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How traceable are bitcoins? Would it be possible to track when someone tried to offload the stolen bitcoins on one of the major exchanges by tracing back to thi

by sorenbs 13y ago

How traceable are bitcoins? Would it be possible to track when someone tried to offload the stolen bitcoins on one of the major exchanges by tracing back to this address or some Gox logs? Given the value of the stolen coins are in the range of 0.5B USD it's not unreasonable to suspect that some government capacity would investigate this. If the stolen coins can indeed be detected - how would they go about extracting the value? Seems like a large scale, risky money laundry effort would be needed.

icebraining 13y ago
You can trace all transactions forever, they're all public in the Bitcoin ledger (blockchain). But since Bitcoins are fungible, if you transfer them to an address that holds BTC from many people, you can "mix" them and make it harder to tell to where did your amount go: https://en.bitcoin.it/wiki/Mixing_service https://en.bitcoin.it/wiki/Mixing_service
- obiterdictum 13y ago
  You can also use alt-coin exchanges, e.g. BTC->LTC->BTC, or even multiple exchanges (one to buy, one to sell) to obscure the trail even more.
- kordless 13y ago
  Keep in mind older transactions are pruned from the tree on most nodes. While you may see where a Bitcoin originated, not all intermediate addresses will be shown forever in some version of the Blockchain. That's not to say that someone somewhere doesn't have the full blockchain, so you should keep in mind that it depends on what blockchain you are viewing at the time of investigation.
  - stcredzero 13y ago
    If I were the NSA, I'd be keeping track of the full blockchain.
    - kordless 13y ago
      Based on current observations, I would assume they are and have for some time.
  - makomk 13y ago
    That's not exactly true. Older transactions aren't indexed by most nodes, so it's a lot of work to retrieve them, but almost all nodes still have a full copy of the entire transaction history.
rtkwe 13y ago
You can't trace individual coins, but you can trace amounts. Bitcoin is made of nothing but the blockchain which is the whole ledger of which wallet owns how many BTC.
smtddr 13y ago
You cannot[1] track thieves through the blockchain like this. If you're going to catch any alleged MtGox thieves, they need to make some other mistake outside of bitcoin-world. Like a leaked email, or telling a friend who then goes leak it, etc. e.g. SilkRoad's Dread Pirate Roberts got caught because of his errors outside of bitcoin's blockchain. 1. https://news.ycombinator.com/item?id=7235113 https://news.ycombinator.com/item?id=7235113
- maxerickson 13y ago
  Your argument would benefit from precision; it's exactly 'through the blockchain' that you can track thieves. The issue you are bringing up is that it is straightforward to move value off the blockchain.
  - smtddr 13y ago
    I stand corrected. :)

by sorenbs 13y ago

icebraining 13y ago

You can trace all transactions forever, they're all public in the Bitcoin ledger (blockchain). But since Bitcoins are fungible, if you transfer them to an address that holds BTC from many people, you can "mix" them and make it harder to tell to where did your amount go: https://en.bitcoin.it/wiki/Mixing_service https://en.bitcoin.it/wiki/Mixing_service

obiterdictum 13y ago
You can also use alt-coin exchanges, e.g. BTC->LTC->BTC, or even multiple exchanges (one to buy, one to sell) to obscure the trail even more.
kordless 13y ago
Keep in mind older transactions are pruned from the tree on most nodes. While you may see where a Bitcoin originated, not all intermediate addresses will be shown forever in some version of the Blockchain. That's not to say that someone somewhere doesn't have the full blockchain, so you should keep in mind that it depends on what blockchain you are viewing at the time of investigation.
- stcredzero 13y ago
  If I were the NSA, I'd be keeping track of the full blockchain.
  - kordless 13y ago
    Based on current observations, I would assume they are and have for some time.
- makomk 13y ago
  That's not exactly true. Older transactions aren't indexed by most nodes, so it's a lot of work to retrieve them, but almost all nodes still have a full copy of the entire transaction history.

rtkwe 13y ago

You can't trace individual coins, but you can trace amounts. Bitcoin is made of nothing but the blockchain which is the whole ledger of which wallet owns how many BTC.

smtddr 13y ago

You cannot[1] track thieves through the blockchain like this. If you're going to catch any alleged MtGox thieves, they need to make some other mistake outside of bitcoin-world. Like a leaked email, or telling a friend who then goes leak it, etc. e.g. SilkRoad's Dread Pirate Roberts got caught because of his errors outside of bitcoin's blockchain. 1. https://news.ycombinator.com/item?id=7235113 https://news.ycombinator.com/item?id=7235113

maxerickson 13y ago
Your argument would benefit from precision; it's exactly 'through the blockchain' that you can track thieves. The issue you are bringing up is that it is straightforward to move value off the blockchain.
- smtddr 13y ago
  I stand corrected. :)