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Nobody has seriously claimed that Bitcoin is anonymous.

by fooker 7y ago

jjulius 7y ago
Be careful speaking in such absolutes as "nobody". Back when Silk Road was all the buzz, people who may've lacked the same technical knowledge you and I have would claim that using Bitcoin on Silk Road was an anonymous way to pay for what you bought.
dragontamer 7y ago
Not BTC being anonymous, but that BTC "mixer" services would anonymize the data in an untrackable way. I never trusted the mixers personally. But it was a hot debate item a few years back whether or not law enforcement could track transactions through a mixer. Its always been my firm belief that a mixer was just automated money laundering and probably puts you up for legal scrutiny as well. But we'll see how the FBI decides to handle those...
- tempsy 7y ago
  It's relatively easy to identify mixers, so by sending money to a mixer you immediately flag your sending account as high risk...
  - jandrese 7y ago
    More importantly receiving money from a mixer could taint your wallet for converting the bitcoins into real money. KYC laws kick in. It's easy to check if you've ever had coins from a mixer enter your wallet. The idea that your transactions are mixed up and impossible to track doesn't matter so much if they just assume everybody who uses a mixer is a criminal.
    - __s 7y ago
      You can't reject someone depositing to your address. So a tumbler can taint whichever addresses it pleases You aren't tracking coins with the ledger, only totals. So address A can have 10 btc, tumbler adds 5 to A, then A transfers 5 to B, 5 to C. If C is an exchange, does it consider that A is still holding 5 tumbled coins? Or does it say B has the tumbled coins? Or does it reject A's offer of 5? Feel free to shift values such as A having 100 BTC, receiving 0.01 tumbled BTC, & wanting to send 1 BTC to exchange Also hard to track something like A sending tumbled coins to B, which triggers the owner of B to have C send non tumbled coins to D. You can even have this service offered at an exchange rate, so D receives less than B did
      - jandrese 7y ago
        Easiest solution is to just taint any wallet that has ever had a coin from a known tumbler added to it. It's harsh and a malicious tumbler could mess up famous wallets, but easy to implement and "safe" to a point. A harder solution only allows them to withdraw up to the number of coins you can verify were not tumbled. So if some malicious tumbler deposits 0.000001 coin in your wallet you can convert all but 0.000001 of your wallet's value at an exchange.
  - steveeq1 7y ago
    You get around that by converting from btc to monero and then back again. Either through bisq or through xmr.to. "mixers" are obsolete now because it's a central point of failure.
    - dragontamer 7y ago
      Will monero just be consider a money laundering scheme by the FBI in the future? Why use monero unless you wanted to hide your transactions? Hiding your transactions is literally illegal in the USA (its called money laundering). Presumably, the FBI will be able to automatically determine if your BTC came from a Monero exchange.
      - steveeq1 7y ago
        Hackers use "bisq" which is a decentralized exchange to get around this problem. I am baffled as to how "kingpin money launders" don't do this. I'm not a money launderer and I know this. As for the fbi consdering monero a "money laundering scheme" in the future. They can outlaw it, I guess, but it's like trying to outlaw video and music piracy, it's hard to do in practice.
        dragontamer 7y ago
        > Hackers use "bisq" which is a decentralized exchange to get around this problem. How does "bisq" provide anonymity to its users? If you're trading BTC, your wallets are still being connected to each other and provably written into the blockchain for all of eternity. Same with Ethereum and other "mainstream" cryptocoins. If the FBI only cares about "anonymous" coins, like Monero, and ONLY targets those, then all payment processors would "taint" Monero wallets (or any BTC coins which ever touched a Monero-related wallet), and refuse to process them. Its really not that hard for Monero (or any other minority-coin) to be shut out of the payment processor market and relegated to black-market goods.
        steveeq1 7y ago
        Because there are legimitate uses for monero and if you use a service like xmr.to to convert to bitcoin (which mixes the bitcoin on top of that), you are "far enough removed" from the tainted transaction to establish "plausible deniability".
- hn_throwaway_99 7y ago
  Are any of the mixers still up? I remember about a year ago when one of the most popular ones abruptly shut down when it became clear the government would go after him for abetting money laundering if he continued.
  - lacker 7y ago
    Yeah. There was a leak recently from a Chainalysis employee who claimed that they were unable to trace transactions through the Wasabi wallet, which is a wallet that integrates a coinjoin mixer. I think there are other coinjoin-based mixer services operating.
    - RandomBacon 7y ago
      A supposed employee in an unverified AMA.
      - steveeq1 7y ago
        yeah, but he knew his stuff so it at least sounds plausible
simias 7y ago
I'm pretty sure by now somebody has seriously claimed that Bitcoin cures cancer, speaks Romanian and cure male pattern baldness. Anonymity and protection from the Big Bad Government were definitely talking points used by many cryptocurrency enthusiasts. "It can't be banned and can't be seized", rings a bell? Except of course if the Big Bad Government comes knocking at your door and tells you to hand your wallet over "or else".
- steveeq1 7y ago
  And how are they going to know you even HAVE a wallet? There are anonymization techniques like wasabi and monero that are fairly trivial to use. It's basically like trying to outlaw software piracy, it's a hard sell.
- fooker 7y ago
  > Can't be banned This part is sort of true. A government can ban fiat <-> BTC conversion but there isn't really a way to stop people from providing services in exchange for BTC.
quickthrower2 7y ago
I think anonymous/not anonymous binary distinction is too black/white. Bitcoin is more anonymous than a bank transaction. If I buy something with a credit card, they have my credit card number that is easily linked to me. With Bitcoin it is less easy. Unfortunately with Bitcoin once you have been 'revealed' then your transaction 'graph' is then revealed in the public, whereas the credit card doesn't have that problem. It depends who you want to be anonymous from. Governments can easily get bank transactions, and also they can investigate bitcoin-based crime and then just trace the public ledger. Businesses will not easily get bank transactions or map general bitcoin addresses to people, but if you use a credit card you tend to have to give them a lot of other matching information such as your name and address, whereas with bitcoin you don't need to give them anything. Assuming there is no delivery involved it can be pretty anonymous. But again if they did happen to pattern match (maybe they have another customer who you have dealt with too) they could join some dots. But to be safe it's best to assume Bitcoin is not anonymous and that anyone can find out eventually where you have spent your money.

