Discourse crossed its wires when I was responding to you, it linked the reply to the wrong person. Attempting to fix:
So, I don’t mean to brag, but they don’t call me Mr. Biggg for nothing. My parties are classy, renowned, high-profile events. Everybody wants to see and be seen there. I don’t normally need to pay performers and vendors with money… the business they get from the commercial exposure more than makes up for it (if they know what’s good for them, heh heh).
And that was our handshake deal. He catered my party just for commercial exposure, which anyone will tell you is hugely valuable. He’ll get a ton of new business off this, far exceeding the cost of my party. Want proof? It’s in your quoted post. Snaps of the party are all over Instragram and Facebook, with the caterer’s logo and face all over them. This was extremely beneficial for him, and I’m just crushed that he’s chosen to betray me in this manner. That’s what I get for being so generous and trusting.
I still have no reason as to why I should want a Bitcoin, or any other cryptocurrency. I don’t get paid in it, I can’t pay my taxes with it, I can’t easily spend it, I can’t be sure of what its value is a month from now meaning that I’m even less likely to spend it, it’s not backed by anything, it doesn’t represent anything, and as far as I can tell it’s a solution in search of a problem. Yet people are burning a ton of energy and creating a ton of emissions for something that is at best a curiosity to the vast majority.
This illustrates where I get confused, because it seems very theoretical in the sense that it’d work if you did things perfectly but is liable to fall apart with a single tiny mistake and even the most basically competent investigators.
For example, a claim by “HMS” that he transferred 0.6 and 0.4 to lost offline wallets X and Y works as long as there is never again another transaction from the supposedly lost offline wallets X and Y. As soon as there is we have proof that he was lying. So the only way to make that lie work is for the 1.0 to be permanently lost.
And if we have those additional links that @GreenWyvern mentioned from X,Y to Z and the corresponding links to the exchanges on each end we’re getting to a point where we can see pretty clearly that “HMS” paid “Shady Dealer” 1.0.
Now I assume a smarter pair of people would use a far more elaborate chain of transactions and mismatching amounts (I’m presuming it’s easy to setup hundreds of intermediary addresses for example) and I could see how this might work if one or more sides aren’t compromised or suspects. But if you know or suspect “Exchange → A” is linked to “HMS” and “Z → Exchange” is linked to “Shady Dealer” then it strikes me as a known computer science graph search problem to answer the question “is there a path between addresses A and Z through the address (node) and transaction (edge) graph”. My graph theory is a little rusty but I suspect you could also make some claims about the amounts too, e.g. “I claim “HMS” paid “Shady Dealer” 20.0 bitcoins, here’s a candidate set of paths with transaction amounts that plausibly show a flow of 20.0 or more bitcoins from A to Z”. That’s an awfully suspicious coincidence if there is already real life suspicions linking the two.
I’d concede that this is significantly harder if any suspicions are only one sided (e.g. we think “HMS” did something bad, but we don’t know who with). I still think it’s a solvable graph search problem to get from A to a set of addresses known to be endpoints (e.g. associated with exchanges) but it seems unlikely that would be sufficient to allow for subpoenaing all of the endpoint exchanges for their customer records absent some probable cause for a specific “other side” individual.
But now I’m wondering what the benefit is over something like cash, which is just as anonymous and will make the police have to work much harder to show the actual transactions than just looking at a public database. Yes, if you only suspect one side it’s really hard to trace the bitcoin transactions but you’d have the same issue with cash too. In either case you’d really need a collection of physical evidence (communications, etc.) showing the suspicion of a connection between two people. I’m not sure how bitcoins will make that less traceable than cash, etc.
I’m very curious to hear from any prosecutors or the like we may have on the board who’ve had some real life experience with this. From a layperson’s perspective this all seems like it’d be used in a cumulative evidence situation, where the trace of bitcoin transactions would typically not be the “smoking gun” or enough evidence in itself, but maybe in conjunction with other facts be enough to push things over the “reasonable doubt” edge.
I am not a juror, but as a defense attorney, I would absolutely hate any evidence that my client used bitcoin in a transaction. It makes you look guilty. Anything unusual makes you look guilty. You buy groceries, utilities, etc. with your bank card but you “lost money gambling” with a large bitcoin purchase? Yes, that money went for what the prosecution said it did. Guilty.
I think I understand where you are coming from. Let me try to restate your hypothetical in general terms so we don’t get bogged down talking about Mafia bosses, party planners, or truckloads of crack.
Step 1: You convert USD to BTC, depositing it in one or more Bitcoin addresses.
Step 2: A series of Bitcoin transactions occur, possibly with the intent of obfuscating the original source address of the BTC.
Step 3: A certain amount of BTC is transferred to an entity that will provide you goods or services in the real world.
