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It is relatively easy to obfuscate the origin of your Bitcoin with multiple interpretations. The term to search for this is "CoinJoin" [1]. "CoinJoin requires

by gzer0 5y ago

It is relatively easy to obfuscate the origin of your Bitcoin with multiple interpretations. The term to search for this is "CoinJoin" [1]. "CoinJoin requires multiple parties to jointly sign a digital smart contract to mix their coins in a new Bitcoin transaction, where the output of the transaction leaves the participants with the same number of coins, but the addresses have been mixed to make external tracking difficult." For example, the service Whirpool [2] cycles users' Bitcoin numerous times; the end result is one which can be interpreted 1,496 different ways. [1]. https://www.investopedia.com/terms/c/coinjoin.asp https://www.investopedia.com/terms/c/coinjoin.asp [2]. https://samouraiwallet.com/whirlpool https://samouraiwallet.com/whirlpool

JumpCrisscross 5y ago
> where the output of the transaction leaves the participants with the same number of coins, but the addresses have been mixed to make external tracking difficult Wouldn’t the simple solution be tagging coins that exited such a tumbler?
- esyir 5y ago
  Pretty much. Bitcoin wasn't made for anonymity. The logical approach to handling this is that exchanges consider coins from those wallets as invalid, creating a secondary class of coins.
- gambiting 5y ago
  Yes, but then you have a problem of "tainted" bitcoins. So in theory you arrive in a situation where some bitcoins aren't equal others - they can't be spent in a normal way because at some point in the past they went through a tumbler, so payment providers won't touch them "just in case".
  - PeterisP 5y ago
    Yes, that's kind of the whole point - from the government or law enforcement perspective, having a class of "tainted" coins would not be a problem but the intended outcome, and if a side-effect of that is a serious disincentive to use tumbling/laundering services (since that would effectively taint/destroy your funds, no matter if they were originally clean), that would be considered as a bonus, not as a flaw.
- Y_Y 5y ago
  And assuming all tumbled coins were tainted? Perhaps you could, but then I can imagine tumblers paying "innocent" people (out-of-band) to tumble their coins, while charging money launderers to do the same. If you could get a big fraction of all the active coins/wallets to be "tainted" then people are much less likely to refuse to transact with them.
  - JumpCrisscross 5y ago
    > can imagine tumblers paying "innocent" people (out-of-band) to tumble their coins, while charging money launderers to do the same Perhaps. But the legal precedent is for laundered money to be tainted per se. The laundering itself taints the cash independent of any preceding criminality.
salawat 5y ago
This is negated the moment someone generates a reasonable double entry accounting visualization. I wouldn't recommend on something that degenerates to a UI/UX or data presentation problem to ensure your own security and ongoing freedom from prosecution, especially when the evidence trail is everywhere and forever for all to see.

by gzer0 5y ago

JumpCrisscross 5y ago

> where the output of the transaction leaves the participants with the same number of coins, but the addresses have been mixed to make external tracking difficult Wouldn’t the simple solution be tagging coins that exited such a tumbler?

esyir 5y ago
Pretty much. Bitcoin wasn't made for anonymity. The logical approach to handling this is that exchanges consider coins from those wallets as invalid, creating a secondary class of coins.
gambiting 5y ago
Yes, but then you have a problem of "tainted" bitcoins. So in theory you arrive in a situation where some bitcoins aren't equal others - they can't be spent in a normal way because at some point in the past they went through a tumbler, so payment providers won't touch them "just in case".
- PeterisP 5y ago
  Yes, that's kind of the whole point - from the government or law enforcement perspective, having a class of "tainted" coins would not be a problem but the intended outcome, and if a side-effect of that is a serious disincentive to use tumbling/laundering services (since that would effectively taint/destroy your funds, no matter if they were originally clean), that would be considered as a bonus, not as a flaw.
Y_Y 5y ago
And assuming all tumbled coins were tainted? Perhaps you could, but then I can imagine tumblers paying "innocent" people (out-of-band) to tumble their coins, while charging money launderers to do the same. If you could get a big fraction of all the active coins/wallets to be "tainted" then people are much less likely to refuse to transact with them.
- JumpCrisscross 5y ago
  > can imagine tumblers paying "innocent" people (out-of-band) to tumble their coins, while charging money launderers to do the same Perhaps. But the legal precedent is for laundered money to be tainted per se. The laundering itself taints the cash independent of any preceding criminality.

salawat 5y ago

This is negated the moment someone generates a reasonable double entry accounting visualization. I wouldn't recommend on something that degenerates to a UI/UX or data presentation problem to ensure your own security and ongoing freedom from prosecution, especially when the evidence trail is everywhere and forever for all to see.