In the early days, criminals used Bitcoin as a safe haven, thinking Bitcoin is anonymous, and transactions can’t be traced. However, today, sophisticated blockchain analysis softwares can trace bitcoin transactions to identify criminal activities on the blockchain.
… To accomplish this, Yum followed more than 700,000 bitcoins on the blockchain, from the Silk Road marketplace to Ulbricht’s personal wallets. It was the first time people realized the potential of blockchain analysis to solve a criminal investigation.
Today, blockchain analysis technology is used by financial institutions, crypto businesses, and law enforcement authorities to prevent and investigate cryptocurrency crimes worldwide.
Why don’t you go start yourself off. I’ve invested a lot of effort explaining the fundamentals to you, and I’m done processing low-quality pop-technology articles that you’ve clearly invested zero effort into understanding.
Come back when you can explain how the “sophisticated” tool can expose my identity given the scenario I’ve put forward, whose strength is actually in its simplicity. And I’ll tell you that the “sophistication” in this tool is just marketing-speak for ordinary cluster analysis that we’ve already mentioned in this thread.
See also: the way you’ve stuck your head in the sand each time I debunked the next thing you Googled up without doing any of your own work on it. It’s so, so, easy to pull something up and say “think about this!” How about you think about it for a change.
I’m not much interested in having that football pulled away yet again, but I’ll leave you with the parting thought that your last source is equally as flawed and irrelevant as your other ones that I’ve debunked, at great effort, while you just keep spitting out random links.
If you have zero compromised agents that you’re interacting with, then yes, bitcoin is perfectly secure. But that’s a ludicrously unrealistic assumption, and it’s irrelevant even in that unrealistic case because in that case, everything is secure. As soon as you start adding any compromised agents at all, however, bitcoin becomes less private than other currencies, because you can now trace transactions from any of those compromised agents, through any number of uncompromised agents. And it is not unrealistic at all to assume that the number of compromised agents is nonzero.
I’m guessing you’re unaware of the origin of that word. “Gyp” is to be cheated as though by Gypsies. Even the G word to describe a people is out of favor these days. The preferred term is Romani. As a verb, it’s viewed in the same way as “To Jew” to mean bargaining.
Eh, before I made that post I wasn’t sure if the spelling was “gyp” or “jip”, so I checked Google and it said “gyp” was the more common form so I rolled with that. Anyhow, it certainly wasn’t my intention to denigrate an ethnic group.
I also thought about using “swindle” or “defraud”, but ultimately decided those words aren’t as effective at conveying the douchyness and abruptness of someone “jipping” you.
HMS_Irruncible is correct in pointing out that it is theoretically possible to use Bitcoin in a way that would sufficiently obscure your transactions - that Bitcoin is not the weak link here.
Chronos and GreenWyvern are pointing out that you can’t be sure that some party isn’t compromised, and there is a risk with Bitcoin over and above the risk from cash. And let me spell that out more: if banks tracked cash by serial number, and noted the identity of every individual who gets each $100 bill, and noted the identity every time someone deposited that $100 bill in the bank, the bank has no record of where that bill went in its path from beginning to end. But with Bitcoin, every single time that Bitcoin changes hands, there’s a record. So it’s less secure than cash, except cash has the downside of your having to physically get it to the recipient.
You keep repeating this intuition as fact, but it’s not. I will tell you as a plain fact, if you and I only know each other by our bitcoin addresses, and my address is an anonymous one-time address that’s never had other connection, it doesn’t matter if you’re compromised. It doesn’t matter if you’re a compromised member of the world’s dumbest criminal syndicate. None of you know who I am, nobody on earth has any information on my temp address, neither is there any way for them to get that information. How do you plan to catch me in that scenario?
And before someone jumps in with “sophisticated pattern analysis blah blah”, pattern analysis only works when there is a pattern to discover, and only when that pattern is a nexus to known information.
To make this a little more intuitive, let’s call SDMB a criminal conspiracy. We’re all in on it. But we sign up with no more personal info than our email address. I only know your handle, you only know my handle. My email is a code-name burner for SDMB only. I don’t post personal details, we just trade crime information via PM.
You get busted. The feds offer you a deal: if you can tell them my real name, or any information that leads to my real name, they let you walk. What info can you give them to save yourself?
This is only correct for a naive user who doesn’t understand how bitcoin works. I think I’ve detected the cause of confusion, which is:
Let me spell out: this is absolutely, 100% factually incorrect. Couldn’t be wronger if you tried. Bitcoins do not have serial numbers.
Again, I will repeat, Bitcoins do not have serial numbers. They have no identity. There’s actually no such entity as a Bitcoin. There is a network called Bitcoin, and it trafficks in numbers that have an exchange rate, which is colloquially referred to as Bitcoin.
But Bitcoins aren’t real. They’re not even real in the abstract. They don’t leave a glowing trail through the internet. The ledger looks like: I sent you 3.14159 of something. There is zero information in that something that follows your transaction when you spend that money. If you spend exactly 3.14159 of those funds, then a reasonable person could make an inference that it was my money. But 3.14159 isn’t as rare a number as it seems, and it could be entirely a coincidence.