People are pointing out how step 1 and 3 link this series of transactions to your real world identity, but your contention is that step 2 is sufficient to make it infeasible to conclusively link step 1 and 3, so any real world identifying information from step 1 and 3 are outside the scope of what you want to discuss. You are making the case that step 2 is secure and contains no information that can be used to identify you.
Is that a fair summation?
If so, I agree to an extent. It is possible to make the transaction history sufficiently noisy that without information external to the network it would be extremely difficult or impossible to trace if there were no other similar transactions or patterns to use. I think that’s what you are saying, but please correct me if I’m missing something.
There is a pattern, though, if you take into account step 1 and 3. Your identity intersects both of those transactions. In a discussion about the utility and effectiveness of anonymization within Bitcoin I’m not sure how useful it is to exempt real world intersections to the Bitcoin transactions, when that’s exactly where the utility is, but I think there is a discussion to be had if we narrow the focus to just step 2.
Let’s say I’m interested in finding out if Bitcoin address A sent/received BTC to/from Bitcoin address Z. How traceable do you think this is, both with how people commonly use Bitcoin, and also if it is done to purposely hide the trail?
Just to be clear, I have no interest whatsoever in finding your real world identity. My counter-challenge was in response to your challenge here:
I think your challenge was mostly tongue-in-cheek hyperbole, but a more realistic version does sound interesting. While you said “publicly identifiable Coinbase account” my thought was to identify a Bitcoin address directly tied to your Coinbase account – one that Coinbase could definitively link to you.
With that in mind, here is my proposed challenge:
Goals: I will take a set of Bitcoin addresses that received BTC from you and find Bitcoin address(es) associated with your Coinbase account.
Requirements: You will provide:
2.1 The receiving (output) Bitcoin addresses
2.2 of 3 purchases
2.3 each from unrelated entities (not the same individual or vendor)
2.4 that resulted in you receiving goods or services (in the real world)
2.5 that were unrelated to crypto
2.6 with the BTC originating from your Coinbase account
2.7 and all Bitcoin transactions, from your Coinbase account through to the receiving vendor, are recorded in the blockchain, with no off-chain transactions (e.g. the lightning network)
2.8 and all Bitcoin transactions are dated before 2021-05-11 03:30 UTC
Acceptance: I will provide you with a up to 3 Bitcoin addresses (possibly one for each transaction) that you will compare with your Coinbase wallet and transaction history. If at least one of those addresses is known to Coinbase in such a way that they could definitively link it to your account, whether it is in a wallet or an address they have record of your account directly transferring BTC to, then the challenge will be deemed successfully completed. An alternate goal might be if I provide a longer list of addresses for comparison, but I will accept that the challenge is failed if my top 3 addresses don’t match.
Sorry for the terrible list formatting – I haven’t figured out how to do real numbered lists in this forum software. The numbered formatting of the requirements is also bad, but I wanted to provide an easy reference to each one because we might need to negotiate on specific items.
I’m happy you are willing to consider this experiment, but I’ll completely understand if you aren’t able to meet the requirements.
There was a real life example posted earlier, the Bitcoin Fog case.
I also posted another link earlier which has a real life example of using the Coinpath software to trace an address through hundreds of intermediate wallets to an exchange.
Well, currently you’d want one because it’s worth approx (as of this posting) $56,538.21 and you can exchange it for cash money with which to pay your taxes or spend it. Which is where most of the mining and energy consumption is coming from – people who don’t give a shit about crypto as a philosophy or economic experiment but who just see the opportunity to make some cash off the minority who does care about that.
That’s a reason why if someone gave you a bitcoin (no strings attached) you wouldn’t turn it down. I’d agree with that, although I’d turn it into USD as fast I could Google how to go about that.
But I interpret @asterion’s comment more about the utility of bitcoin and why you would choose to invest resources (either $56,538.21 or mining energy and equipment) into acquiring them. And on that I’m in agreement with them: I don’t see the compelling use case that isn’t better served by more traditional technologies.
I mean, if you want to just give me a Bitcoin, I’ll take it. And immediately convert it to something useful, like USD, and then hold on to that USD, knowing that my $56k today will be the same value tomorrow and nearly so next year, less some inflation, hopefully offset a bit by interest rates. Or I’ll put it into something that actually has a proven record of gains over time, like maybe 140 shares or so of SPY, which will pay me a dividend every year I hold it and can be easily converted to USD at any time. Sure, it may go up and down on paper, but so does Bitcoin. And I’m investing in part of a massive amount of companies with major economic presence. Holding that Bitcoin is purely hoping that somebody else will buy this otherwise worthless thing for more than I got it for. Or I’ll use it to help purchase real property, which is always a good long term hold, plus a place to live.
