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Bitcoins are the most traceable currency ever, this is true. However the value behind bitcoins is the most untraceable thing ever. If you send 10 BTC from ADE

by Guvante 13y ago

Bitcoins are the most traceable currency ever, this is true. However the value behind bitcoins is the most untraceable thing ever. If you send 10 BTC from ADE to 143 and I send 10 BTC from 5FC to 057 you can probably trace that we both still have 10 BTC. Now take advantage of how much data you can shove into a single 10 minute transaction and do 100 transfers with a group of 10 other people turning a total of 10 original addresses into 20, and it becomes tricky to trace. Make that 100 new addresses and it becomes nearly impossible with current technology. Even if you could trace it, all people have to do is not worry about getting all their money back, say by donating 0.1 BTC to a central coordinator overall, and it becomes really hard to figure out that someone put in 99 BTC and got out 98.9 BTC.

natrius 13y ago
You don't have to trace all the money. You can mark all wallets that receive money from mixers as suspect, and disincentivize accepting suspect bitcoins. Imagine someone's wallet gets compromised, and all the funds are transferred elsewhere. The theft is reported to the police. Some arbiter of trust will indicate that all wallets that have received funds that flowed from the stolen wallet after the theft are suspect, and communicate to participating merchants and consumers that accepting funds from suspect wallets will put them on a blacklist. People will stop accepting funds from tainted wallets, and the incentive for future theft will go down. Bitcoin is not a permanent haven for crime. It is more traceable than any widely accepted currency, and that traceability will be used to deter financial crimes.
- Guvante 13y ago
  Too easy to game. I just send you 0.001 bitcoins and you are screwed. Add a limit and I will just go under it. Ultimately though there is an even more effective method. New coins are always clean, trading pristine coins for tainted coins at a discount is damned effective, even if it requires a lot of computing power to pull off. The trick is you have infinite wallets, so avoiding any way of figuring out which is which is not difficult, especially since distributing pristine coins is standard practice.
  - hollerith 13y ago
    >Too easy to game. I just send you 0.001 bitcoins and you are screwed You seem to assume that a regulator must mark all the BTC in a wallet as tainted just because 0.001 of tainted BTC was sent to it, which seems to me a false assumption.
    - Guvante 13y ago
      It is so easy to send transactions that you have a problem, do you ignore transactions under a certain amount (leading to a potential group going under the limit for mixing) or do you introduce these problems. If you don't mind false positives it will be easy enough, but I don't know how you would develop a system that would work. Well I would say someone brought forward the concept of the US or other entity marking bitcoins, that could definitely work, but I don't know if that would solve the problem of laundering non-marked bitcoins.

by Guvante 13y ago

natrius 13y ago

You don't have to trace all the money. You can mark all wallets that receive money from mixers as suspect, and disincentivize accepting suspect bitcoins. Imagine someone's wallet gets compromised, and all the funds are transferred elsewhere. The theft is reported to the police. Some arbiter of trust will indicate that all wallets that have received funds that flowed from the stolen wallet after the theft are suspect, and communicate to participating merchants and consumers that accepting funds from suspect wallets will put them on a blacklist. People will stop accepting funds from tainted wallets, and the incentive for future theft will go down. Bitcoin is not a permanent haven for crime. It is more traceable than any widely accepted currency, and that traceability will be used to deter financial crimes.

Guvante 13y ago
Too easy to game. I just send you 0.001 bitcoins and you are screwed. Add a limit and I will just go under it. Ultimately though there is an even more effective method. New coins are always clean, trading pristine coins for tainted coins at a discount is damned effective, even if it requires a lot of computing power to pull off. The trick is you have infinite wallets, so avoiding any way of figuring out which is which is not difficult, especially since distributing pristine coins is standard practice.
- hollerith 13y ago
  >Too easy to game. I just send you 0.001 bitcoins and you are screwed You seem to assume that a regulator must mark all the BTC in a wallet as tainted just because 0.001 of tainted BTC was sent to it, which seems to me a false assumption.
  - Guvante 13y ago
    It is so easy to send transactions that you have a problem, do you ignore transactions under a certain amount (leading to a potential group going under the limit for mixing) or do you introduce these problems. If you don't mind false positives it will be easy enough, but I don't know how you would develop a system that would work. Well I would say someone brought forward the concept of the US or other entity marking bitcoins, that could definitely work, but I don't know if that would solve the problem of laundering non-marked bitcoins.