4 ms·

Stross is wrong- bitcoin is extremely traceable. There is a public record of all transactions ever.

Tyrannosaurs 13y ago
Genuine question: If that's the case why is it seen as (and indeed seem to be) such a great currency for illegal activity?
- krakensden 13y ago
  Because there's lots of overlap between people interested in Tor and interested in cryptocurrencies. Because they figured no one was watching.
  - Tyrannosaurs 13y ago
    So are you saying that Bitcoin is actually relatively traceable by law enforcement or the tax authorities?
    - VMG 13y ago
      It is traceable in principle, but not yet in practice.
    - zik 13y ago
      Yes, it is traceable. That's why when you buy bitcoin at an exchange the government requires that you prove your identity. Then it's just a matter of following the money through bitcoin's permanent public ledger. It's probably the most traceable currency ever. Even amateurs can follow the money trail.
gnaritas 13y ago
Which can be hidden by mixers.
- sharpneli 13y ago
  The transactions won't get hidden. There will still be a record of you transferring to a mixer and the mixer transferring money to outside. Mixer will just mean that there is no certain way of knowing who's input to the mixer goes to what output. However that can be a bad thing to you, as you can be accused of money laundering especially if you receive money from mixer that also handles something that has been linked to drug money etc. "Now tell me why didn't you use direct transaction but transferred your flower purchase into a mixer address well known for tax evasion/drug trafficking?"
  - gnaritas 13y ago
    Agreed.
  - maaku 13y ago
    No, there doesn't have to be. CoinJoin is a technique for mixing on the block chain that can also be used for payments. If widely deployed, mixes look like regular bitcoin activity.
    - sharpneli 13y ago
      That technique saves you from the bad reputation of the mixer server. However you lose the ability to lose temporal information and the amount of payments made together with yours is probably quite a lot lower than what is achieved with popular mixer server. And it does not save you from bad reputation of your mixing partner. Someone mixes with you to pay drugs to a silk road advertised wallet -> you could get interrogated and you'd have to reveal as much info as you have on the persons you mixed that particular transaction with. Or you mix with someone who has not kept their wallet untainted -> they can get interrogated and thus reveal who you are. Don't get me wrong here. I don't dislike bitcoin. People just tend to give it features that it doesn't have. What bitcoin is: Awesome solution to the byzantine generals problem. It allows parties that do not trust eachother to verify that someone has exactly the amount of coins he claim to has. Basically it solves the digital equivalent of forged money. A bookkeeping service for parties that do not trust eachother. What bitcoin is not: Anonymous in any way. Pseudonymous at maximum. Maybe safe to your spouse using techniques like that. Not a way to evade taxes, nor a way to easily facilitate any illegal fund transfers etc. It might be that way now but only because IRS has not put up an unit to analyze it yet. It is not anonymous against adversary with actual resources.

Genuine question: If that's the case why is it seen as (and indeed seem to be) such a great currency for illegal activity?

krakensden 13y ago
Because there's lots of overlap between people interested in Tor and interested in cryptocurrencies. Because they figured no one was watching.
- Tyrannosaurs 13y ago
  So are you saying that Bitcoin is actually relatively traceable by law enforcement or the tax authorities?
  - VMG 13y ago
    It is traceable in principle, but not yet in practice.
  - zik 13y ago
    Yes, it is traceable. That's why when you buy bitcoin at an exchange the government requires that you prove your identity. Then it's just a matter of following the money through bitcoin's permanent public ledger. It's probably the most traceable currency ever. Even amateurs can follow the money trail.

gnaritas 13y ago

Which can be hidden by mixers.

sharpneli 13y ago
The transactions won't get hidden. There will still be a record of you transferring to a mixer and the mixer transferring money to outside. Mixer will just mean that there is no certain way of knowing who's input to the mixer goes to what output. However that can be a bad thing to you, as you can be accused of money laundering especially if you receive money from mixer that also handles something that has been linked to drug money etc. "Now tell me why didn't you use direct transaction but transferred your flower purchase into a mixer address well known for tax evasion/drug trafficking?"
- gnaritas 13y ago
  Agreed.
- maaku 13y ago
  No, there doesn't have to be. CoinJoin is a technique for mixing on the block chain that can also be used for payments. If widely deployed, mixes look like regular bitcoin activity.
  - sharpneli 13y ago
    That technique saves you from the bad reputation of the mixer server. However you lose the ability to lose temporal information and the amount of payments made together with yours is probably quite a lot lower than what is achieved with popular mixer server. And it does not save you from bad reputation of your mixing partner. Someone mixes with you to pay drugs to a silk road advertised wallet -> you could get interrogated and you'd have to reveal as much info as you have on the persons you mixed that particular transaction with. Or you mix with someone who has not kept their wallet untainted -> they can get interrogated and thus reveal who you are. Don't get me wrong here. I don't dislike bitcoin. People just tend to give it features that it doesn't have. What bitcoin is: Awesome solution to the byzantine generals problem. It allows parties that do not trust eachother to verify that someone has exactly the amount of coins he claim to has. Basically it solves the digital equivalent of forged money. A bookkeeping service for parties that do not trust eachother. What bitcoin is not: Anonymous in any way. Pseudonymous at maximum. Maybe safe to your spouse using techniques like that. Not a way to evade taxes, nor a way to easily facilitate any illegal fund transfers etc. It might be that way now but only because IRS has not put up an unit to analyze it yet. It is not anonymous against adversary with actual resources.