5 ms·

Can tumblers and mixers -- or to other large pools of bitcoin -- actually make bitcoins essentially untraceable? That doesn't make any sense to me if bitcoin i

by throw7 5y ago

Can tumblers and mixers -- or to other large pools of bitcoin -- actually make bitcoins essentially untraceable? That doesn't make any sense to me if bitcoin is truly a trustable public ledger.

bdcravens 5y ago
You can trace transactions in and out to addresses, but with enough inputs and outputs, connecting the same actor becomes a very hard problem.
- coolspot 5y ago
  Actually it’s the opposite. The more transactions you have for statistical analysis - the better your chances of tracing the actor. In the end, after all mixing, you want to land it on some off-ramp to cash. And you want not a dollar, but significant sum.
acdha 5y ago
It's a question of how much effort someone wants to put in and how much information they can gather: you can trace all of the transactions in and out, and you can try to get information the operators or other parties involved. Since the goal of the crooks is to spend that money, simply looking at high volumes going from tumblers to exchanges would make it hard to conceal that much money unless they're willing to sit on it for a long time. Someone laundering a small amount of money probably won't get that much effort but $3.6B is a much harder problem because it's an unusually amount of money to launder and it's enough to get law enforcement involved. It's not inconceivable to image _everyone_ receiving bitcoin traceable back to the tumbler being asked to prove that they weren't involved. That factor limits the total volume going through a tumbler and increases the cost since everyone using it is risking being targeted as an accessory.
- cwkoss 5y ago
  I've liked Bitcoin for a while now, but have always found tumblers scary. Seems like many users are tumbling their personal-use-quantity drug bitcoins for bitcoins from crimes with much more LEO/regulatory oversight - like money laundering (and increasingly ransomware). I wonder how many people have gotten a knock on the door by the Secret Service and found their risk mitigation strategy actually painted a bigger target on their backs.
  - acdha 5y ago
    I think of it as basically the same problem as running a Tor exit node: you're basically taking on the risk of whoever committed the greatest crime using that system, with the knowledge that the more successful you are at making the service work the more likely it is that someone sketchy is going to send traffic your way because it's cheaper / more reliable than the alternatives. Even if you love the concept and want to see it succeed, that's a big deterrent unless you love litigation and are confident that it won't be a SWAT raid.

by throw7 5y ago

Can tumblers and mixers -- or to other large pools of bitcoin -- actually make bitcoins essentially untraceable? That doesn't make any sense to me if bitcoin is truly a trustable public ledger.

bdcravens 5y ago

You can trace transactions in and out to addresses, but with enough inputs and outputs, connecting the same actor becomes a very hard problem.

coolspot 5y ago
Actually it’s the opposite. The more transactions you have for statistical analysis - the better your chances of tracing the actor. In the end, after all mixing, you want to land it on some off-ramp to cash. And you want not a dollar, but significant sum.

acdha 5y ago

It's a question of how much effort someone wants to put in and how much information they can gather: you can trace all of the transactions in and out, and you can try to get information the operators or other parties involved. Since the goal of the crooks is to spend that money, simply looking at high volumes going from tumblers to exchanges would make it hard to conceal that much money unless they're willing to sit on it for a long time. Someone laundering a small amount of money probably won't get that much effort but $3.6B is a much harder problem because it's an unusually amount of money to launder and it's enough to get law enforcement involved. It's not inconceivable to image _everyone_ receiving bitcoin traceable back to the tumbler being asked to prove that they weren't involved. That factor limits the total volume going through a tumbler and increases the cost since everyone using it is risking being targeted as an accessory.

cwkoss 5y ago
I've liked Bitcoin for a while now, but have always found tumblers scary. Seems like many users are tumbling their personal-use-quantity drug bitcoins for bitcoins from crimes with much more LEO/regulatory oversight - like money laundering (and increasingly ransomware). I wonder how many people have gotten a knock on the door by the Secret Service and found their risk mitigation strategy actually painted a bigger target on their backs.
- acdha 5y ago
  I think of it as basically the same problem as running a Tor exit node: you're basically taking on the risk of whoever committed the greatest crime using that system, with the knowledge that the more successful you are at making the service work the more likely it is that someone sketchy is going to send traffic your way because it's cheaper / more reliable than the alternatives. Even if you love the concept and want to see it succeed, that's a big deterrent unless you love litigation and are confident that it won't be a SWAT raid.