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Mixers exchange coins without using the blockchain so you can't trace them. As a simple example of how this is possible: imagine you and I both have 0.1 BTC. W

Mixers exchange coins without using the blockchain so you can't trace them. As a simple example of how this is possible: imagine you and I both have 0.1 BTC. We could simply swap wallets which would exchange tokens but that wouldn't be represented on the blockchain at all.

bradleyjg 3y ago
Whoever ends up with that other coin is screwed. Because it’s traceable back to the theft and so subject to forfeiture even if he was a bona fide purchaser for value, which he isn’t in this case.
- _cenw 3y ago
  Nobody ends up with a "the other coin", it ends up as a transaction with many inputs and many outputs on the chain, but none are 1:1 mapped. The sum of inputs and outputs just has to match. So given sufficient inputs and iterations, and keeping in mind that you can split up outputs into as many wallets as you want, it becomes hard to differentiate. You can of course treat it all as tained, but you'll have a lot of small fish and privacy users in the middle to track down as well.
stevensanderson 3y ago
> We could simply swap wallets How would you prove to me that you don’t still have the key for your old wallet?
- littlecranky67 3y ago
  No need to swap wallets. Create a single 2of2 multisig wallet where each party holds a key. Send your funds two to different addresses of that wallet. Then you just sign a transaction transferring from both addresses to designated other ones (outside the multisig wallet). Since a "single" signed transaction in bitcoin can have multiple input and output addresses, each party can review the full transaction for correctness (50/50 split to right addresses) before signing. The only challenge is "filling" the wallet, but doable: one party starts sending small amount to the multisig wallet, then the other party evens out. Increase amount by the amount the other party paid in total, until the preagreed amount is in.

bradleyjg 3y ago

Whoever ends up with that other coin is screwed. Because it’s traceable back to the theft and so subject to forfeiture even if he was a bona fide purchaser for value, which he isn’t in this case.

_cenw 3y ago
Nobody ends up with a "the other coin", it ends up as a transaction with many inputs and many outputs on the chain, but none are 1:1 mapped. The sum of inputs and outputs just has to match. So given sufficient inputs and iterations, and keeping in mind that you can split up outputs into as many wallets as you want, it becomes hard to differentiate. You can of course treat it all as tained, but you'll have a lot of small fish and privacy users in the middle to track down as well.

stevensanderson 3y ago

> We could simply swap wallets How would you prove to me that you don’t still have the key for your old wallet?

littlecranky67 3y ago
No need to swap wallets. Create a single 2of2 multisig wallet where each party holds a key. Send your funds two to different addresses of that wallet. Then you just sign a transaction transferring from both addresses to designated other ones (outside the multisig wallet). Since a "single" signed transaction in bitcoin can have multiple input and output addresses, each party can review the full transaction for correctness (50/50 split to right addresses) before signing. The only challenge is "filling" the wallet, but doable: one party starts sending small amount to the multisig wallet, then the other party evens out. Increase amount by the amount the other party paid in total, until the preagreed amount is in.