I didn't see in this article where they actually gave a valid reason for the crack down. Is there evidence that the funds for these attacks, or any others, originated from bitcoins?
The initial reaction of my inner knee-jerk skeptic says this is another example of those in power, this time banksters, not letting a good crisis go to waste.
That would actually be a nice reason compared to what I believe. I see this as their opportunity to try and stop Bitcoin for it's actual uses, anonymous payments, not paying taxes etc. etc.
"They are not using the big obvious systems at all," he tells the BBC.
They were using SMS.[1]
"They are all now using the OTR [Off the Record] protocol, which offers end-to-end encryption," he says.
"The arrests that are going on now have come from a trawl through metadata"
This is actually how they found the other would-be attackers:
European media outlets are reporting that the location of a raid conducted on a suspected safe house Wednesday morning was extracted from a cellphone, apparently belonging to one of the attackers, found in the trash outside the Bataclan concert hall massacre. Le Monde reported that investigators were able to access the data on the phone, including a detailed map of the concert hall and an SMS messaging saying “we’re off; we’re starting.” Police were also able to trace the phone’s movements.
The amount of bullshit and propaganda coming out is scary.
This is the website of one of the BBC's experts, for added hilarity[2].
Good timing. Yesterday, the UK Treasury released an official document stating that Bitcoin and cryptocurrencies have the lowest risk and lowest likelihood of money laundering amongst the areas of finance they studied. Guess who came first, Banks. Good job HSBC! You have laundered more money ever then the entire cryptocurrency industry is worth... 10x over
That's because bitcoin adoption is so low that it's not a threat.
Seriously:
>9.29 The money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the UK this risk could rise. Digital currencies are currently not a method by which terrorists raise or move money out of the UK (though they remain a viable method for doing so).
The Transparency International website that you've linked does talk about financial regulation in the EU, but Transparency International's position is that the regulators have failed - that they have not, in fact, clamped down on fraud and corruption, and that close ties between regulators and the banks they're regulating have made them unwilling to act. You're using a web page criticising regulators for failing to take action as proof that they didn't fail to take action.
I was using it as proof that E.U. financial regulation (however shitty it may seem) isn't new, since TI does a good job as watch dog and lists many examples that date back.
Here's a hint, along with some advice. You can get around the posting limit by clicking on the direct link of the comment you are responding to. Then again, it's there for a reason, so it's probably best to make sure your reply at least has some context and analysis, so the discussion doesn't devolve into a bunch of one line responses, which rarely convey enough information to make the conversation worth while.
I don't think we have to call that just a rumor. I haven't heard anyone argue they weren't. But it's not important what the bank paid.
Everyone involved got their bonuses. No one was responsible. No one paid back. I don't think anyone involved cried over any fines the company had to pay.
Only sort of, and only if you have a lot of other people willing to participate with you. If you are just looking to see how money is flowing, you just see the tumble cloud between your collections of interesting source and destination addresses, you are not foiled by it (in the worst case scenario you consider every output address interesting, but then you start paring that down with other information).
I wonder if some of the bitcoin gambling sites have really been operated by people trying to obscure the history of their bitcoin. If they can control how fast their coin moves through the site, they have some more assurance of how many addresses they are mixed with.
Believe in your lucky sunglasses all you want, but how much would you really stake on a tumbler?
"Such tumblers do a very poor job of hiding transactions, especially when dealing with a thousand or a hundred thousand bitcoins. The simplest approach is to simply look for common flow patterns."
If a tumbler is used by 1 person, they get their own coins back. To work, it needs as many users as possible. Therefore a researcher doesn't scan transactions looking for "possible tumbling", they look for the tumblers, use them and follow those transactions.
There is also an inherent risk in trusting that the tumbler operator is not willing to cooperate with (or happens to be operated by) western governments. It doesn't seem like a reliably sustainable strategy, especially for any substantial amount of funds.
Even if they don't control it, wouldn't a heavy user be able to build a probabilistic model of where the coins went? If you are 99% of the volume on a tumbler, you know with near certainty that your adversary's coins are being swapped with your own. Paying tumbler fees or even making massive amounts of small-loss bets on a gambling site is well within the resources of a state actor. Bitcoin is small. Eventually real money has to be taken in or out of the system, which gives them a smaller set of individuals to target for investigation.
Right, so you mix multiple times. You use unlinkable wallets. Electrum and Multibit wallets in Whonix VMs work well. And you successively use different mixing services, so deanonymization would require collusion. Doing three successive mixes is prudent.
