If you look at the Anonymity page on this wiki, it basically states that being able to generate as many addresses as you want is not much protection. The coins

If you look at the Anonymity page on this wiki, it basically states that being able to generate as many addresses as you want is not much protection. The coins still need to be transfered between your wallets, and that means people can track whether a wallet has received any funds from an address that has been reported as having stolen coins (after the theft was reported, of course) In fact, I think it is down right easy to do. https://en.bitcoin.it/wiki/Anonymity https://en.bitcoin.it/wiki/Anonymity I assume that "tumbler" is basically as good as any eWallet service with a bit of obfuscation on the transactions in and out. That is fine, if you trust someone enough to take you coins, mix them with a bunch on other peoples money, and then send them back to when you need them, you can remain pretty anonymous. This is because that person/organization can do virtual funds transfers off of the bitcoin block chain record. However, in the scenario where address are marked as dirty or clean, that eWallet supplier is going to find him/herself in the possession of many dirty bitcoins and will have to burn them. In the Silk Road example, if people use stolen bitcoins on that network, all bitcoins that get sent in are tainted by that (to some percentage) and the value of the entire working volume of Silk Road bitcoins in the "tumbler" laundering machine is lessened. This means that either Silk Road passes that loss of value on to the sellers, possibly pissing them off, or they throw those bitcoins away (or send them back) and tell the person paying with them to pay again from a clean address because that money was reported as stolen.