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I don't know why the author dismisses Bitcoin as an anonymous payment mechanism. He says he doesn't "trust the blockchain to provide anonymity" but doesn't elab

I don't know why the author dismisses Bitcoin as an anonymous payment mechanism. He says he doesn't "trust the blockchain to provide anonymity" but doesn't elaborate as to why.

mindslight 14y ago
Perhaps because it's just a big list of who gave what to whom? sigh.
- Karunamon 14y ago
  All that the blockchain does is say that code UVW signed code XYZ. Tracing that to individual transactions is a lot tougher, especially considering that one person can have multiple randomly generated bitcoin wallets. Who's to say that when 123 signs 456 that he didn't pay for some service somewhere, as opposed to just sending coins to another wallet under his control? There's no "who". There's a cryptographic hash that may or may not be under the control of a specific person at any given time. If you're smart, the only link an attacker can make is that you used your traceable money to purchase BTC sent to this wallet. Once that BTC leaves that wallet, the chain is broken, because you have no way of tying an identity to that second wallet.
  - mindslight 14y ago
    Tracing mass flows, the concept of guilt by association, and general investigation say otherwise. Please take a look at the properties provided by a system based on http://en.wikipedia.org/wiki/Blind_signature http://en.wikipedia.org/wiki/Blind_signature for a perspective on the guarantees that Bitcoin lacks. (Unfortunately, such schemes require a Bank and are thus not practical for adoption. still it's instructive to see what other properties are actually possible rather than devolving into the technicalities of performing various degrees of untraceable btc transaction in the immediate future) It's really a matter of time until all exchanges routinely report their customers and a list is made of all the major above-board merchants. For the sake of the naive users, let's hope this is done openly rather than covertly. FINCEN has decades of experience tracing pseudonymous transactions.
    - weavejester 14y ago
      > Tracing mass flows, the concept of guilt by association, and general investigation say otherwise. Those arguments could also be applied to Tor. In fact, I'd contend that bitcoin is easier to anonymise than a TCP connection, as you don't need to obscure the transfer in real time.
judofyr 14y ago
> I don't know why the author dismisses Bitcoin as an anonymous payment mechanism. As he said: "No bitcoin service accepts any anonymous funding source; most only accept bank transfers." The problem here isn't bitcoin per se, but the initial trading of bitcoin for USD. Every bitcoin trade can be traced through the blockchain. So if he does use his true identity to buy bitcoins, they will be able find the seller. And you never know how easily the seller will reveal your identity…
- crazygringo 14y ago
  Wow, I was under the mistaken impression that Bitcoin was anonymous, but researching it more, it's not really. Does anyone know if this was a deliberate political choice in designing Bitcoin (so it wouldn't solely turn into a network for money laundering), or if there just wasn't any way to make the cryptography work for truly anonymous transactions that could still be verified?
  - mindslight 14y ago
    Expediency. The novel part of bitcoin is the usage of the proof-of-work to also perform probabilistic byzantine agreement, and Satoshi didn't wait to invent two new things. I read the paper when it first came out, saw that it was based on signature chaining, and dismissed it as uninteresting. Didn't forsee the social echo chamber of everyone telling each other it was anonymous due to the present lack of identification. Oh well.
  - jnbiche 14y ago
    1. I don't think it was a deliberate choice in the design of Bitcoin. I think Satoshi was hoping for full anonymity. That said, this ability to track Bitcoin payments to the payee has been leveraged by some of the present Bitcoin principals to convince governments that Bitcoin is kosher. (Satoshi is no longer involved in the development of Bitcoin) 2. That said, it is possible to use bitcoin anonymously, you just have to be careful and use some of the techniques described above: buying btc anonymously with cash, buying bitcoins via regular channels and "mixing" them via some online btc mixing sites, and/or generating your own btc but taking care to keep the client on a trusted vpn (like Mullvad, for example). Also, it's interesting to note that -- as far as I'm aware -- none of the perpetrators of the large bitcoin thefts have been tracked down, despite the best efforts of many smart people. And these are people that can be clearly tracked to very specific bitcoins. This may have changed in recent months, but it's certainly not a trivial task to track down even someone who has not used the techniques I describe above. It's certainly a hell of a whole lot more anonymous than Paypal or credit cards.

