible.
        ColanR 7y ago
        Maybe this is where we diverge. > or the prosecutor looking to use the results of such an investigation as evidence in a trial I'm inclined to believe in the possibility of parallel constructions being used to cover up the best sources of intel. > Anything is possible.[...] As long as it's not cost-effective to trace the transfer, that's enough. It doesn't need to be mathematically impossible. And here, I think it is probably cost-effective to come up with that technology, because it would allow tracing people and transactions that might otherwise be impenetrable. And, if that were the case, I don't have a hard time imagining that it would be of utmost importance to keep such technology under wraps. But again, at this point it seems like we're comparing pessimism to optimism.

by ColanR 7y ago

nybble41 7y ago

The first problem here is that there is no link between the identities across the two currencies. You don't know that X lost some BTC and gained some altcoin. You just know that some BTC was transferred from X to Y and some altcoins were transferred from Z to W—completely different addresses. You also don't know precisely what exchange rate was used, and a privacy-minded service would round to a small number of significant digits (5.4BTC for 3.8ALT) rather than using exact, traceable figures. A proper mixer would probably also use fixed denominations and send each piece to a different address over a randomized timespan. It's still not immune to tracing, obviously, but it's a much harder problem than just looking for symmetric transactions. The simplest system, though, is probably just to spend some BTC renting time on a mining rig. It doesn't have to be profitable, just break even. Newly mined bitcoins have no official history to show who paid for the mining.

ColanR 7y ago
> It's still not immune to tracing, obviously, but it's a much harder problem than just looking for symmetric transactions. "And with the proper graph theory tools, much more complex interactions could be tracked." > The simplest system, though, is probably just to spend some BTC renting time on a mining rig. It doesn't have to be profitable, just break even. Newly mined bitcoins have no official history to show who paid for the mining. That is a good idea.
- nybble41 7y ago
  > "And with the proper graph theory tools, much more complex interactions could be tracked." So you've said, and I already agreed that it isn't impossible. But do you have any real-world examples where someone followed reasonable OPSEC (fixed denominations, mixers, randomized timing) and still had their transactions successfully traced via these "proper graph theory tools"?
  - ColanR 7y ago
    Who would have published such an example? When we deal with opsec, we have to consider what is possible, rather than what has been done in the past. We have to do better than merely "locking the house after the thief has gone".
    - nybble41 7y ago
      > Who would have published such an example? Typically that would be either the academic researcher attempting to prove that their investigation technique works, or the prosecutor looking to use the results of such an investigation as evidence in a trial. > When we deal with opsec, we have to consider what is possible... Anything is possible. Even ideal encryption algorithms—other than one-time pads—have some non-zero probability of being broken within a reasonable timeframe by a brute-force search, but that doesn't make them useless. As long as it's not cost-effective to trace the transfer, that's enough. It doesn't need to be mathematically impossible.
      - ColanR 7y ago
        Maybe this is where we diverge. > or the prosecutor looking to use the results of such an investigation as evidence in a trial I'm inclined to believe in the possibility of parallel constructions being used to cover up the best sources of intel. > Anything is possible.[...] As long as it's not cost-effective to trace the transfer, that's enough. It doesn't need to be mathematically impossible. And here, I think it is probably cost-effective to come up with that technology, because it would allow tracing people and transactions that might otherwise be impenetrable. And, if that were the case, I don't have a hard time imagining that it would be of utmost importance to keep such technology under wraps. But again, at this point it seems like we're comparing pessimism to optimism.