Bitcoin Forum

Last year, a group of Cambridge cybersecurity researchers have released a new report that demonstrates a new way of tracing tainted coins on the Bitcoin Blockchain. With their "Taintchain" algorithm, it'll be possible to trace dirty Bitcoins with the purpose of putting an end to money laundering. The group claims that Bitcoin is not cash, due to its highly transparent nature.

As such, it makes me wonder whenever this will negatively impact Bitcoin over the long term. If widely adopted by the authorities, then it'll be easier for them to spy on anyone's transactions. Of course, I'm against money laundering or other illegal activities on the Bitcoin Blockchain. But I'm afraid that this will greatly threaten the privacy of Bitcoin users as we know it.

You can access the official site of the Taintchain algorithm here: https://www.cl.cam.ac.uk/~is410/taintchain/ (https://www.cl.cam.ac.uk/~is410/taintchain/)

Nonetheless, what are your thoughts about this? ???

Well, we have to face the fact that actually Bitcoin is not that very private or anonymous as all transactions are actually recorded in the ledgers and they are no hidden from the public view. In fact, this means to say that the government and regulatory bodies have nothing to worry about Bitcoin and is even making their jobs easier. Now, how will this affect people who are very much concerned on privacy? That can be the question that should be answered squarely. As for me, as of now, I really don't care as I don't have any wealth that I feel I should hide from the world -- that is for now but as to the future then maybe I don't know.

Sorry but i can see a good benefit from this proposal, the authorities can track the bitcoins stolen easily as we know that so many exchanges got hacked during this time and it is too hard to track the transaction. On the other hand privacy is a big deal here and people gonna be thinking twice before accepting payments if they find out that those bitcoins were stolen by someone.

but will they really do that?
that has always been the problem though. these services are rarely used for the benefit of users. next thing you know is that IRS is the biggest user of them trying to catch those that didn't pay their taxes so that they can make more money, while the real criminals like the hackers you mentioned are roaming freely.

I'm sure there will be more innovation if that's really become a problem. But as a user, you can still be anonymous if you do it correctly even though it might be more difficult to use your Bitcoin. For example, instead of using a single mixer, you can use multiple mixers to send your bitcoins, or we can adopt mimblewimble to increase privacy and stuff like that.

The concept of "taint" has actually existed for a while now. Check this question out from 2013:

https://bitcoin.stackexchange.com/questions/7966/what-are-tainted-coins-exactly

I wouldn't be surprised if an algorithm similar to this is already being used widely by governments. As for the privacy concern, I don't think so. I mean, Bitcoin is completely transparent anyway, so if someone wanted to breach your privacy(?), they could do it with or without taint algorithms. This is why it's important to protect your anonymity, which in this case is very different from privacy -- your transactions could be public while your identity is private.

I don't think the IRS will care about tainted coins
They care what you do after you cash in and that is far easier to track and to prove if you try to avoid paying tax. Besides, as long as avoiding paying taxes on a form of revenue is illegal, you really can't blame the IRS for doing their job, even if you don't like it.

Anyhow, do we have an example where such a report based on "tainted" coins has led to somebody getting sentenced in a court?
And I mean "tainted", not tracing funds between two addresses.

Privacy does not mean that no one can know my Bitcoins/addresses but no one can know that I do those transactions.
So now if you trade through the Cash, no one will know "except you who traded with" you do these transactions, but using this algorithm can know that there is someone who made the transaction and sent money to the address and so on.

If you consider this to be a problem, there are some cryptocurrencies that allow open/traced transactions.

Every coin that has moved beyond its mining address is 'tainted'. You'll be able to trace what's in your wallet to some dodgy activity without fail.

There'll have to be levels of this otherwise it's going to be useless when these 'experts' realise all of BTC is one swirling cesspit. I don't know how you'd decide the levels either.

This is somewhat against the ethos of bitcoin as the main purpose of the creation of the said cryptocurrency is to promote privacy and at the same time, transparency. We know for a fact that the data is publicly and readily available on the blockchain, however the taint isn't. Also, what if the coins used on a 'clean' transaction is tainted with the 'dirty' ones? How would one discern the difference between a fraud transaction and a normal one? They only can trace the taints, but not whether the transaction is a fraud or not. At one point in time, most transactions will be using 'dirty' coins, so how would they address that.

Bitcoin will keep on improving for sure. There's already been several mixing services with the purpose to "launder" tainted coins. New developments such as TumbleBit and ZeroLink will make Bitcoin more private for the whole world to enjoy. Even if Bitcoin remains highly transparent as it is right now, there's always the choice of privacy coins like Monero and Grin. As for Taintchain, it's good in the sense that it'll allow the authorities to easily track criminals using the Bitcoin blockchain.

However, it could be bad in the sense that the government could use that same algorithm against its own citizens (like spying on transactions, etc). In case Bitcoin becomes highly surveilled by governments, people would resort to other alternatives like the ones mentioned earlier.

