Silk Road forums

Discussion => Security => Topic started by: club on January 19, 2012, 05:42 pm

Title: What's the point of BTC "laundering"?
Post by: club on January 19, 2012, 05:42 pm
Isn't it true that if someone tried to dissect a BTC transaction, they can't tell where it came from and where it's going to? So why are people shifting BTC around various instawallets to "clean" them and such?

Similarly, if it's true as some are saying that MtGox is being heavily monitored, what is the problem with that anyway? So they know I'm trading my money for some BTC. They have no way of knowing where I'm sending those coins after that, right?

I thought that was one of the great features of the Bitcoin design... untraceable anonymity. Has someone ever found a way to trace or track BTC transactions or something?
Title: Re: What's the point of BTC "laundering"?
Post by: supersecretsquirrel on January 19, 2012, 05:54 pm
Isn't it true that if someone tried to dissect a BTC transaction, they can't tell where it came from and where it's going to? So why are people shifting BTC around various instawallets to "clean" them and such?

Similarly, if it's true as some are saying that MtGox is being heavily monitored, what is the problem with that anyway? So they know I'm trading my money for some BTC. They have no way of knowing where I'm sending those coins after that, right?

If they spend enough time and resources on monitoring all the transactions, they may be able to trace your coins back to you.

I thought that was one of the great features of the Bitcoin design... untraceable anonymity. Has someone ever found a way to trace or track BTC transactions or something?

Wrong. Bitcoin was never designed to be anonymous. You can get pretty damn close to anonymous, but there's no guarantee that your transactions will be left untraceable.
Title: Re: What's the point of BTC "laundering"?
Post by: kmfkewm on January 19, 2012, 11:41 pm
Unless you mix bitcoins they are as anonymous as the method you used to pay for them. Unless you mix bitcoins they ar as anonymous as the method you use to cash them out. Bitcoin offers absolutely no anonymity what-so-ever in and of itself, infact the entire transaction history is available for anybody to see.
Title: Re: What's the point of BTC "laundering"?
Post by: abuttelmao on January 20, 2012, 02:57 am
I'm just going to go ahead and repost this post that I made in another thread, sums up my thoughts on the alleged anonymity of bitcoins and why I think you shouldn't rely on it.  Also please spare the tinfoil hat jokes:

Bitcoins have already developed a reputation in the zeitgeist as fulfilling only two purposes:
1. Currency used for illegal trades (money laundering, essentially)
2. Fueling the dreams of libertarian idealists

Because of this, I really don't think it will be long before the US Government starts keeping a very close eye on citizens who purchase bitcoins, if they haven't already.  The only people this would be likely to upset are criminals and Ron Paul, neither of whom the general public cares about one whit.  The vast majority of the population does not understand enough and does not care enough to be outraged at surveillance operations targeted at people who buy bitcoins.

Lots of people like to say "it isn't illegal to buy bitcoins" to reassure themselves and others that having your bank account and other identifying information linked to the purchase of bitcoins is completely risk-free.  While that may be the case at the present moment (although I have my doubts about this), I am really skeptical that it will continue very far into the future.  Even if it isn't illegal to buy bitcoins, I would not be surprised AT ALL if doing so put you on some kind of federal watchlist.  The government would have reasons that would be acceptable to the general public to do this to both libertarians and those using BTC for SR or similar money laundering purposes.

That is why I personally refuse to ever purchase BTC through an exchange that requires any identifying information at all.  I'm not worried about them tracing the BTC back to my bank account; I'm worried about catching Big Brother's eye just for doing it in the first place.
Title: Re: What's the point of BTC "laundering"?
Post by: doublemint on January 20, 2012, 03:15 am
Isn't it true that if someone tried to dissect a BTC transaction, they can't tell where it came from and where it's going to?
No.
Title: Re: What's the point of BTC "laundering"?
Post by: kmfkewm on January 21, 2012, 08:57 am
Isn't it true that if someone tried to dissect a BTC transaction, they can't tell where it came from and where it's going to?
No.

It depends on the layer of abstraction you are talking about. Certainly all bitcoin transactions can be linked on the bitcoin address layer. On the IP layer you can prevent linking by using Tor. On the meatspace identity layer you can avoid linking if the method used for buying or cashing out bitcoins is itself anonymous, and you use Tor, but anyone can always still see that your bitcoin address sent coins to another known bitcoin address. You can use bitcoin mixes to offer unlinkability on the'who actually paid who' layer (the attacker will still be able to see your bitcoin address and five hundred others sent a bitcoin to a mix, and they can still see that five hundred bitcoin addresses took a coin out of the mix, but they can no longer tell who gave a coin to who through the mix). Of course mixing is money laundering and it might not be of particular importance that the feds can't tell what you needed to launder money for if they can tell you laundered money in the first place. In general you should be trying to pay for and cash out bitcoins as anonymously as possible and through as many additional layers as possible, and you should certainly be mixing your bitcoins using blind signature mixes if possible.