Bitcoin Forum

May i raise the quest to the community to collect  the most extensive analysis yet about what is happening in the blockchains overall
as well as of crypto coins that are/were used criminally ordered by those connected to crime most severely and certainly?  Ultimately  this could result in informing users about the traces of their transaction partners and marking most money in a whitetlist of most money or red list of some  and attracting consensus between several entities.

What are starting points for this?
(Will you like this to be a "DCO" with swarm.fund? I'll be up to contribute hours and a little money too.  )

I know this topic isn't novel yet too important to let it as widely un-heard, un-done as it is yet.
Please mention any existing approaches.

this post was edited: it was called "tainted bitcoins"  only at first and as long as page 1

Why is this relevant? Bitcoin will cease to be as useful as it is if we start treating 1 Bitcoin from address X differently from 1 Bitcoin from address Y. These types of researches and lists will only be useful to make white and blacklists, which are very much the opposite of what we're trying to accomplish with the whole cryptocurrency technology.

Why don't we "blacklist" all fiat notes connected to crime, too? ::)

How about : no, fuckoff?

i think a coins is where you can get it everywhere is could be infected to intervention of crime :P


lol agree. and maybe your fiat is intervention of crime too, so beware :D

If I'm not mistaken, I've read exactly on these forums that a quite high percentage of dollar bills have a trace of cocaine powder in them. I don't know if that's true evidence, but it just makes us remember that many fiat bills we hold might have went through the hands of criminals. Do we stop using them for legal purposes, just because of that? Obviously not...

I think its unreasonable for you to be held responsible for having bitcoins (or any fiat) passed to you in honesty when they have been through illegitimate places. Its impossible to really enforce this.

That's not a reasonable example in terms of fiat... Some banks still have a system of where they have a booby trap implanted in "money bags" they give to robbers when they hand over large amounts of money to them.  When they open the bags, large amounts of red/blue ink spurts all over the notes and themselves which is essentially impossible to get off the money and very hard to wash off of you (the robber)... This represents what could happen with bitcoin, and why the fungibility issue is really a bigger issue than a lot of people on here would like to admit.

Why don't you go OP and collect all of the dollar bills that were used for buying drugs, weapons, and murders? You might wanna have fun this way as well if you want to make a list of bitcoins used for such endeavours.

No, I think you are just trolling, nothing else!

US government is selling 'tainted' bitcoins on novemebr 5th
44,000! of them

so either this 'tainted' bitcoin idea floating around is pure bs, or it's one rule for the biggest criminals in history and another for joe bloggs (john doe)

http://www.coindesk.com/us-government-to-sell-44000-btc-in-final-silk-road-auction/

information and freedom exclude eachother?

Digital cash allows deeper analysis than blue/red paint.   By network theory, who has the records/information to assign persons and deals of a miniscule portion of all to their respective adresses and transactions in the blockthen, may be able conclude/lay open most of the remaning puzzle.

"incoming payment 1 BTC
 96.82% this was used to purchase weapons by the sender
 99.97% either by the sender or the previous holder"
 [+ view detailes path of conclusions all through the blockchain]
 [accept payment]  [deny/return] [donate to charity]
[report] [notify sender]"

"incoming payment 0.1 BTC  from a sender who spends 932 trandactions per year in for charity accounting to >90% volume"
[+ view detailes path of conclusions all through the blockchain]
[accept payment]  [give partial refund]

Cash can be tainted too. Money is money and most people would accept it irregardless.

How would you know what had been bought with that Bitcoin? Also, those two lines "96.22%..." and "99.97%..." don't make any sense as to how would the sender be able to use the same coins twice to purchase weapons and such?

Generally this will not work. The majority of large crimes have had their txids and involved addresses published (scams, thefts, hacks, etc. all have txids reported by victims) but the coins are broken up and distributed among thousands of addresses. They go to anonymizers (coinjoin, mixers), paying other people for stuff, etc. and get broken up into tiny pieces that pretty much taint every address. And there is no certainty after the first transaction that any of the following addresses in the chain belong to the same criminal, if a criminal at all.

If you want a large list of major scams and thefts of Bitcoin, there is a thread floating around here somewhere that is pretty exhaustive. Of course, it only has the known and big publicized stuff, not stuff like petty crimes like buying drugs

Edit: here it is. It's a little old though: https://bitcointalk.org/index.php?topic=576337.0

lol. my sentiments exactly!

Thanks for the link. Any more?    Is there any organized consensus to keep/confiscate crypto payments, if the chance should happen, that someone tried to spend/deposit directly from an adress known to have stolen 1000s of BTC? ;how did/does the best practice/legislation around develope?

Intermediaries take responsiblity of attempting to create that fog around their sets of addresses and customers.  
A lot of behavior is recognize-/reverseegineer-able.  The decentral stucture/transaction fee and block size set a relatively low limit to the confusion and the required computation to analysing the blockchain.  

just phrased raw vision what was possible if a major player - bank of america, facebook or some union (if cryptocurrencies win)
would integrate Bitcoin (- else, for now, coinbase? -)  and apply their significant portion of knowledge of everything happening in the blockchain to even translate every other transaction as well.   

Everyone is connected. There are no random transactions.  How far you may get solving the puzzle depends your seed/source. By amount, validity and distribution of your information the amount and likeablity of clues increases exponentially.  Computers win "guess who?"

    Yes, better UI would use a conjunction instead like 96.22% it was the sender but 3.75% the previous owner, just typed separated guesses to sound like some AI, since today AI have a reputation using dumb language.