I guess that if one is not doing anything wrong with Bitcoin, there should be no reason to worry. In fact, Taintchain would prove to be highly beneficial towards the legitimacy of Bitcoin as a real currency for the mainstream world. Time will tell us what the outcome will be with new discoveries brought by researchers around the world. Just my opinion :)

You can bet that it's already highly surveilled (https://theintercept.com/2018/03/20/the-nsa-worked-to-track-down-bitcoin-users-snowden-documents-reveal/) by governments. As long as people don't reuse addresses and make sure none of their addresses are linked to them then they can remain anonymous. You can't be anonymous to your bank (or a curious 3 letter agency if you use the bank's networks), but you can be anonymous to the bitcoin network.

What do you mean by "not against money laundering".Do you support it? ;D
If this taintchain algorithm really works (I doubt it works) this will help for clreaing the blockchain from all the "dirty" transactions,which will end the "bitcoin is a money laundering tool" FUD.

bitcoin has never been anonymous so there shouldn't be any "negative effects on bitcoin in the long run" anyways because anybody who chooses bitcoin doesn't do it to remain anonymous. if they wanted that then they would have used anon coins instead.
these blockchain analysis methods have always existed and will keep on improving as the time goes by but they will never be perfect and will never be able to exactly "track" everyone and everything. so there is no negative effect on that front either.

If BTC makes an attempt to become fully private a la Monero there's going to be one hell of a fuss from the authorities who've 'permitted' it to flourish so far.

In Japan and S Korea exchanges are being strongly 'advised' to not list privacy coins if they want to stay in business. That's going to spread.

It would be nice to see more awareness of what you can do with BTC as it is to retain some confidentiality. It doesn't seem to be mentioned all that often.

Lol. I did make a typo when posting this thread, but I was referring that I'm against money laundering. The Taintchain algorithm proves to be highly beneficial for this and could help legitimize not only Bitcoin but other transparent cryptocurrencies as well. However, I'm afraid that the same tool used for good, can be used for evil among governments to spy on their citizens' transactions. I'll be the same way as the Internet where there's massive surveillance by top governments of the world (like the US), with lack of privacy.

Nonetheless, it'll be interesting to see how everything would turn out to be in the future, once this algorithm is used among worldwide governments. :D



That's certainly true, mate. The only reason why governments have been so friendly to Bitcoin, is because it's a transparent cryptocurrency. It has all the probabilities of becoming regulatory compliant with ease, as it's easy to trace every transaction on the Bitcoin blockchain. That's not possible with privacy coins like Monero and Grin, which could face a complete ban from governments in the future. Untraceable cryptocurrencies will be hard to comply with existing regulations, which makes many exchanges think twice before adding them to their platform.

A good example of this is Coinbase, which has added Zcash on top of Monero due to its transparent aspects (t-addresses). Since Monero is fully private, it has not attracted the likes of most centralized exchanges, as they need to comply with KYC/AML laws.

Nonetheless, I think that Bitcoin's transparent design is good in some sort of way, as it allows it to be recognized as a legitimate cryptocurrency worldwide. Just my opinion :)

That looks complicated to use for beginners.

Is there a free, easy to use way of checking whether addresses are tainted?

Thanks.

Even if an address was tainted, it may only be declared so by one entity and no one else will care. And that one entity may not publicly declare the actual address either.

So if bitcoins are not considered cash due to its transparency and can be tracked easily, does that mean that fiat is the best candidate for money laundering due to its anonymity? Idk why Taintchain wants to do something about taint analysis when in fact it's already readily available if people really want to follow the trail. Also, what if the unknowing, innocent people received the tainted coins? Would they be a subject for interrogation if ever? This will just show that the majority of the coins in circulation is actually dirty and people might even avoid using bitcoin for their own safety.

I dont think this could affect a lot bitcoin and thats because people can still use bitcoin anonymously with having to reveal their identity. So i dont understand how it helps someone if they trace dirty bitcoins since you dont know who is the person who used them. A bitcoin travels all around the world , going from one adress to another so its just like paper money wich travel a whole country because people use money every time.

I think the system would be unfair to innocent people receiving those tainted coins.
How about those hacked coins that are freely circulating up until now?
Nobody knows where they all ended up with. We might be receiving those coins from the exchanges that we are currently using.
This is too complex for me right now. Maybe, they will find a better way to address this scenario.

Good point. Cash itself is anonymous and can be used for criminal activity at a higher level than Bitcoin. On the other hand, Bitcoin is completely transparent and open to anyone who wishes to analyze or explore the blockchain. I believe that this is more of a feature, than a flaw itself. This is because, a transparent Bitcoin will add more legitimacy to it than other cryptocurrencies that are fully private. No drug dealer or money launderer would ever want to use Bitcoin because of this (which is a good thing).

That's why, most criminal activity has taken part mostly with cash than cryptocurrencies. While this "Taintchain" algorithm is impressive, it doesn't reveal anything new. Bitcoin has always been a pseudonymous cryptocurrency, despite being marketed by many as completely anonymous. For people who want to track their balances anytime, and invest into a good store of value, there's Bitcoin. But those who prefer anonymity or privacy to do other things, will choose Monero or Zcash on top of BTC.

Nonetheless, it's good to know about this, since it will add better legitimacy to Bitcoin as a cryptocurrency for the mainstream world. Just my opinion :)

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