I'm a big supporter of bitcoin and I have a superficial understanding of how the public ledger works, but why is it not incredibly easy to launder money through bitcoin? Since the currency is fungible, aren't there services that allow you to send bitcoins and it will send move your bitcoin around through many other accounts, including bitcoin from deposits of others? The end result being that the end state of some bitcoin cannot be traced back to the origin. How would someone reasonably trace that with any degree of certainty?
There are, called Bitcoin mixers. Also there's coinjoin matching services that's fairly automatic (community coordinated mixing instead of going through central servers).
Edit: How is this not relevant? Why is this downvoted?
>>The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public" ledger.
No, because they don't work, and even if they did successfully split up $1,000+ transactions, you can still analyse the public ledger to figure out where it all came from.
Edit: the proponents of such services also ignore the fact that anyone could be behind the tumbling services, governments included.
Bitcoin don't have individual coins. Each transaction is like taking several pieces of gold and melting them together and splitting them up in new pieces.
Mixing multiple transactions from multiple people do not reveal what came from where - you only know sending addresses, receiving addresses and amounts - but no links between which senders are tied to which recievers. Instead of having a bunch of individual historical lines for each "coin" and each person there's a big web of unknown addresses, with only a few known original senders and maybe a few known recievers. Coinjoin lets strangers securely pool together their coins and get the same amount of coins out to several new addresses of yours, except that now nobody knows which addresses belong together and which coins belongs to which sender.
Whoever is downvoting tumble commments is WRONG. Go read the bitcoin forums and note the people who have stolen large amounts of bitcoins after tumbling they are gone and have never been traced.
Tumbling is highly effective if done properly. You need many inputs other than just your own. Then you take the outputs and you don't combine them. You can spend them via psuedo transactions with scripts, use them to store coins, tumble them some more, sell them for cash. Since all inputs are combined there is no real way to no which outputs are from who inputted them if you're smart, disciplined, and it's done properly.
Generally, the large bitcoin thefts never get traced because the trail of bitcoin transactions leads to an exchange and then you can't follow them any more without the co-operation of the exchange.
This is incorrect. If you have $1000 in bitcoin and send it to a tumbler in say 5 transactions of $200 each, and you specify that each of those transactions should send the output as 2 different transactions of $100 each, to different addresses, then there is no way to defintively link those addresses back up (unless the person sends all those coins back to the same address and even then it would take a lot of work to match them up again).
I think you think that someone sends $1000 btc to a new addres, then $500 btc to address 1, $500 to address 2, does this a few times and then sends all the coins to address 56, which then holds $1000. This would be possible to trace but would be time consuming to do.
The method I mention above would safely unlink any coins in the final addresses from the $1000 you started with.
Bitcoin itself is a chore to anonymize properly AND to feel 100% safe after doing it.
I know some people like Monero (crypto note ring signature based, not Satoshi base) but as far as using bitcoin base code, Dash (formerly darkcoin) has the best coin join like solution.
It's a decentralized, passive (done before any real transaction), denominated mixing with up to 16 rounds. Obtaining less than a 1% chance of unmasking a SINGLE transaction in their model would cost millions of $.
I don't bitcoin is going anywhere but the flexibility some of these altcoins have is amazing for development. Dash (digital+cash) btw, wants to fix every problem with bitcoin.
They have anonimity, incentivized full nodes which share the block reward, instant transactions (5 of 6 confirmations within a few seconds) and more recently a model to fund development of the currency directly on the blockchain. Developers propose projects which are voted on and the blockchain itself sets aside the budget.
this kind of service does exist [1]. however:
-you have to trust the manager of the laundry to get your bitcoins back
-the dirtiness of the average coins may be quite high
-it costs money (X %)
Note the existence of alt coins with increased anonymity, such as ZeroCoin [2]
It's not anonymous. All transactions are trivially followable, up to an anonymizer. But anonymizers have to eventually send the money to a destination, so their effect is pretty muted - just track the flow and user the resultant amounts to differentiate.
I think people look at bitcoin and hear "crypto" and immediately think opaque and unbreakable. Neither are true, but first impressions matter a lot.
You're mixing money laundering and terrorism funding. Terrorism doesn't need money laundering, they just need the money. They don't hold large accounts in Europe where they send the proceeds from their criminal activities to fund their retirements, quite the opposite.
Money laundering is about moving money from illicit to licit activities. Terrorism funding is exactly the opposite.