   

The reason I think the idea is abhorrent is that somebody has to control the blacklist.

It is doable if you can get 51% of the miners on board. The miners simply refuse to accept transactions and blocks involving blacklisted addresses. Even mixers can't get around that.

Anyway, it is an old idea that will never happen, but if you are still interested, look up "bitcoin red list".

The problem is the scammer send it to other adresses and you cannot say if these adresses still belongs to the scammer. Plus over time, so many people have traits to this original stolen 1000s of BTC. Thinking your newly bought coins from exchange are completly clean is naive, I bet most contains small traits to old scams the same way as most cash bills in circullation could be tracked to crime (if it was possible).

Currencies must be fungibile https://en.wikipedia.org/wiki/Fungibility (https://en.wikipedia.org/wiki/Fungibility)

They do not. However, some information might not be useful at all, or just that: information.

It's praiseable if you want information, that you feel the need to search and find. Some topics have been already laid out, and there's also a discussion thread posted a few posts back. But from that to anything blacklist related... It goes a long way, and "blacklisting" is something we definitely don't want.

If someone receives tainted coins, he or she would definitely like to be able to spend them, and not have them blocked just because they once were used for scams/were in an address of a scammer.

You will never be able to identify all these coins, even if you spend years trying to... most of those coins has gone through mixers by now, and these companies will never give up

that information, even if you tried to subpoena them.

In the end, people who are innocent of those crimes, will end up losing their coins... they are not even aware that they were used in those crimes.  :(

Yes, that's the way I see it too.  I have almost two years in BTC, and mine have come from all kinds of places.  And then sent on, mixed, new wallets, etc.  Almost anyone who is imaginative can hide their trail rather well if they do not mind spending 1.5% or even less (for a very thorough job).

I also agree that were there a way to actually ID and "freeze" tainted BTC that it would be the beginners and less sophisticated who would lose their BTC.  The real crooks have probably already buried their BTC beyond reach.


EDIT:

This does not appear to work anymore, but coinalytics used to have a free tool to track BTC from a wallet (so you could see how well you hid your outgoing BTC).  Link does not work, but takes you to their website, too bad, that was a great tool:

http://coinalytics.co/tools/tracker.html

Thanks for mentioning coinanalytics.

todate there have been less than 87 million bitcoin transactions.  
and the block chain is less than 44gb in size.  
Almost half the daily transactions are done through 'my wallet' according to blockchain.info
What may be the biggest portion of transactions any provider or party is yet able to translate?

An addititional data source in analysis can be recording IPs of most/all active nodes.  
You cant know how many parties already do so thoroughly


Tumbling/obfocusating by for example 10000 transactions will cost several bitcoins in fee - And take a long time to mimic a natrual duration of changing many hands distant/unrelated to eachother none of the intermediary addresses will be linkable to any real purchases  or identities.
I assume many real crime and intermediary providers do not behave completely longsighted.



What would you think about such positive or negative notifications to accompany anyones transactions without enforcing.  Yet not even mentioning rather unsure cases?

What about the innocent act of depositing BTC to a localbitcoins account and withdrawing and/or selling the equivalent number coins over the next few days? This is the simplest case you need to properly handle (without any additional information from localbitcoins) before you can even talk about mixers, CoinJoin or what not.

A. easily traceable/open , simple purchases in big shops or donations to published adresses or verified identities and/or known IPs    

B. unknown2unknown transactions.   Traceable only through conclusions hence they use proxies/tor or so
plus Localbitcoins (minus all the people on localbitcoins who will happily use the same/connected addresses all the time.)
or mixers which are willing to spend huge portions in fees, act slowly but for many customers simultaneously

What if A gets whitelisted though and transactions that stay unkown2unkown are in anyway only few percent
and have some acorrelation with crime?

Then people who are already within A and dont generally feel need or see value in anonymity,
would tend to avoid transactions with B even more and the separation between both would grow.

Buying stolen goods for example will not make you actually gain ownership  (It differs between countries/legislations)
I assume same is for taking/trying to spend those tainted fiat notes from robbery even when you werent the thief, yet not for indistinquishable notes because it would be far harder to expect? Yet the blockchain is public and such automated ratings/whitelist may become avaiable to everyone.

localbitcoins was banned in germany.

a blockchain visualizer: http://www.elliptic.co/intelligence/

I don't think we need to go to that extent. I think even if you managed to compile a list of all the coins that are supposedly being tainted and have it offered for free (assuming if you have the private key to access it), there are still people who would want it regardless of whether it is tainted. The point is, there are many ways to even mix it around until it becomes almost negligible, so would it matter where it has gone to and where it has original come from?

Your right, this law is common. It just makes job easier, but at expense of those buying stolen goods in good faith. Pretty good example of bad law, like I cant find and punish the bad guy, so at least I punch this little poor one...

why dont you guys think it can happen and needs to be checked?


(As said,) if any relevant parties, like wallet providers would whitelist/identify most,
and share the information between eachother (or through public API),
that would still practically corner the remaining few. Since, if people have choice between distiguishable and undistiguishable bitcoins the more people may voluntarily chose distiguisable ones. Many of those legislations that already tolerated or accepted bitcoin also already require companies to identify customers as if they were banks.  Same could/does happen to mining pools?

thanks ( https://bitcointalk.org/index.php?topic=334165.0  )
-and by every such entity the destinguishabilty of every bitcoin may rise exponentially.

Depends destinguishablity. Yes, often unfair if law should intent to be strict even for hard to destinguish things just to aggressively promote to better keep care in the first place.