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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. Imagi

by 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 natrius 13y ago

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.