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It looks like some exchanges and fiat-to-crypto on ramps are using chain analysis to track which addresses you are sending to (1). (1) https://twitter.com/Rona

It looks like some exchanges and fiat-to-crypto on ramps are using chain analysis to track which addresses you are sending to (1). (1) https://twitter.com/RonaldMcHodled/status/1222172084610027523 https://twitter.com/RonaldMcHodled/status/122217208461002752...

cft 6y ago
Trivial to evade: Just transfer to your own wallet (e.g. Electrum) then back to yourself (from Electrum to Electrum again), and then to the poker site. They won't be able to prove that the intermediary (second Electrum address) was you.
- ur-whale 6y ago
  The example you give to try and evade coinbase checks is trivial to track, and the big US exchanges use chain analytics tech. to do this. Just try it, and you'll see what happens to your account. To do what you suggest is of course possible, but requires far more "exertion" than what you suggest and certainly more than the average user is technically capable of.
- selsta 6y ago
  The amount of hops is irrelevant for blockchain analysis.
  - xur17 6y ago
    But they can't assume it's under your control indefinitely. If I buy some Bitcoin, and use it to pay for something online, the seller could sell it to someone else who uses it on a poker site. Am I responsible for their use?
    - selsta 6y ago
      Are blockchain analysis companies able to detect what you are describing? Yes. Is it possible that exchanges say we ignore everything after n amount of hops? Also yes. It depends on what exchanges specify.
      - mrscottson 6y ago
        Let the hop wars begin then..., I know it's easier for wallet makers to add more hops to anonymizing tech than for chainalysis to deanonymize the transactions....when 90+% of the wallets do this by default, that company will probably have to shut down.
        selsta 6y ago
        No, that’s not what my comment intended to say. While some exchanges say they will ignore everything after a few hops, blockchain analysis companies can track them fine. Moving Bitcoins between wallet is not anonymity and does not give you plausible deniability against law enforcement.
        mrscottson 6y ago
        >Moving Bitcoins between wallet is not anonymity and does not give you plausible deniability against law enforcement. Moving fractions of bitcoin between 100+ wallets using something like coinjoin absolutely gives you plausable deniability and anonymity, how would anyone know what % is still in your custody? With enough people doing this, eventually all bitcoin will be tainted. At that point will exchanges start to refuse 100% of all bitcoin being deposited? I think its more likely chainalysis goes bankrupt.
  - cft 6y ago
    Can you explain how a Bitcoin blockchain analysis company can track this? For example, I transfer to an Electrum address from Coinbase. Then I make a transaction that has a single input spending that address, and two outputs, both with newly derived addresses that belong to me (unknown at that point to the chainalysis). Then I make a third transaction with one one input, spending one of those two new addresses that belong to me, and one output with the address of the poker site. How does Chainalysis know that the new address that was spent by the input of that last (third) transaction to the poker site was mine (at least till I spend the second output from the second transaction)? What am I missing? From what I know, chain analytics uses various heuristics and it's inherently probabilistic: the more hops, the less certainty
dependenttypes 6y ago
Can't someone just transfer their money to monero and then back to a bitcoin address?

cft 6y ago

Trivial to evade: Just transfer to your own wallet (e.g. Electrum) then back to yourself (from Electrum to Electrum again), and then to the poker site. They won't be able to prove that the intermediary (second Electrum address) was you.

ur-whale 6y ago
The example you give to try and evade coinbase checks is trivial to track, and the big US exchanges use chain analytics tech. to do this. Just try it, and you'll see what happens to your account. To do what you suggest is of course possible, but requires far more "exertion" than what you suggest and certainly more than the average user is technically capable of.
selsta 6y ago
The amount of hops is irrelevant for blockchain analysis.
- xur17 6y ago
  But they can't assume it's under your control indefinitely. If I buy some Bitcoin, and use it to pay for something online, the seller could sell it to someone else who uses it on a poker site. Am I responsible for their use?
  - selsta 6y ago
    Are blockchain analysis companies able to detect what you are describing? Yes. Is it possible that exchanges say we ignore everything after n amount of hops? Also yes. It depends on what exchanges specify.
    - mrscottson 6y ago
      Let the hop wars begin then..., I know it's easier for wallet makers to add more hops to anonymizing tech than for chainalysis to deanonymize the transactions....when 90+% of the wallets do this by default, that company will probably have to shut down.
      - selsta 6y ago
        No, that’s not what my comment intended to say. While some exchanges say they will ignore everything after a few hops, blockchain analysis companies can track them fine. Moving Bitcoins between wallet is not anonymity and does not give you plausible deniability against law enforcement.
        mrscottson 6y ago
        >Moving Bitcoins between wallet is not anonymity and does not give you plausible deniability against law enforcement. Moving fractions of bitcoin between 100+ wallets using something like coinjoin absolutely gives you plausable deniability and anonymity, how would anyone know what % is still in your custody? With enough people doing this, eventually all bitcoin will be tainted. At that point will exchanges start to refuse 100% of all bitcoin being deposited? I think its more likely chainalysis goes bankrupt.
- cft 6y ago
  Can you explain how a Bitcoin blockchain analysis company can track this? For example, I transfer to an Electrum address from Coinbase. Then I make a transaction that has a single input spending that address, and two outputs, both with newly derived addresses that belong to me (unknown at that point to the chainalysis). Then I make a third transaction with one one input, spending one of those two new addresses that belong to me, and one output with the address of the poker site. How does Chainalysis know that the new address that was spent by the input of that last (third) transaction to the poker site was mine (at least till I spend the second output from the second transaction)? What am I missing? From what I know, chain analytics uses various heuristics and it's inherently probabilistic: the more hops, the less certainty

dependenttypes 6y ago

Can't someone just transfer their money to monero and then back to a bitcoin address?