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I don't understand the practical need for Bitcoin mixers vs. simply mixing via existing exchanges. If Bitcoin goes into an exchange and Litecoin leaves a week l

I don't understand the practical need for Bitcoin mixers vs. simply mixing via existing exchanges. If Bitcoin goes into an exchange and Litecoin leaves a week later, nothing in either the Bitcoin or Litecoin blockchain would link the transactions together, especially if the funds are chopped up and sent to multiple wallets so the totals are never comparable. If the worry is that the exchange itself might be subpoenaed, one can just hop through many exchanges in many different countries. It's only necessary that one exchange be opaque for the mix to be secure.

MichaelGG 13y ago
If you're moving a unique sum of money, then it's not too hard to see X BTC in, Y LTC out, L YTC in X BTC out. Additionally, you must trust the exchanges. Leaving your coins in a 3rd party for a week means at any point during that weak, a hack or other problem might mean you lose all your money. Needing to fully trust a third party is a failure. On top of that, as you note, you'd need to use multiple exchanges, with significant time delays. This is not user-friendly, and will lead to people making mistakes. Not to mention, it's hard to verify if a given exchange is really operating under certain law, and not compromised. I'd be surprised if various LEAs haven't or aren't considering opening exchanges pretending to be safe havens.
- goodside 13y ago
  "If you're moving a unique sum of money, then it's not too hard to see X BTC in, Y LTC out, L YTC in X BTC out." Really? If I were to deposit BTC into BTC-e, send you the blockchain.info link for the deposit, and then in the next hour withdraw it to 5 separate wallets in any of the half-dozen altcoins they trade, how would you identify even one of those altcoin transactions as mine?
  - MichaelGG 13y ago
    It'd depend on the volumes involved. I don't think it's out of the question to look for any grouping of outbound transfers around the amount in question and follow them as possibilities. This assumes you eventually want to do something with the mass of money. If you've got 10000 BTC and only want to cash out 100, yeah I suppose that's nearly untraceable.
Vitaly 13y ago
If you use an exchange, the exchange can be subpoenaed for your identity.
- contingencies 13y ago
  Exchanges are potentially (depending upon host jurisdiction) not required to know who you are if you are only dealing in cryptocurrency.

MichaelGG 13y ago

If you're moving a unique sum of money, then it's not too hard to see X BTC in, Y LTC out, L YTC in X BTC out. Additionally, you must trust the exchanges. Leaving your coins in a 3rd party for a week means at any point during that weak, a hack or other problem might mean you lose all your money. Needing to fully trust a third party is a failure. On top of that, as you note, you'd need to use multiple exchanges, with significant time delays. This is not user-friendly, and will lead to people making mistakes. Not to mention, it's hard to verify if a given exchange is really operating under certain law, and not compromised. I'd be surprised if various LEAs haven't or aren't considering opening exchanges pretending to be safe havens.

goodside 13y ago
"If you're moving a unique sum of money, then it's not too hard to see X BTC in, Y LTC out, L YTC in X BTC out." Really? If I were to deposit BTC into BTC-e, send you the blockchain.info link for the deposit, and then in the next hour withdraw it to 5 separate wallets in any of the half-dozen altcoins they trade, how would you identify even one of those altcoin transactions as mine?
- MichaelGG 13y ago
  It'd depend on the volumes involved. I don't think it's out of the question to look for any grouping of outbound transfers around the amount in question and follow them as possibilities. This assumes you eventually want to do something with the mass of money. If you've got 10000 BTC and only want to cash out 100, yeah I suppose that's nearly untraceable.

Vitaly 13y ago

If you use an exchange, the exchange can be subpoenaed for your identity.

contingencies 13y ago
Exchanges are potentially (depending upon host jurisdiction) not required to know who you are if you are only dealing in cryptocurrency.