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It's way easier to correlate activity to a particular person with a blockchain than with traditional banking. There are no administrative hoops to getting acce

It's way easier to correlate activity to a particular person with a blockchain than with traditional banking. There are no administrative hoops to getting access to transaction data.

rtkwe 5y ago
That assumes it's gone through some deanonymizing transaction like with someone who does know your customer compliance. Tumblers still work right?
- acdha 5y ago
  Maybe: even assuming that the one you use isn’t run by the FBI, compromised, or sloppy with their security, it’s still easy to block transactions which trace back to one and that both lowers the value of those coins and increases the risk of using them. Some people will say they aren’t doing anything big enough to warrant attention but that’s forgetting that everyone using a tumbler is paying extra to help anonymous strangers launder money. If anyone involved attracts attention it’ll bring scrutiny to everyone else, and potentially the need to prove that you were “just” committing a small-scale crime and didn’t know that most of the other coins being tumbled belonged to a cartel.
- dvt 5y ago
  > Tumblers still work right? Anything you tumble, you can (provably) de-tumble. It's just expensive and time-consuming (re-building the blockchain state, yadda yadda). Crypto banking is less anonymous than actual banking, especially if you actually want to pull your money into fiat and need to go through an exchange.
  - teh_infallible 5y ago
    Bitcoin Cash has CashFusion, which does not rely on a central server, and since transactions are less than a cent, you can shuffle your coins as much as you want. https://cashfusion.org/ https://cashfusion.org/
    - 3np 5y ago
      Do you know how/if CF differs from JoinMarket (both are two-sided CoinJoin implementations, on two different chains) One-sided JM for BTC include Wasabi and Samourai Whirlpool. Though Samourai are a bit sketch IMO.
    - tylersmith 5y ago
      Its anonymity set is basically non-existant, so no real amount of funds can be obfuscated with CashFusion.
      - 3np 5y ago
        I'd love to see an analysis of the real-world numbers, though I suspect you may be right. Note also it's a function of time (ie if you run the maker side yourself you will participate in others' joins and slowly work up your anonymity set). Over several weeks/months it may be viable to obfuscate even significant amounts.
  - gruez 5y ago
    >you can (provably) de-tumble not really? If you have a transaction that has five equally sized inputs A_{1...5} and five equally sized outputs B_{1...5}, then the max extent you can "provably" de-tumble B_1 is saying "there's a 20% chance that it came from A_1, 20% chance it came from A_2, ..."
    - dvt 5y ago
      > there's a 20% chance that it came from A_1, 20% chance it came from A_2, ... You can't do this[1], as the blockchain does its best to be perfectly deterministic. Best you can do is get an oracle to get you a random seed (which you'll see publicly in the oracle token), so you'll know exactly "what went where." [1] https://blog.chain.link/random-number-generation-solidity/ https://blog.chain.link/random-number-generation-solidity/
      - drdeca 5y ago
        Is there actually a “which one it came from”? Doesn’t it just need to require that the sum of the inputs is equal to the sum of the outputs?
      - 3np 5y ago
        Explain to me why there would need to be a smart contract with an unpredictable source of randomness for this to work. Coinjoins are running well on Bitcoin, mind you. The transaction chains are generally constructed off-chain. For Ethereum you can do fancier things with zk constructs, like Aztec and Tornado Cash.