> Terrorism doesn't need money laundering, they just need the money.
You're absolutely correct. The whole thing reeks of security theater. Those people need money for logistics -- food, clothes, lodging and so on while they plan their crimes. I don't believe that there is anything safer than cash for such purposes. Even gold would be to suspicious. I'd imagine you'd want as few people to be in the know of the activity before it happens.
More importantly than their intent, exactly how do they expect to enforce this new "policy"? It seems to me to be as enforceable as banning individual to individual cash transactions. Good luck with that.
I expect they will introduce tighter regulations, i.e. requiring a license to operate an exchange. But all that's going to do is harm legitimate users of virtual currencies...
You can ban/heavily regulate legitimate usages of the currency, which devalues it. If no-one outside of illegitimate circles can accept/process bitcoin money laundering becomes a lot more difficult, since the bitcoin loses value for legitimate purposes.
This is a great idea. The legitimate users will have to find someone to offload their bitcoin to, and since the legitimate outlets are shut down, they'll have to do local, difficult to trace trades. And since the only people buying bitcoin at that point is going to use it for illegal purposes... wait this is a terrible idea
Oh please, in principle you could easily regulate Bitcoin like Heroin, meaning make it illegal to buy/sell, manufacture (mine) etc... While Bitcoin would not disappear, it would become even less mainstream than now. Hopefully this is not possible under constitutional law!
Bitcoin's usage would go down, legitimate businesses would disappear. Legislation like this is not likely to happen, but this techno-hubris "Governments can't touch us, because we use smart technologies!" is quite ridiculous.
Since companies have to file tax returns, you can effectively ban every one of them from accepting or using these currencies. That means a huge number of uses for the currencies are cut off for the average person on the street. When a currency can't be used to pay your mortgage directly, for example, its value drops.
It looks to me more like this was something that was already planned and now they're using the Paris attacks as an excuse. Bitcoin is a lot less anonymous than cash, since everyone can follow who pays what to whom, and it's often possible to tie a wallet to an identity.
So it goes. Terror attacks provide opportunities for special interest groups to advance their agenda while public is frightened and irrational. Makes you think about the implicit beneficiaries of terrorism, doesn't it?
I think this is not true for several reasons. One (only in multi-party systems) is the rise of new political parties (for example here in Germany) that are very "right-winged" and strongly oppose the current government. I think it can not possibly be in the governments interest to loose power to these groups.
sigh this /feels/ like it's in the same vein as "ban encryption". As in "we have no proof this is happening but the Paris attacks give us a window where we can push through whatever BS we want and silence any critics with 'Do you want this to happen again?'"
Before they had the "pedonazis", now they have the terrorists to justify whatever they want to ban.
Since the terrorists used cars for their attacks (there was even mention of a Volkswagen Polo involvement) I propose we ban cars for our collective safety.
I wonder, did the terrorists ever used cash, a debit or credit card ? Maybe we should ban this too then.
Given how extremely traceable bitcoin payments are, I'm pretty surprised that they're not trying to get Bad People to use Bitcoin, whether publicly or behind-the-scenes.
I mean, in a way, maybe this is what this story is all about: a great big advertisement saying "Come use this completely anonymous payment system," with a sly nudge and a wink because bitcoin's nothing of the sort.
Just imagine: a plot is discovered, payment details made via bitcoin stumbled upon - and now you have a long list of every transaction those people have ever made using Bitcoin!
(for the inevitable bitcoin cult members wanting to chime in about "tumbling" or "fog" services, aka bitcoin money launderers, 1. they're still traceable and 2. there's not enough money going through them to successfully launder a four-digit amount, let alone anything greater.)
>It's impossible to track bitcoin laundering when people transfer in and out of other currencies, between bitcoin addresses.
>The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public" ledger.
I very briefly addressed this at the bottom of my comment.
In short order:
- Tumbling is traceable: throw a beefy server at the list of transactions, and since you know how much money arrived in someone's possession on a given date, you can now trace it backwards by crunching the numbers. Analysing long lists of transactions like this is something computers are really good at.
- But that doesn't matter, because tumbling sites can't work: they don't have enough capital in them to successfully launder more than a few play dollars at a time.
I think you're under the assumption that currency conversions are traceable. Once you convert bitcoins to dollars or yuan, your beefy server can't see the remaining transactions.
For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC
The only way to trace these is to compromise the exchange servers, get account information, and subpoena transactions from the banks. Very difficult to do given the international nature of these exchanges and banks.
