Silk Road forums

Discussion => Security => Topic started by: copperplate on December 08, 2012, 12:16 pm

Title: How Anonymous Are Bitcoin Transactions? Any Help Greatly Appreciated
Post by: copperplate on December 08, 2012, 12:16 pm
So I see on BitInstant I can just go and buy Bitcoins with my own bank details if I want and have them appear in my exchange account. I thought Bitcoin transactions are anonymous, so if I then transfer those coins to a wallet on my computer and then from there to my SR wallet is that not secure?? It seems a lot of people are jumping through hoops to buy Bitcoin in cash, with a fake name etc. I don't understand why - I thought the transactions were anonymous/untraceable? If I did what I just described above would it be possible to trace backwards and reveal my identity somehow? I only want to buy small amounts of coin for small transactions.

Or is it simply the fact that people are worried that if LE see them buying large amounts of coin they will assume something is up?
Title: Re: How Anonymous Are Bitcoin Transactions? Any Help Greatly Appreciated
Post by: Winston420 on December 08, 2012, 03:00 pm
You should understand that bitcoin transactions are very traceable, that is, LE can see every transaction because it is public information.

However, if you send it straight to SR, you should request a  new btc address every time. While LE may get a subpoena on bitinstant to prove that it was you sent the coin, it can only be proven that you sent it to SR if SR servers gets raided and LE compromises SR's private wallet keys.





Title: Re: How Anonymous Are Bitcoin Transactions? Any Help Greatly Appreciated
Post by: copperplate on December 08, 2012, 03:31 pm
I have done some more reading and I understand now that bitcoin transactions are public info and very traceable like you said. Thanks!
Title: Re: How Anonymous Are Bitcoin Transactions? Any Help Greatly Appreciated
Post by: zator45 on December 08, 2012, 10:38 pm
Helo.
I BTC first pour of currency exchange on priv wallet, and then to account for SR.
I think this is sufficient.
Cheers.
Title: Re: How Anonymous Are Bitcoin Transactions? Any Help Greatly Appreciated
Post by: HassleHoff on December 09, 2012, 04:19 am
There not very anonymous. Every bitcoin transaction is available in a public database that the various Law Enforcement agencies can get just by downloading, like everybody else.  There was a recent paper on bitcoin anonymity written by two Israeli researchers - called "quantitative analysis of the bitcoin transaction graph" (you can find the PDF if you want to read it). They analyzed the whole blockchain and were able to isolate the 19 largest entities dealing in bitcoins. Some were identified - like MtGox and Instawallet , but most were not. SR is surely one of them, perhaps one of the largest. I have begun to wonder if the SR internal bitcoin tumbler might have a unique signature or behavior that would make it easy for LE to follow any bitcoins in or out of the road, even without compromising the servers. Personally, I think its essential for buyers to obtain coins anonymously and any sellers should take pains to launder their coins before cashing out. I suspect some sellers may just be sending their coins to MtGox and then into their registered bank account. This is a bad idea.

I'm not a computer security expert , just a paranoid pot smoker.

Title: Re: How Anonymous Are Bitcoin Transactions? Any Help Greatly Appreciated
Post by: gnosticfury on December 18, 2012, 09:52 pm
Do you know what the best process is for laundering coins before cashing out as opposed to just sending directly to an exchange and then to bank account?
Title: Re: How Anonymous Are Bitcoin Transactions? Any Help Greatly Appreciated
Post by: mrlichy on December 19, 2012, 04:51 pm
Helo.
I BTC first pour of currency exchange on priv wallet, and then to account for SR.
I think this is sufficient.
Cheers.

That does not do much in terms of anonymity and security. As all transactions are available, and no need for programming when you can use public services like. http://blockexplorer.com/, and thus no matter how many intermediate wallets you use, that's only a matter of tracing those steps which are recorded in blocks anyway. It would be relatively easy to write a program do follow trasnactions originating from one address to another and thus go through the whole chain of addresses you've been using as intermediaries.

For a rather good analysis about this, see http://arxiv.org/pdf/1107.4524 or for more approachable text http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html .

To sum it up: as long as your identity can be combined with one bitcoin address, all the coins you transfer from that address will always be traceable back to that address and thus to you. Of course this is useful only in cases where the police or anyone interested in this has two addresses and wants to show that they're somehow linked (ie. there has been a transaction between them, though that may not have been a direct transaction).