If I can’t pay my rent with it, pay my taxes with it, buy groceries with it, and I have no idea what the value is likely to be a year from now, a Bitcoin is effectively worthless to me.
Right, but that’s literally why most people are mining them. We’re not using 10% of the world’s electricity or whatever the stat is because all those people want a Bitcoin economy; we’re doing it because most of the miners want to convert it to USD. Either immediately or in a period of time if they think it will be worth more USD. But they don’t give a fuck about the “crypto” or blockchain aspect. It might as well be bars of gold or old baseball cards or some other item largely valued beyond its actual functional worth. If only the people who cared about crypto were mining it, it would be insignificant.
Whatever their goals are (a Bitcoin economy, or instant, zero-cost USD transfers (not that they are getting that), or anonymous e-cash (they are not getting that either, as least not as straightforwardly as with the type of e-money where nobody can “see” where the coins go), or some kind of speculation or arbitrage), it already seems pretty damned negative to waste electricity when any or all of those goals can be accomplished in other ways.
I’ve already pointed out that the Bitcoin Fog situation was (A) compromised by a crypto instrument other than Bitcoin, and (B) compromised by lazy security practices that exposed that instrument. Bitcoin wasn’t the weak link, unsurprisingly.
This link doesn’t say what you think it does. There’s no real-life example there, Coinpath didn’t catch those hackers, they were caught because they were outrageously careless about unnecessary leaking side-channel information by bragging on a hacker forum. They were outed by rival hackers who cracked the forum they were posting on, where they’d stored all kinds of personally identifying information.
Coinpath’s example is simply generating a node visualization and saying “look, we see some interactions. If these nodes had complied with KYC then we totally would have identified them.” It’s nothing special and it has a lot of qualifiers in the fine print.
Before you post links as evidence, you should read them and attempt to understand what you’re reading. Ask for help if you’re not certain.
Professional caterers don’t cater huge parties for “exposure” because it’s not worth anything. And, if they did… why would they lie about it and claim to have received bitcoin in payment?
And even if it weren’t a really bad lie, you’re basically saying “who are you going to believe, my self-serving story with absolutely nothing to back it up, or this professional services company that has plenty of normal accounting records and also the corroborating indelible record of blockchain transactions that anyone can examine?”
For the thousandth time, this wasn’t my scenario, it was a strawman scenario set forth by Chronos, contrived with comically obvious flaws because his arguments only work when all parties are outrageously incompetent.
I whimsically indulged it as a thought experiment to demonstrate that even serious flaws needn’t be automatically fatal, but I now understand that kind of good faith will not be reciprocated in this thread, so I won’t be doing that anymore.
I think it’s probably a good idea to not whimsically make bad arguments. One reason is that when you extend your rhetorical skills beyond your core claim, it begins to look like your claims are mostly supported by rhetorical skills rather than solid arguments. When I read that, I think “this guy is really dug in on his argument, and isn’t amenable to reason”, which is unfortunate, because I fully acknowledge that that might not be an accurate impression.
But if you spent a few less paragraphs making bad arguments along some tangent and more paragraphs focusing on your core claims (where presumably you have better arguments), then we’d all have a better discussion and you’d get fewer people pointing out the really bad arguments. It’s a win-win.
We went down this “sweet sixteen party” digression because the thread followed this pattern, which if I am incorrect, please enlighten me:
You are arguing that if all parties in and around the bitcoin transaction are as smart and careful as you (and that sounds snarky when typed, but I don’t mean it that way) they if you and your confederates wanted to do illegal stuff, they you were home free.
I pointed out that at some point in order to use your bitcoin, you need to convert it to USD or some form of local currency. I haven’t commented on blockchains and whatnot because I have no idea.
You responded to me and others with rather fanciful examples of lies you could tell to the police to explain the presence of that cash, which I and others have objected to.
You know claim that it wasn’t your argument in the first place.
So, my point is that even if we assume that your method is completely anonymous, it will still be found out in the end.
It’s pretty much all incorrect, and it’s partially my fault for entertaining flimsy thought experiments that were contrived to fail in the first place, and I won’t be expending any more effort to unwind them.
Especially given that a number of participants here formed their preconceptions based on flatly wrong understanding of how Bitcoin works, but instead of admitting error and correcting themselves, they have doubled down by pivoting into elaborate human-failure scenarios that have nothing at all to do with the technology.
I don’t think that anybody here has ever disputed, or even discussed, the cryptological security of the blockchain. You’re the only one who keeps harping on it.
It’s like you’re saying ‘The operation was a success, but the patient died’.
‘Bitcoin is 100% secure, as long as it’s not used by real people in the real world.’