>I think you're under the assumption that currency conversions are traceable.
I was specifically addressing tumbling services. I'm guessing that you accept those services are easy to compromise (heck, for all we know, various governments might operate the current ones) which is why you bring up currency conversion.
Let's turn this around: you have a list of transactions, you know when they took place, you know where the money ended up, and now you're tracing the line backwards, knowing that at some point, there will be a connection (or connections) to other transactions at least as big as this one; why do you think this is so hard to analyse?
>The only way to trace these is to compromise the exchange servers, get bank account information, and get transactions from the banks. Very difficult to do given the international nature of these exchanges.
Not really, given how little is known about some exchanges' operators.
1) bitcoin to cash or cash to bitcoin is pretty hard to trace unless you catch the actual handover.
2) As for the 'connections'. Anyone who knows what they are doing would spin up a wallet per transaction making connections non existant.
Of course mistakes can and will be made, at which point using bitcoin can become a bigger liability than cash/banks because everything is public. But given perfect usage, it is extremely difficult to ascertain any information.
huge list of assumptions there, but having read your responses you dont really understand bitcoin, transactions or tumblers. Tumblers can delay sending transactions by anywhere from hours to days, so matching 1 input with 1 output would be dificult at the very least. If 1 input is split into 6 outputs of varying sizes, sent at various times how would a beefy server help you. Say I send in 10BTC to a tumbler and my output is split into 6 outputs of between 1 and 2 btc each, these are issued to different addresses over a 5 day period. How do you trace that in amongst all of the other several thousand transactions that occurred in that 5 day period? I would genuinely be interested in how you think this would work, as would many in law enforcement and the bitcoin ecosystem.
You can not trace it backwards, that's not how tumbling works. If I take a 1000 inputs and combine them. Then I split it into 100,000 outputs you can not trace that.
You could trace it if the person getting the outputs was dumb enough to recombine them or spend them in all the same way. I suspect most people who tumble store the coins in those addresses and only spend small amounts later.
Tumbling has been used by people being tracked and has been effective at them not being caught. Read the bitcoin forums.
Back in 2012 someone stole worth of $1M bitcoins in today's prices from project I had. Do you think you can help me find who did it? Since if we could - there is certainly a case and enough to pay lawyers and for beefy server and whatever else.
It is not traceable if done correctly, regardless of how many beefy servers you throw at the problem. As long as you don't collate all BTC in one address at the end of your tumbling then there is no way to absolutley link it to the original sending address.
> throw a beefy server at the list of transactions, and since you know how much money arrived in someone's possession on a given date, you can now trace it backwards by crunching the numbers.
I hope you realize that you haven't actually described a process for tracing Bitcoin transactions. You can't just take an arbitrary problem, say "throw a computer at it", and consider it solved.
I don't mean to be abrasive, but you are clearly ignorant of the state of affairs of Bitcoin anonymity systems. Look up coinjoin, for starters. When you have highly-connected (in the graph sense), properly conducted mixing systems, you can't just "trace the transactions".
It doesn't matter how beefy your server is when I trade that Bitcoin for a different cryptocurrency using an exchange via Tor, and back again. Factor in a few exchanges and unless you're running all of them, good luck.
> 2. there's not enough money going through them to successfully launder a four-digit amount, let alone anything greater.)
Are you sure about that? I believe most of the onion drug markets have their own tumblers running in the background, so sending money to them and then withdrawing it should get you mixed funds. I'd expect the scale of business of those sites to result in quite a large mixing pot.
Can't one launder money by buying and running bitcoin mining? There is the question of getting it into a usefull currency again but it makes who sent money to whom untraceable.
Pre-insulting everyone who disagrees with you as a "cult member" is pretty nonconstructive as far as comments go, and for that matter so is the idea that tumbling is equivalent to money laundering, the latter of which always implies ill-gotten gains.
Someone has yet to successfully explain how you differentiate coins once they enter a single wallet. Say you know with certainty who owns a given address. That person makes a transaction sending the coins to another wallet, and the owner of that wallet makes another transaction.
You do not know who controls the second and third wallets. It could be the original owner splitting their money up. It could be a legitimate business accepting payment for services.
There's no way just looking at the blockchain to tell the difference between 'tumbling' and other perfectly normal transactions, save for very easily defeated statistical analysis
There are methods of tumbling Bitcoin (a la coinjoin) where every tumbling round effectively divides the confidence in a sender/receiver relationship by the number of people participating in the tumble.