  - 3np 5y ago
    > Anything you tumble, you can (provably) de-tumble. Source? Enough CoinJoins (Wasabi+Joinmarket) and I don’t think so. Note CJ work a bit different than the oldschool custodial tumblers. Combining CJs with LN (reverse) submarine swap for another layer. With large enough anyonymity sets you should have plausible deniability. This is also a bit time-consuming, more so the larger the amount; there’s no way to do a complete end-to-end transaction of billions of dollars untracably in mere hours without standing out I think. But if you have days/weeks to break the link I think it’s def doable and done. Obviously make one single mistake and you’re out, but that’s in the nature of these things. If I’m wrong I’d very much appreciate something substantial.
    - dmitriy_ko 5y ago
      Right, and it doesn't even require actual tumblers. Any service where you can deposit and then withdraw bitcoin can be used as a tumbler: gambling sites, exchanges, bitcoin marketplaces etc. Each time this is done the link is broken, and to de-tumble you need transaction history from each of those services. It's like if you want to deanonymize someone who connects to Internet though 10 VPNs: you need logs for ALL 10 VPNs to deanonymize the user. Criminals can also exchange bitcoin to Monero through anonymous exchanges, let it sit for a while and then exchange back over time.
  - godelski 5y ago
    I'm under the impression that this isn't true if the currency is converted to a privacy coin first and then tumbled. Though of course if not done properly then the chain's state can be determined. Though I'm sure this is even more time consuming and expensive to determine.
- omginternets 5y ago
  >Tumblers still work right? I don't really know, but putting myself in a criminal's shoes, I don't like the idea that my transactions stay in plain view forever. It makes statistical attacks very, very easy. It also makes me vulnerable as-of-yet-undiscovered statistical attacks. BitCoin is arguably the worst thing for organized crime.
  - eurasiantiger 5y ago
    Tell that to the guys that have been launching coin/token scams to the tune of hundreds of millions of dollars and are now buying out traditional companies with their flash cash. We will soon be living in a world where crime is the norm.
    - omginternets 5y ago
      Most of those criminals live in jurisdictions that are either unwilling or unable to prosecute them.
- anonymoushn 5y ago
  In current_year people use cryptographically secure tumbler-like services like Tornado Cash. Everyone will just assume you're a criminal if your funds come from Tornado Cash and you don't prove the origin before then though.
  - rank0 5y ago
    Serious question: Why do you believe tornado to be secure? The project is self described as experimental software.
    - anonymoushn 5y ago
      this is afaik no longer true as of over a year ago
      - rank0 5y ago
        From the main page of the app: “ Tornado.cash was audited. However, it is still an experimental software. Please use at your own risk.”
godelski 5y ago
This is exactly the potential danger of countries creating their own digital currency. If they aren't privacy coins then said government has a ledger of every single transaction that its citizens have made. And in that case the gov will know what IDs correspond to which names. Of course if the country adopts a privacy coin this would in turn be a great win for privacy. Of course there's still the danger of if we can ensure that privacy and ensure that it stays that way. So this is something many need to consider during discussions about the FedCoin and Digital Yuan. The "crypto" in "cryptocurrency" isn't necessarily the same "crypto" as we understand in privacy. E.g. Bank transactions are cryptographically secure, but not private.

