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I know little about Bitcoin (and its community) so please correct me where I'm wrong: If MtGox can publish all stolen Bitcoin, would it make it impossible for

by songgao 13y ago

I know little about Bitcoin (and its community) so please correct me where I'm wrong: If MtGox can publish all stolen Bitcoin, would it make it impossible for whoever with them to use them? Although Bitcoin is not regulated, stealing them still violates laws right? And since everything is kept track by the entire Bitcoin network, whoever uses it can't keep anonymous.

lazyloop 13y ago
There's Bitcoin laundering. https://en.bitcoin.it/wiki/Mixing_service https://en.bitcoin.it/wiki/Mixing_service
- songgao 13y ago
  Interesting. Is it mathematically impossible to trace back to source (and intermediate nodes) or is it just harder?
  - gnerd 13y ago
    Not mathematically impossible just computationally infeasible, that is assuming a good implementation.
  - Groxx 13y ago
    Done correctly, mixing N together means a strict 1/N chance of getting the source correct, and being more certain is impossible. Trivialized example: a friend and I split a single bitcoin each and send half to address A and half to address B, and we each control one address. Who owns A and who owns B? If A is used to buy something, am I the buyer or my friend? Since the private keys are generated offline, the fact that two sources sent to both A and B is all the information that exists. I've "tainted" both addresses, anyone can see that, but that's all. But even when done correctly, odds are you still expose your identity through your use of the coins in the future. So you run through a random number of mixers, and then you behave extremely carefully, since there's some taint to everything and someone could be watching any of a billion addresses for signs of you (shipment to your house, for example). Given enough connections, you can get pretty reasonable probabilities and start forming deeper and more confident paths.
    - shawabawa3 13y ago
      Aren't there mixing services that completely sever the connection to you? i.e. Me and you both want to launder coins, so through this mixing service we essentially swap coins. Now my spends get traced to you and vice versa (obviously this works a lot better with more people involved)
      - pavel_lishin 13y ago
        I don't think that severs the connection to you; you are now connected to the service, and so is your friend, and therefore potentially to each other.
  - deleted 13y ago
    [deleted]
- legulere 13y ago
  To be effective only tiny amounts of the 700k bitcoins would be able to be hidden
lmm 13y ago
Stealing them may or may not violate laws - I'm not aware of an explicit precedent for this kind of "virtual property", but courts tend to look at intent, so if people treat them as coins and you treated what you were doing as stealing them that probably counts. Yes, the community could agree they won't accept the stolen coins. But for most bitcoin people the whole point is to avoid regulation. I mean, the primary use for bitcoin is buying drugs - if you start blacklisting coins that were stolen, why not also blacklist coins that were used to pay for drugs, which is also illegal? The basic cycle of the bitcoin economy is: drug user buys bitcoins for cash from someone who has them (either a drug dealer or one of the early "miners"), user buys drugs from dealer with bitcoins, dealer sells bitcoins for cash. Is the user (who's already breaking the law) going to refuse to buy stolen bitcoins? Maybe, but if they're cheaper I'll bet they'll find a buyer; is every user going to check the blockchain history? Is the dealer, who again is already breaking the law, going to refuse payment in stolen bitcoins. Maybe, but that sets a bad precedent for themselves. Maybe they'll charge a higher price for those bitcoins. But I suspect most of them won't care.

by songgao 13y ago

lazyloop 13y ago

There's Bitcoin laundering. https://en.bitcoin.it/wiki/Mixing_service https://en.bitcoin.it/wiki/Mixing_service

songgao 13y ago
Interesting. Is it mathematically impossible to trace back to source (and intermediate nodes) or is it just harder?
- gnerd 13y ago
  Not mathematically impossible just computationally infeasible, that is assuming a good implementation.
- Groxx 13y ago
  Done correctly, mixing N together means a strict 1/N chance of getting the source correct, and being more certain is impossible. Trivialized example: a friend and I split a single bitcoin each and send half to address A and half to address B, and we each control one address. Who owns A and who owns B? If A is used to buy something, am I the buyer or my friend? Since the private keys are generated offline, the fact that two sources sent to both A and B is all the information that exists. I've "tainted" both addresses, anyone can see that, but that's all. But even when done correctly, odds are you still expose your identity through your use of the coins in the future. So you run through a random number of mixers, and then you behave extremely carefully, since there's some taint to everything and someone could be watching any of a billion addresses for signs of you (shipment to your house, for example). Given enough connections, you can get pretty reasonable probabilities and start forming deeper and more confident paths.
  - shawabawa3 13y ago
    Aren't there mixing services that completely sever the connection to you? i.e. Me and you both want to launder coins, so through this mixing service we essentially swap coins. Now my spends get traced to you and vice versa (obviously this works a lot better with more people involved)
    - pavel_lishin 13y ago
      I don't think that severs the connection to you; you are now connected to the service, and so is your friend, and therefore potentially to each other.
- deleted 13y ago
  [deleted]
legulere 13y ago
To be effective only tiny amounts of the 700k bitcoins would be able to be hidden

lmm 13y ago

Stealing them may or may not violate laws - I'm not aware of an explicit precedent for this kind of "virtual property", but courts tend to look at intent, so if people treat them as coins and you treated what you were doing as stealing them that probably counts. Yes, the community could agree they won't accept the stolen coins. But for most bitcoin people the whole point is to avoid regulation. I mean, the primary use for bitcoin is buying drugs - if you start blacklisting coins that were stolen, why not also blacklist coins that were used to pay for drugs, which is also illegal? The basic cycle of the bitcoin economy is: drug user buys bitcoins for cash from someone who has them (either a drug dealer or one of the early "miners"), user buys drugs from dealer with bitcoins, dealer sells bitcoins for cash. Is the user (who's already breaking the law) going to refuse to buy stolen bitcoins? Maybe, but if they're cheaper I'll bet they'll find a buyer; is every user going to check the blockchain history? Is the dealer, who again is already breaking the law, going to refuse payment in stolen bitcoins. Maybe, but that sets a bad precedent for themselves. Maybe they'll charge a higher price for those bitcoins. But I suspect most of them won't care.