Bitcoins do not have identity. They do not have serial numbers. They do not have fingerprints, they do not bear fingerprints. They do not leave fiber evidence. The currency itself is even more anonymous than cash.
Very interesting thread. I’m not a tech guy so bear with me.
I am a big time drug dealer in Pennsylvania. I need to get $100k to a guy in Detroit to ship my product. $100k in cash is going to be hard to get because banks will have records of these large transactions and will be able to trace it to me. And wire transfer is completely out of the question. So enter Bitcoin.
I take $100k from my bank (and use @HMS_Irruncible techy method without an exchange) and buy $100k worth of bitcoin. I properly anonymize my accounts and send the Detroit drug dealer (DDD) the equivalent in bitcoin. He properly anonymizes his accounts. We also assume that DDD isn’t stupid enough to convert that bitcoin into exactly $100k cash soon thereafter. But he will be making withdrawals into USD to pay his mules, to buy necessities, and so forth.
So, if I am correct in this rudimentary understanding of the process, it seems that bitcoin does add a certain something that would allow two sophisticated parties to transfer large sums of money between one another and avoid the usual pitfalls of withdrawing large sums of cash or carrying cash, but once the police used other investigatory techniques to connect me and DDD, the bitcoin purchase from me would be an additional piece of evidence. (e.g. Sir, you bought $100k worth of bitcoin, yet you are “unemployed.”)
It seems like bitcoin could add to traceability issues, but is definitely not the anonymous currency as long as someone has to use government currency to get into it in the first place.
If you are a “big-time drug dealer”, you certainly have more cash than you know what to do with. At any rate, though, you are correct that if a dealer had a bunch of bitcoins, and wanted $US, then he or she would have to find someone willing to exchange cash for bitcoins, which may require paperwork for such an amount, or smurf it (lots more potentially traceable transactions) etc.
No. I’m just trying to put my mind around the idea that bitcoin is this money launderers paradise because of the anonymity and how it might be used that way.
It would seem that the same level of anonymity, with the same potential pitfalls, would arise if I just bought around six pounds of gold and had my mules transport it to DDD and him back to me. Maybe a little more for bitcoin as there is no chance of it getting confiscated physically, but there is still the issue of why I bought so much gold in the first place.
I guess it could be stated more simply. In order to buy stuff, I need USD. I don’t have money just to look at a pile of cash or log into my bank account. I want stuff.
And if I have a bunch of ill gotten gains, I cannot get any stuff unless I launder it. The tax man will come. It seems as if I have a similar problem if I have $5 million worth of bitcoin that I got improperly or $5 million in a duffel bag in my closet that I got improperly.
Can you help me out? I’m very green with the whole bitcoin thing. My understanding is that one of the main ways that bitcoin is secure is that everyone has the record of every transaction. If you transfer bit coin to 5637 who transfered it to 7723 who transfered it to 8049 who transfered it back to you, you could then compare the codes and see the annonomized wallets that were hit between you getting the bit coin back. Not the people who held it but the wallets. Is that a correct understanding?
Again, no, that’s not a correct understanding. There’s no history of a bitcoin, because there’s no such thing as a bitcoin.
There is a history of transactions, like “Wallet X sent 27 to Wallet Y. Now Wallet Y has 28.” The money only has an amount, not an identity. There’s no such thing as a “bitcoin”, so there’s nothing to be identified.
Ok, so you could see my transaction exactly as I described it. Me buying 1, transferring 1 to 5637 who has 1, 5637 transferring 1 to 7723 who has 1 who transfered 1 to 8049 who has 1. 8049 transfered 1 to me?
As I also understand it if it was Me buying 3, transferring 3 to 5637 who has 3, 5637 transferring 1 to 7723 who has 1 who transfered 1 to 8049 who has 1. 8049 transfered 1 to me. If the chain didn’t end back with me I wouldn’t know where the other 2 ended up?
Stop right there. Please explain how exactly you will buy bitcoin without going through an exchange.
Will you draw $100k in banknotes from your bank, put it in a suitcase, and go round to the house to someone you just happen to know has $100k in bitcoin he wants to sell? Give him the cash, and ask him to transfer the bitcoin to your wallet?
How exactly will you buy bitcoin without leaving a trace?
To reiterate, when you say “buying 1” at various points in the chain, the “1” has no serial number or identifying information. It’s just the amount “1”. You can’t go to the middle of the chain and say “aha, this is the 1 that came from the beginning of the transaction.” In that way they are fungible.
Now, it’s important to note here, indeed you have chosen a fixed amount of 1, and thus you’ve potentially exposed yourself by intentionally creating a circular pattern of trading of that fixed amount. If you want to be anonymous you need to intentionally not do that. Bitcoin makes it possible, but it requires you to think about what you’re doing (just as with any computer software or financial product).
Yes, DarkWeb drug markets are among the biggest users of Bitcoin now. It tends to be a good fit because none of the parties need to know one another, thus there’s no side-channel leakage of identity, and no formation of trading patterns.
However those markets are slowly moving away from Bitcoin in favor of Monero. Monero is pretty similar to Bitcoin, but it requires less effort to be private, so any compromise in the chain is less likely to be critical.
I’m just trying to put my mind around the idea that bitcoin is this money launderers paradise because of the anonymity and how it might be used that way.