I don't know why the author dismisses Bitcoin as an anonymous payment mechanism. He says he doesn't "trust the blockchain to provide anonymity" but doesn't elaborate as to why.

mindslight 14y ago

Perhaps because it's just a big list of who gave what to whom? sigh.

Karunamon 14y ago
All that the blockchain does is say that code UVW signed code XYZ. Tracing that to individual transactions is a lot tougher, especially considering that one person can have multiple randomly generated bitcoin wallets. Who's to say that when 123 signs 456 that he didn't pay for some service somewhere, as opposed to just sending coins to another wallet under his control? There's no "who". There's a cryptographic hash that may or may not be under the control of a specific person at any given time. If you're smart, the only link an attacker can make is that you used your traceable money to purchase BTC sent to this wallet. Once that BTC leaves that wallet, the chain is broken, because you have no way of tying an identity to that second wallet.
- mindslight 14y ago
  Tracing mass flows, the concept of guilt by association, and general investigation say otherwise. Please take a look at the properties provided by a system based on http://en.wikipedia.org/wiki/Blind_signature http://en.wikipedia.org/wiki/Blind_signature for a perspective on the guarantees that Bitcoin lacks. (Unfortunately, such schemes require a Bank and are thus not practical for adoption. still it's instructive to see what other properties are actually possible rather than devolving into the technicalities of performing various degrees of untraceable btc transaction in the immediate future) It's really a matter of time until all exchanges routinely report their customers and a list is made of all the major above-board merchants. For the sake of the naive users, let's hope this is done openly rather than covertly. FINCEN has decades of experience tracing pseudonymous transactions.
  - weavejester 14y ago
    > Tracing mass flows, the concept of guilt by association, and general investigation say otherwise. Those arguments could also be applied to Tor. In fact, I'd contend that bitcoin is easier to anonymise than a TCP connection, as you don't need to obscure the transfer in real time.

judofyr 14y ago

> I don't know why the author dismisses Bitcoin as an anonymous payment mechanism. As he said: "No bitcoin service accepts any anonymous funding source; most only accept bank transfers." The problem here isn't bitcoin per se, but the initial trading of bitcoin for USD. Every bitcoin trade can be traced through the blockchain. So if he does use his true identity to buy bitcoins, they will be able find the seller. And you never know how easily the seller will reveal your identity…

crazygringo 14y ago
Wow, I was under the mistaken impression that Bitcoin was anonymous, but researching it more, it's not really. Does anyone know if this was a deliberate political choice in designing Bitcoin (so it wouldn't solely turn into a network for money laundering), or if there just wasn't any way to make the cryptography work for truly anonymous transactions that could still be verified?
- mindslight 14y ago
  Expediency. The novel part of bitcoin is the usage of the proof-of-work to also perform probabilistic byzantine agreement, and Satoshi didn't wait to invent two new things. I read the paper when it first came out, saw that it was based on signature chaining, and dismissed it as uninteresting. Didn't forsee the social echo chamber of everyone telling each other it was anonymous due to the present lack of identification. Oh well.
- jnbiche 14y ago
  1. I don't think it was a deliberate choice in the design of Bitcoin. I think Satoshi was hoping for full anonymity. That said, this ability to track Bitcoin payments to the payee has been leveraged by some of the present Bitcoin principals to convince governments that Bitcoin is kosher. (Satoshi is no longer involved in the development of Bitcoin) 2. That said, it is possible to use bitcoin anonymously, you just have to be careful and use some of the techniques described above: buying btc anonymously with cash, buying bitcoins via regular channels and "mixing" them via some online btc mixing sites, and/or generating your own btc but taking care to keep the client on a trusted vpn (like Mullvad, for example). Also, it's interesting to note that -- as far as I'm aware -- none of the perpetrators of the large bitcoin thefts have been tracked down, despite the best efforts of many smart people. And these are people that can be clearly tracked to very specific bitcoins. This may have changed in recent months, but it's certainly not a trivial task to track down even someone who has not used the techniques I describe above. It's certainly a hell of a whole lot more anonymous than Paypal or credit cards.