So no, such mechanisms are not traceable by any reasonable metric.
You're right about the volume of plausibly tumble-able money being low, but it's at least in the five or six digits per day.
Nothing is traceable about bitcoin payments. All you see is coins moving from address A to address B. And then B can split into C, D, E, and each of those can too. It becomes an unmanageable mess very quickly. You can generate 1000 addresses a minute absolutely free and randomly move your coins between them for a few pennies. Even if an outside observer knows your originating address, they don't know absolutely anything about who owns the addresses the money went to. All they see is money moving, and no way to trace them to a person. If you're paranoid, you can sell/buy coins on LocalBitcoins, and there's no trail leading back to you.
The fallacy here is, Bitcoin doesn't actually move money. It can only move ownership of money. If I want to finance terrorism, there must already be someone with e.g. $1M where I want it (in Islamic State), so that I can trade 3000 BTC with him/her.
Transferwise already require receipts for some payments. I recently ordered something from Asia where payment went through an intermediate European payment provider and Transferwise wanted a receipt from me to proceed.
Transferwise accepts payments from debit cards or to their eastern European bank (Latvia or something), and then they pay from their US bank for example.
They do ask for ID documents and perform AML checks, but then again so do all proper bitcoin exchanges with the exception of the shady btc-e from Russia or thereabouts.
But its not like bad guys are afraid of using fake IDs (as seen in Europe this last week) which brings the obvious question as to why they would bother with all that when they can just use cash and traditional banking.
The whole article is click bait of the highest order based on fud.
----
If the powers to be want to hit ISIS where it hurts how about destroying their oilfields, oil refining and transport capabilities. A few armed drones can do this on the cheap remotely. Make it clear that any oil extraction, processing or transport equipment in the area controlled and sympathetic to ISIS will be destroyed and grant these scum their wish if living in the middle ages.
That won't help one bit. You make the assumption that extremism originates from religion while it can originate from any kind of ideology. Religion is not the source of violent extremism, just the most convenient justification. Not to mention banning another religion (a very extremist thing to do by the way) is completely impractical and will only increase the division between religious and non-religious people which will only fuel the fire.
> You're right, but in practice, what other ideologies are behind attacks?
Remember the anarchists of the late 19th century? The Bolsheviks in Russia? The long Cold War? That was primarily fueled by atheistic progressivism, and killed more people than all the religious wars in history put together.
It just happens to be so that the people from the countries we have been interfering with for the last decades are mostly Muslim. Before that it was relatively peaceful and extremism was nearly non-existent. The current anti-Western extremism is reactionary.
The violent extremists disagree with you. Abdelhamid Abaaoud, the organizer of the Paris attack, said his goal was to kill as many non-believers as possible for Allah.
Like I said, religion is just being used to justify the crime. Like fighting terrorism is being used as an excuse to justify our own crimes (spying on people, torturing people, bombing with drones causing civilian casualties etc.).
They are already planning it (I think, I heard it already from Sweden). But to ban cash will be much more difficult than Bitcoin, since so many people will shout up -- with Bitcoin, who cares, when a few hackers who are probably already involved in illegal activities (drug, sex, copyright violations, .... you name it) will be mad.
There are already stores in Sweden where cash is not accepted. One notable example is the ABBA Museum, where ABBA songwriter Björn Ulvaeus believes a cashless society will reduce crime:
While a cashless society might reduce crime (for a little while), it will definitively bring an Orwellian system onto us.
Also, we have seen, that there are enough corrupt banks and bankers around, so crime will go on ... (money laundering also does work today in company with banks).
The headline is misleading. This is a Reuters reporter reporting that some ministers are planning to discuss non-bank methods of money transfer at the upcoming emergency meeting. The report seems to get it's information from a "draft conclusion" document, but does not reference it.
The headline suggests the EU has already decided to clamp down on Bitcoin, but it is far from clear to me that it will even be discussed. All we know is that some unnamed officials want to talk about it (together with transfers of precious metals, etc).
Perhaps we should be looking at GNU Taler (https://taler.net/) instead. They're supposed to provide personal liberty and many of the other benefits of crypto currencies, but without criminal security.
What is the evidence here. If i were a terrorist i would avoid any online / electronic "anonymous" transfer method like the plague. Good old print oil money is the best.
