Bitcoin Forum

I've attempted to understand the technicalities of blockchain analysis, but some basic yet critical piece seems to have escaped me. Even if one could theoretically tumble their coins a enough times and remove all taint, why would it matter if someone is tracking you already? If they know you have a wallet with dirty coins, don't they "have your number" and could follow your transactions regardless of whether the BTC in your wallet are dirty anymore or not?

no, that's the point: once you tumble your coins, they don't "have your number" anymore.
You get different coins in a new address.

use something like shapeshift.io and go through Bitcoin -> Monero on shapeshift ->  monero wallet -> mixin 10 to -> another monero wallet -> back to BTC on shapeshift.

In theory, when you tumble your coins, you will not place the "new" coins back into your original "dirty" coin address.
If you did do that, then tumbling is pointless.

Take your Bitcoins, send tjem to the exchange and buy Litecoins. Take these Litecoins and send them to the other exchange where you will buy bitcoins. Withdraw bitcoins to your wallet. Untraceable even though you will lose a bit in exchange rates.

Those exchange rates and withdrawel fees are neglible if you really want to get anonymous.

Biggest problem here is that exchanges can still give your info to others..

I suspect that the vast majority of "coin tumblers" would not stand up to proper analysis with sufficient resources.

That being said, if a particular mixing service were able to completely eliminate any ability to connect a source of funds to its intended destination, then it would still be necessary for the sender to take care not to leak their connection to the transaction.

As an example:

Albert wants to make a purchase with bitcoins.  He is concerned that the bitcoins he owns can easily be traced to him (he purchased them with a bank transfer from an exchange that required him to supply stringent identity verification).  He does not want the items (or services) that he is purchasing to be traced to him. He passes the bitcoins through a "mixing service" that does a perfect job of disconnecting the source from the destination.  Then the bitcoins go to the merchant where Albert supplies his mailing address to have the items shipped to him.  The merchant is now able to connect the purchase to the mailing address.  If that information becomes public (the merchant is arrested, or the merchant is a law enforcement operation, or the merchant is a criminal that sells the information, etc) the mailing address can be connected by the bank to the original bitcoins.

They have what?  ???

There are apparently more possible Bitcoin addresses than grains of sand on Earth, and addresses are free, your software can generate a new one for you instantly.  Given that new addresses are free and convenient you wouldn't send your tumbled coins back to your old address would you?  The point of the tumbler is to break the connection.

It's not perfect, but it might be the easiest way at the moment until technology doesn't advance further.

Anyways, I am sure that we will have completely anonymous ways of senring our coins in the future.

if the mixing service is doing their job properly it is impossible to trace those transactions to the source. because for example when you enter some bitcoin (10BTC) in one address and you get the same amount in a couple of addresses with different amounts (1BTC) it can not be traces with amounts entering and exiting.

additionally you can add time difference between then , for example you get the first 2BTC now and get 5BTC after an hour and the rest tomorrow. all in different addresses and different amounts. i don't see any way to trace these.

Are there any known cases, where mixer/tumbler service providers have been successfully subpoena to reveal the source address of anyone criminal act done with Bitcoin before? Not that I know of..

I also doubt that these services are working with government agencies to gather information. {Honeypots}

The question is... How much information would be revealed, if these services were compromised. {Hacked / Infiltrated by governments / Forced by legal means}

It is a matter that needs more discussion... We trust them, because there are no history of this happening... but it's not to say, that it could not happen in future. How do we prevent that from happening? 

even if they know about your address they can't actually do shit to track you back, it's no like in the address there is your name street or whatsoever labeled above it

unless they start search for exchnage where you have exchanged bitcoin for fiat you are pretty much secure from traceability, so i say they aren't needed you cna be anon without a mixer..

If you are suspicious and they track your first address, then mixer ( tumbler ) is useless if you transfer 100% of the amount to another address and pay with it, because they will know, but if you send 12%, 48% and 40% to three different addresses than it really works.

it should be noted that taint isn't proof of identity.
if I send Bitcoin to some dude in China and he then
spends that coin on something illegal, it wasn't me,
even if there is 100% taint.

Taint may be grounds for suspicion but hopefully
never accepted as proof by itself.

I understand he refers to his address, which is assumed to have been previously connected to his identity. Hence the responses telling him he can create new addresses.