Nobody has seriously claimed that Bitcoin is anonymous.

by fooker 7y ago

Nobody has seriously claimed that Bitcoin is anonymous.

Be careful speaking in such absolutes as "nobody". Back when Silk Road was all the buzz, people who may've lacked the same technical knowledge you and I have would claim that using Bitcoin on Silk Road was an anonymous way to pay for what you bought.

dragontamer 7y ago

Not BTC being anonymous, but that BTC "mixer" services would anonymize the data in an untrackable way. I never trusted the mixers personally. But it was a hot debate item a few years back whether or not law enforcement could track transactions through a mixer. Its always been my firm belief that a mixer was just automated money laundering and probably puts you up for legal scrutiny as well. But we'll see how the FBI decides to handle those...

tempsy 7y ago
It's relatively easy to identify mixers, so by sending money to a mixer you immediately flag your sending account as high risk...
- jandrese 7y ago
  More importantly receiving money from a mixer could taint your wallet for converting the bitcoins into real money. KYC laws kick in. It's easy to check if you've ever had coins from a mixer enter your wallet. The idea that your transactions are mixed up and impossible to track doesn't matter so much if they just assume everybody who uses a mixer is a criminal.
  - __s 7y ago
    You can't reject someone depositing to your address. So a tumbler can taint whichever addresses it pleases You aren't tracking coins with the ledger, only totals. So address A can have 10 btc, tumbler adds 5 to A, then A transfers 5 to B, 5 to C. If C is an exchange, does it consider that A is still holding 5 tumbled coins? Or does it say B has the tumbled coins? Or does it reject A's offer of 5? Feel free to shift values such as A having 100 BTC, receiving 0.01 tumbled BTC, & wanting to send 1 BTC to exchange Also hard to track something like A sending tumbled coins to B, which triggers the owner of B to have C send non tumbled coins to D. You can even have this service offered at an exchange rate, so D receives less than B did
    - jandrese 7y ago
      Easiest solution is to just taint any wallet that has ever had a coin from a known tumbler added to it. It's harsh and a malicious tumbler could mess up famous wallets, but easy to implement and "safe" to a point. A harder solution only allows them to withdraw up to the number of coins you can verify were not tumbled. So if some malicious tumbler deposits 0.000001 coin in your wallet you can convert all but 0.000001 of your wallet's value at an exchange.
- steveeq1 7y ago
  You get around that by converting from btc to monero and then back again. Either through bisq or through xmr.to. "mixers" are obsolete now because it's a central point of failure.
  - dragontamer 7y ago
    Will monero just be consider a money laundering scheme by the FBI in the future? Why use monero unless you wanted to hide your transactions? Hiding your transactions is literally illegal in the USA (its called money laundering). Presumably, the FBI will be able to automatically determine if your BTC came from a Monero exchange.
    - steveeq1 7y ago
      Hackers use "bisq" which is a decentralized exchange to get around this problem. I am baffled as to how "kingpin money launders" don't do this. I'm not a money launderer and I know this. As for the fbi consdering monero a "money laundering scheme" in the future. They can outlaw it, I guess, but it's like trying to outlaw video and music piracy, it's hard to do in practice.
      - dragontamer 7y ago