They (Daesh/IS) are accepting donations in bitcoin, I don't think it is beeing used for something else. I recently read an article, describing how a teenager was scentenced to prison, because he showed how such a transaction can be done.
I assume this is because they found the vast majority of terrorism funding is done through Bitcoin, and not just another knee-jerk reaction to "crypto" - right?!
As of right now individuals can trade bitcoin through via personal bank transfers thanks to sites like this. I see this being squeezed to death eventually, which is a real shame.
I think Bitcoin is slowing the demise of cash- I think the powers that be will prefer the devil they know (cash) over the devil they don't know (cryptocurrency).
Quite possibly the dumbest thing I've ever read on here. I hate to be cliche, but to quote Chomsky, "Everyone’s worried about stopping terrorism. Well, there’s really an easy way: Stop participating in it". Regardless, the CIA and Mossad didn't use bitcoin to finance ISIS.
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[ 2.8 ms ] story [ 179 ms ] threadThe initial reaction of my inner knee-jerk skeptic says this is another example of those in power, this time banksters, not letting a good crisis go to waste.
It's like the encryption hysteria. Look at this blatant propaganda from the BBC: http://www.bbc.com/news/technology-34842854
Some choice quotes:
"They are not using the big obvious systems at all," he tells the BBC.
They were using SMS.[1]
"They are all now using the OTR [Off the Record] protocol, which offers end-to-end encryption," he says.
"The arrests that are going on now have come from a trawl through metadata"
This is actually how they found the other would-be attackers:
European media outlets are reporting that the location of a raid conducted on a suspected safe house Wednesday morning was extracted from a cellphone, apparently belonging to one of the attackers, found in the trash outside the Bataclan concert hall massacre. Le Monde reported that investigators were able to access the data on the phone, including a detailed map of the concert hall and an SMS messaging saying “we’re off; we’re starting.” Police were also able to trace the phone’s movements.
The amount of bullshit and propaganda coming out is scary.
This is the website of one of the BBC's experts, for added hilarity[2].
[1] https://www.techdirt.com/articles/20151118/08474732854/after...
[2] http://www.pmsommer.com/
http://www.coindesk.com/uk-treasury-digital-currencies-low-m...
HM Treasury link to the National Risk Assessment carried out by the Home Office: https://www.scribd.com/doc/290214176/UK-NRA-October-2015-Fin...
To be fair, the banking sector is also orders of magnitude larger
Seriously:
>9.29 The money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the UK this risk could rise. Digital currencies are currently not a method by which terrorists raise or move money out of the UK (though they remain a viable method for doing so).
http://www.transparencyinternational.eu/focus_areas/eu-finan...
edit: HN posting limit is extremely annoying, providing no way for a sustained discussion within multiple threads.
Next you'll say those aren't true headlines, a la no-true-scotsman.
Everyone involved got their bonuses. No one was responsible. No one paid back. I don't think anyone involved cried over any fines the company had to pay.
I wonder if some of the bitcoin gambling sites have really been operated by people trying to obscure the history of their bitcoin. If they can control how fast their coin moves through the site, they have some more assurance of how many addresses they are mixed with.
"Such tumblers do a very poor job of hiding transactions, especially when dealing with a thousand or a hundred thousand bitcoins. The simplest approach is to simply look for common flow patterns."
- http://www.forbes.com/sites/valleyvoices/2015/01/15/how-pros...
All the tumblers seem inept when the only detectable tumblers are inept. You don't see the competent or succesful tumblers.
Edit: How is this not relevant? Why is this downvoted?
No, because they don't work, and even if they did successfully split up $1,000+ transactions, you can still analyse the public ledger to figure out where it all came from.
Edit: the proponents of such services also ignore the fact that anyone could be behind the tumbling services, governments included.
Mixing multiple transactions from multiple people do not reveal what came from where - you only know sending addresses, receiving addresses and amounts - but no links between which senders are tied to which recievers. Instead of having a bunch of individual historical lines for each "coin" and each person there's a big web of unknown addresses, with only a few known original senders and maybe a few known recievers. Coinjoin lets strangers securely pool together their coins and get the same amount of coins out to several new addresses of yours, except that now nobody knows which addresses belong together and which coins belongs to which sender.
Tumbling is highly effective if done properly. You need many inputs other than just your own. Then you take the outputs and you don't combine them. You can spend them via psuedo transactions with scripts, use them to store coins, tumble them some more, sell them for cash. Since all inputs are combined there is no real way to no which outputs are from who inputted them if you're smart, disciplined, and it's done properly.
