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June 09, 2013, 07:16:19 PM |
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With things like Zerocoin or (realistically for a not-so-long time frame) P2P mixing on the radar, I was already thinking about how I would use those to enhance my anonymity when there will finally by some people accepting Bitcoin near me in the future. The scenario I think about is like that:
* I have some total balance on my wallet (except what is in cold storage for long-term saving), where I assume it is not at all anonymous because parts may be from my public donation address, exchanges have my identity because of AML regulations, or because I posted with my real name on a local group mailing list asking to buy in person and at least the seller now has my real name plus Bitcoin address.
* When I now make some purchases, I don't want the seller to know who I am / how many Bitcoins I have in total / things like this, and I also don't want the public to know what things I buy, assuming the receiving address of some business I shop at is public. (For instance a printed QR code in a pub.)
* Thus, having Zerocoin or some P2P mixer, I decide to run 1 BTC through it and cash out at a fresh wallet (possibly on my mobile phone for easier spending on-the-go). This has to be some "standardised" amount, though, I can't do it with 0.182673 BTC.
* Now I have 1 BTC to spend on some purchases. While it will be possible to link together all items I bought with that 1 BTC, it won't be able to determine who I am, how many Bitcoins I have beside this balance, or what else I bought before that "1 BTC batch" or what I will buy afterwards. This is acceptable privacy for me.
The only thing I can never really work out is what to do when the amount remaining of these 1 BTC is no longer enough for more purchases. Say I spent some 1 BTC batches already, and from each of those 0.01-something BTC remained as final change. Thus I end up with some coins spread accross multiple wallets. Is there any way to reconcile those into a combined balance, so I can make use of them again, without compromising my anonymity? Or is all I can do then donate anonymously to some charity accepting Bitcoin?
The problem I see is this: As soon as I generate a transaction with inputs from those balances, even if it was just again to "mint" a 1 BTC zerocoin, it would become public that in fact all those 1 BTC batches were linked to me (or at least to each other). However, it is also not possible to anonymise each change balance before that, because I have to send some standard amount to the mixers ... and it would probably be hard to find "mixing partners" for my change amount, right?
A possible solution I see would be to have an account at a "centralised mixing site", say some online wallet or even the Silk Road or something like that. I could then send my change back to it at new addresses each, and when my balance exceeds 1 BTC again, withdraw a full Bitcoin to mint a fresh zerocoin with it. Then probably only the site operator would be able to link everything to me.
I hope I could explain my thoughts clearly ... sorry if it sounds confusing. Do I miss some important points, or is there really no nice solution for this problem with things like Zerocoin or P2P mixers? I'm curious about other thoughts about that!
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