IMPORTANT WARNING to those who want to use Monero/ShapeShift and NOT end up in jail

Okay. So there's been a lot of hype around Monero here since Oasis and AlphaBay have implemented it. But there's been some very bad and very incorrect "advice" going around about how to use Monero[1], and people have some misconceptions that can completely destroy any privacy that this novel and innovative cryptocurrency can offer.

So here's the TL;DR: Monero's privacy comes from the sending side of the transaction. There is absolutely zero privacy gained simply by using a vendor's Monero receiving address, if you are not sending the Monero yourself, on your own computer, running your own Monero software. In that sense, it's just like GPG - never trust another party to do it for you.

This is a problem because people obviously don't want to bother running their own Monero software, and would rather do something like just send BTC to ShapeShift and have ShapeShift send Monero to the market or vendor they want. THAT IS BAD. By doing that, every ounce of privacy that you could be gaining from Monero is entirely dependent on trusting ShapeShift, which is a registered corporation that is subject to various laws, including financial Know Your Customer/Anti-Money Laundering ("KYC/AML") laws. Those laws almost certainly require ShapeShift to keep a complete record of their transactions so that they can be viewed by Law Enforcement at any time (within some number of years), and those records completely destroy any privacy gained through Monero's Ring Signatures and Stealth Addresses. On top of that, even disregarding their probable legal obligations under KYC/AML, they are also potentially subject to lawful orders from a judge or other LE official, including subpoenas and National Security Letters (which are usually kept secret from the target(s) of investigation). They might even already have an NSL that requires them to give complete, unfettered access to de-anonymize every transaction they process, and in fact, I would estimate that this is fairly likely.

EDIT: From ShapeShift's own "Terms and Conditions" document (PDF warning):

You accept that ShapeShift will comply willingly with all legal requests for information from it. We reserve the right to provide information to law enforcement personnel and other third parties to answer inquiries; to respond to legal process; to respond to the order of a court of competent jurisdiction and those exercising the court's authority; and, to protect ShapeShift and our users.

So what does this mean? It means the same moral as so many others in this scene: if you have to trust another party for your security, privacy or anonymity, you are at risk (cough, I'm looking at you, VPNs, and even centralized tumblers...). The whole beauty of systems like Tor, GPG, Bitcoin, etc. is that they are trustless - they work to ensure your well-being without having to trust any other parties. This is also why it's so important to be very careful with "light" bitcoin wallets like Electrum, and only use them when they are very well anonymized (which is hard to do), like the one integrated into Tails. Because in that case, otherwise, your privacy is totally dependent on trusting some random Electrum server(s) not to snitch you out, and that's not a good position to be in.

There are certainly some limited gains in privacy to be had, even if you are trusting ShapeShift, by "breaking" the blockchain trail across two different currencies - but honestly they are fairly minimal if your adversary is LE, like is the case for most of us here. It just adds another hour of work to their investigation, but is not really an actual barrier (assuming that ShapeShift is, in fact, untrustworthy - which we will probably never have an answer for, but is safe to assume).

So, if you want to get the most out of Monero, it's unfortunately necessary to run it yourself. I don't have experience doing this in an environment like Tails, but that would be the advisable way to do it. And like with Electrum, it is extremely important to ensure that the Monero client you use is completely Torified before you even let it know about any Monero addresses you own, or are sending to. Note that programs have a tendency to "leak" identifying data when people try to use them through Tor and they aren't designed for it from the ground up - it's important to make absolutely damn sure that the Monero program is properly Torified, including DNS queries. Tails will not do this for you, since it is not integrated into it.

More information can be found in the discussion that inspired this post, at [1], below.

[1] https://www.reddit.com/r/DarkNetMarkets/comments/4zc96n/planning_to_place_a_first_order_with_monero_what/


Comments


[9 Points] None:

just use https://mymonero.com and you wont have to download any monero software. and, do you regard xmr.to to be as untrustworthy as shapeshift.io ? /u/sapiophile


[3 Points] ReaganStarship:

/r/sapiophile is da real MVP. You've pretty much answered all my questions about this subject, being as succinct and technically accurate as possible.

Thanks x1000


[2 Points] Thr0wMeAway666:

Good read here


[2 Points] None:

fuck this, I'll stick to bitcoin. As if I couldn't tumble my coins already.


[2 Points] None:

[deleted]


[1 Points] MDMangel:

Sap, as a very small time personal use buyer who never plans on cashing out her coins and never uses them for anything other than the markets, does this new currency offer any benefits that BTC doesn't? I firmly believe that if it ain't broke, don't fix it, right?


[0 Points] wartoli:

Does this mean I shouldn't be using iGolder (an online GPG encryption service)?


[0 Points] hopeseekr:

The only Android Monero wallet I found requires me to sign up with my facebook account.

WHAT?!


[-1 Points] 987239847293847:

Dude monero sucks, face it, they dont even have a GUI much less a lite wallet like electrum. They really expect us to download a multiGB blockchain file, keep it updated daily, run all operations on it and all WITHOUT A FUCKING GUI?

We left the command line in 1995. No thanks.

And their webwallet doesnt even work over TOr. The dev said he doesnt plan on fixing it to because Tor is unsafe. lol.


[-3 Points] tenderwingz:

Tldr plz