        > Hackers use "bisq" which is a decentralized exchange to get around this problem. How does "bisq" provide anonymity to its users? If you're trading BTC, your wallets are still being connected to each other and provably written into the blockchain for all of eternity. Same with Ethereum and other "mainstream" cryptocoins. If the FBI only cares about "anonymous" coins, like Monero, and ONLY targets those, then all payment processors would "taint" Monero wallets (or any BTC coins which ever touched a Monero-related wallet), and refuse to process them. Its really not that hard for Monero (or any other minority-coin) to be shut out of the payment processor market and relegated to black-market goods.
        steveeq1 7y ago
        Because there are legimitate uses for monero and if you use a service like xmr.to to convert to bitcoin (which mixes the bitcoin on top of that), you are "far enough removed" from the tainted transaction to establish "plausible deniability".
hn_throwaway_99 7y ago
Are any of the mixers still up? I remember about a year ago when one of the most popular ones abruptly shut down when it became clear the government would go after him for abetting money laundering if he continued.
- lacker 7y ago
  Yeah. There was a leak recently from a Chainalysis employee who claimed that they were unable to trace transactions through the Wasabi wallet, which is a wallet that integrates a coinjoin mixer. I think there are other coinjoin-based mixer services operating.
  - RandomBacon 7y ago
    A supposed employee in an unverified AMA.
    - steveeq1 7y ago
      yeah, but he knew his stuff so it at least sounds plausible

simias 7y ago

I'm pretty sure by now somebody has seriously claimed that Bitcoin cures cancer, speaks Romanian and cure male pattern baldness. Anonymity and protection from the Big Bad Government were definitely talking points used by many cryptocurrency enthusiasts. "It can't be banned and can't be seized", rings a bell? Except of course if the Big Bad Government comes knocking at your door and tells you to hand your wallet over "or else".

steveeq1 7y ago
And how are they going to know you even HAVE a wallet? There are anonymization techniques like wasabi and monero that are fairly trivial to use. It's basically like trying to outlaw software piracy, it's a hard sell.
fooker 7y ago
> Can't be banned This part is sort of true. A government can ban fiat <-> BTC conversion but there isn't really a way to stop people from providing services in exchange for BTC.

quickthrower2 7y ago

I think anonymous/not anonymous binary distinction is too black/white. Bitcoin is more anonymous than a bank transaction. If I buy something with a credit card, they have my credit card number that is easily linked to me. With Bitcoin it is less easy. Unfortunately with Bitcoin once you have been 'revealed' then your transaction 'graph' is then revealed in the public, whereas the credit card doesn't have that problem. It depends who you want to be anonymous from. Governments can easily get bank transactions, and also they can investigate bitcoin-based crime and then just trace the public ledger. Businesses will not easily get bank transactions or map general bitcoin addresses to people, but if you use a credit card you tend to have to give them a lot of other matching information such as your name and address, whereas with bitcoin you don't need to give them anything. Assuming there is no delivery involved it can be pretty anonymous. But again if they did happen to pattern match (maybe they have another customer who you have dealt with too) they could join some dots. But to be safe it's best to assume Bitcoin is not anonymous and that anyone can find out eventually where you have spent your money.