I think you think that someone sends $1000 btc to a new addres, then $500 btc to address 1, $500 to address 2, does this a few times and then sends all the coins to address 56, which then holds $1000. This would be possible to trace but would be time consuming to do.
The method I mention above would safely unlink any coins in the final addresses from the $1000 you started with.
I know some people like Monero (crypto note ring signature based, not Satoshi base) but as far as using bitcoin base code, Dash (formerly darkcoin) has the best coin join like solution.
It's a decentralized, passive (done before any real transaction), denominated mixing with up to 16 rounds. Obtaining less than a 1% chance of unmasking a SINGLE transaction in their model would cost millions of $.
I don't bitcoin is going anywhere but the flexibility some of these altcoins have is amazing for development. Dash (digital+cash) btw, wants to fix every problem with bitcoin.
They have anonimity, incentivized full nodes which share the block reward, instant transactions (5 of 6 confirmations within a few seconds) and more recently a model to fund development of the currency directly on the blockchain. Developers propose projects which are voted on and the blockchain itself sets aside the budget.
Note the existence of alt coins with increased anonymity, such as ZeroCoin [2]
[1] https://en.bitcoin.it/wiki/Bitcoin_Laundry [2] https://en.wikipedia.org/wiki/Zerocoin
I think people look at bitcoin and hear "crypto" and immediately think opaque and unbreakable. Neither are true, but first impressions matter a lot.
The usual mitigation for this is to use common denominations for all inputs and outputs.
Money laundering is about moving money from illicit to licit activities. Terrorism funding is exactly the opposite.
So, yeah, money laundering needs to work both ways.
You're absolutely correct. The whole thing reeks of security theater. Those people need money for logistics -- food, clothes, lodging and so on while they plan their crimes. I don't believe that there is anything safer than cash for such purposes. Even gold would be to suspicious. I'd imagine you'd want as few people to be in the know of the activity before it happens.
Since the terrorists used cars for their attacks (there was even mention of a Volkswagen Polo involvement) I propose we ban cars for our collective safety.
I wonder, did the terrorists ever used cash, a debit or credit card ? Maybe we should ban this too then.
FYI The various known terrorists/terrorist organisations lists are a large part of Know Your Client (KYC) checks.
I mean, in a way, maybe this is what this story is all about: a great big advertisement saying "Come use this completely anonymous payment system," with a sly nudge and a wink because bitcoin's nothing of the sort.
Just imagine: a plot is discovered, payment details made via bitcoin stumbled upon - and now you have a long list of every transaction those people have ever made using Bitcoin!
(for the inevitable bitcoin cult members wanting to chime in about "tumbling" or "fog" services, aka bitcoin money launderers, 1. they're still traceable and 2. there's not enough money going through them to successfully launder a four-digit amount, let alone anything greater.)
The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public ledger".
>The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public" ledger.
I very briefly addressed this at the bottom of my comment.
In short order:
- Tumbling is traceable: throw a beefy server at the list of transactions, and since you know how much money arrived in someone's possession on a given date, you can now trace it backwards by crunching the numbers. Analysing long lists of transactions like this is something computers are really good at.
- But that doesn't matter, because tumbling sites can't work: they don't have enough capital in them to successfully launder more than a few play dollars at a time.
For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC
The only way to trace these is to compromise the exchange servers, get account information, and subpoena transactions from the banks. Very difficult to do given the international nature of these exchanges and banks.
I was specifically addressing tumbling services. I'm guessing that you accept those services are easy to compromise (heck, for all we know, various governments might operate the current ones) which is why you bring up currency conversion.
>For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC
Let's turn this around: you have a list of transactions, you know when they took place, you know where the money ended up, and now you're tracing the line backwards, knowing that at some point, there will be a connection (or connections) to other transactions at least as big as this one; why do you think this is so hard to analyse?
>The only way to trace these is to compromise the exchange servers, get bank account information, and get transactions from the banks. Very difficult to do given the international nature of these exchanges.
Not really, given how little is known about some exchanges' operators.
Why do you insist it isn't.
1) bitcoin to cash or cash to bitcoin is pretty hard to trace unless you catch the actual handover.
2) As for the 'connections'. Anyone who knows what they are doing would spin up a wallet per transaction making connections non existant.
Of course mistakes can and will be made, at which point using bitcoin can become a bigger liability than cash/banks because everything is public. But given perfect usage, it is extremely difficult to ascertain any information.