It's way easier to correlate activity to a particular person with a blockchain than with traditional banking. There are no administrative hoops to getting access to transaction data.

rtkwe 5y ago

That assumes it's gone through some deanonymizing transaction like with someone who does know your customer compliance. Tumblers still work right?

acdha 5y ago
Maybe: even assuming that the one you use isn’t run by the FBI, compromised, or sloppy with their security, it’s still easy to block transactions which trace back to one and that both lowers the value of those coins and increases the risk of using them. Some people will say they aren’t doing anything big enough to warrant attention but that’s forgetting that everyone using a tumbler is paying extra to help anonymous strangers launder money. If anyone involved attracts attention it’ll bring scrutiny to everyone else, and potentially the need to prove that you were “just” committing a small-scale crime and didn’t know that most of the other coins being tumbled belonged to a cartel.
dvt 5y ago
> Tumblers still work right? Anything you tumble, you can (provably) de-tumble. It's just expensive and time-consuming (re-building the blockchain state, yadda yadda). Crypto banking is less anonymous than actual banking, especially if you actually want to pull your money into fiat and need to go through an exchange.
- teh_infallible 5y ago
  Bitcoin Cash has CashFusion, which does not rely on a central server, and since transactions are less than a cent, you can shuffle your coins as much as you want. https://cashfusion.org/ https://cashfusion.org/
  - 3np 5y ago
    Do you know how/if CF differs from JoinMarket (both are two-sided CoinJoin implementations, on two different chains) One-sided JM for BTC include Wasabi and Samourai Whirlpool. Though Samourai are a bit sketch IMO.
  - tylersmith 5y ago
    Its anonymity set is basically non-existant, so no real amount of funds can be obfuscated with CashFusion.
    - 3np 5y ago
      I'd love to see an analysis of the real-world numbers, though I suspect you may be right. Note also it's a function of time (ie if you run the maker side yourself you will participate in others' joins and slowly work up your anonymity set). Over several weeks/months it may be viable to obfuscate even significant amounts.
- gruez 5y ago
  >you can (provably) de-tumble not really? If you have a transaction that has five equally sized inputs A_{1...5} and five equally sized outputs B_{1...5}, then the max extent you can "provably" de-tumble B_1 is saying "there's a 20% chance that it came from A_1, 20% chance it came from A_2, ..."
  - dvt 5y ago
    > there's a 20% chance that it came from A_1, 20% chance it came from A_2, ... You can't do this[1], as the blockchain does its best to be perfectly deterministic. Best you can do is get an oracle to get you a random seed (which you'll see publicly in the oracle token), so you'll know exactly "what went where." [1] https://blog.chain.link/random-number-generation-solidity/ https://blog.chain.link/random-number-generation-solidity/
    - drdeca 5y ago
      Is there actually a “which one it came from”? Doesn’t it just need to require that the sum of the inputs is equal to the sum of the outputs?
    - 3np 5y ago
      Explain to me why there would need to be a smart contract with an unpredictable source of randomness for this to work. Coinjoins are running well on Bitcoin, mind you. The transaction chains are generally constructed off-chain. For Ethereum you can do fancier things with zk constructs, like Aztec and Tornado Cash.
- 3np 5y ago
  > Anything you tumble, you can (provably) de-tumble. Source? Enough CoinJoins (Wasabi+Joinmarket) and I don’t think so. Note CJ work a bit different than the oldschool custodial tumblers. Combining CJs with LN (reverse) submarine swap for another layer. With large enough anyonymity sets you should have plausible deniability. This is also a bit time-consuming, more so the larger the amount; there’s no way to do a complete end-to-end transaction of billions of dollars untracably in mere hours without standing out I think. But if you have days/weeks to break the link I think it’s def doable and done. Obviously make one single mistake and you’re out, but that’s in the nature of these things. If I’m wrong I’d very much appreciate something substantial.
  - dmitriy_ko 5y ago
    Right, and it doesn't even require actual tumblers. Any service where you can deposit and then withdraw bitcoin can be used as a tumbler: gambling sites, exchanges, bitcoin marketplaces etc. Each time this is done the link is broken, and to de-tumble you need transaction history from each of those services. It's like if you want to deanonymize someone who connects to Internet though 10 VPNs: you need logs for ALL 10 VPNs to deanonymize the user. Criminals can also exchange bitcoin to Monero through anonymous exchanges, let it sit for a while and then exchange back over time.
- godelski 5y ago
  I'm under the impression that this isn't true if the currency is converted to a privacy coin first and then tumbled. Though of course if not done properly then the chain's state can be determined. Though I'm sure this is even more time consuming and expensive to determine.
omginternets 5y ago
>Tumblers still work right? I don't really know, but putting myself in a criminal's shoes, I don't like the idea that my transactions stay in plain view forever. It makes statistical attacks very, very easy. It also makes me vulnerable as-of-yet-undiscovered statistical attacks. BitCoin is arguably the worst thing for organized crime.
- eurasiantiger 5y ago
  Tell that to the guys that have been launching coin/token scams to the tune of hundreds of millions of dollars and are now buying out traditional companies with their flash cash. We will soon be living in a world where crime is the norm.
  - omginternets 5y ago
    Most of those criminals live in jurisdictions that are either unwilling or unable to prosecute them.
anonymoushn 5y ago
In current_year people use cryptographically secure tumbler-like services like Tornado Cash. Everyone will just assume you're a criminal if your funds come from Tornado Cash and you don't prove the origin before then though.
- rank0 5y ago
  Serious question: Why do you believe tornado to be secure? The project is self described as experimental software.
  - anonymoushn 5y ago
    this is afaik no longer true as of over a year ago
    - rank0 5y ago
      From the main page of the app: “ Tornado.cash was audited. However, it is still an experimental software. Please use at your own risk.”

godelski 5y ago

This is exactly the potential danger of countries creating their own digital currency. If they aren't privacy coins then said government has a ledger of every single transaction that its citizens have made. And in that case the gov will know what IDs correspond to which names. Of course if the country adopts a privacy coin this would in turn be a great win for privacy. Of course there's still the danger of if we can ensure that privacy and ensure that it stays that way. So this is something many need to consider during discussions about the FedCoin and Digital Yuan. The "crypto" in "cryptocurrency" isn't necessarily the same "crypto" as we understand in privacy. E.g. Bank transactions are cryptographically secure, but not private.