You could trace it if the person getting the outputs was dumb enough to recombine them or spend them in all the same way. I suspect most people who tumble store the coins in those addresses and only spend small amounts later.
Tumbling has been used by people being tracked and has been effective at them not being caught. Read the bitcoin forums.
I hope you realize that you haven't actually described a process for tracing Bitcoin transactions. You can't just take an arbitrary problem, say "throw a computer at it", and consider it solved.
I don't mean to be abrasive, but you are clearly ignorant of the state of affairs of Bitcoin anonymity systems. Look up coinjoin, for starters. When you have highly-connected (in the graph sense), properly conducted mixing systems, you can't just "trace the transactions".
Bitcoin is indeed untraceable, with care.
Are you sure about that? I believe most of the onion drug markets have their own tumblers running in the background, so sending money to them and then withdrawing it should get you mixed funds. I'd expect the scale of business of those sites to result in quite a large mixing pot.
Someone has yet to successfully explain how you differentiate coins once they enter a single wallet. Say you know with certainty who owns a given address. That person makes a transaction sending the coins to another wallet, and the owner of that wallet makes another transaction.
You do not know who controls the second and third wallets. It could be the original owner splitting their money up. It could be a legitimate business accepting payment for services.
There's no way just looking at the blockchain to tell the difference between 'tumbling' and other perfectly normal transactions, save for very easily defeated statistical analysis
So no, such mechanisms are not traceable by any reasonable metric.
You're right about the volume of plausibly tumble-able money being low, but it's at least in the five or six digits per day.
The fallacy here is, Bitcoin doesn't actually move money. It can only move ownership of money. If I want to finance terrorism, there must already be someone with e.g. $1M where I want it (in Islamic State), so that I can trade 3000 BTC with him/her.
They do ask for ID documents and perform AML checks, but then again so do all proper bitcoin exchanges with the exception of the shady btc-e from Russia or thereabouts.
But its not like bad guys are afraid of using fake IDs (as seen in Europe this last week) which brings the obvious question as to why they would bother with all that when they can just use cash and traditional banking.
The whole article is click bait of the highest order based on fud.
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If the powers to be want to hit ISIS where it hurts how about destroying their oilfields, oil refining and transport capabilities. A few armed drones can do this on the cheap remotely. Make it clear that any oil extraction, processing or transport equipment in the area controlled and sympathetic to ISIS will be destroyed and grant these scum their wish if living in the middle ages.
Targeting religion is not quite fair, to be sure. It's the general war on rationality that is causing so much damage.
Remember the anarchists of the late 19th century? The Bolsheviks in Russia? The long Cold War? That was primarily fueled by atheistic progressivism, and killed more people than all the religious wars in history put together.
The violent extremists disagree with you. Abdelhamid Abaaoud, the organizer of the Paris attack, said his goal was to kill as many non-believers as possible for Allah.
ISIS kills believers of Allah in Syria and other places because it's trying to solidify it's power as a government.
ISIS is attempting to start an Islamic Caliphate, considers anyone standing the way of them do so as an apostate, and kills them as such.
The goal here isn't to stop what people think, but what they can do.
Extremists are not a problem, as long as none of them slip through our monitoring and control of them?
Of course the goal is to stop what people think - or would you like to make the same claim regarding racism?
Thought police states are how extremists are born.
Private banks run the western governments. There are people who own the banks. [2]
[1] https://en.wikipedia.org/wiki/Cui_bono [2] http://www.scionofzion.com/federalreserve.htm
https://en.wikipedia.org/wiki/Politician's_syllogism
Where is our community long term planning?
They (people that nobody voted for doing what they do) are engaged in this unrightful activity without no punishment in sight. This is wrong.
I mean, if the payment process was the problem, they should ban money.
An ABBA Star's Campaign for a 100% Cash-Free Sweden http://www.bloomberg.com/bw/articles/2014-10-28/abbas-bj-rn-...
Also, we have seen, that there are enough corrupt banks and bankers around, so crime will go on ... (money laundering also does work today in company with banks).
The headline suggests the EU has already decided to clamp down on Bitcoin, but it is far from clear to me that it will even be discussed. All we know is that some unnamed officials want to talk about it (together with transfers of precious metals, etc).
http://www.dw.com/en/us-teenager-sentenced-to-prison-for-sup...
As of right now individuals can trade bitcoin through via personal bank transfers thanks to sites like this. I see this being squeezed to death eventually, which is a real shame.