About the traceability of Bitcoin

[jmolmo]

Hi all,

Just a very beginer in the Bitcoin world, and I'm trying to understand all implications. So, I'm trying to figure out what happens in the following scenario with my current understanding of Bitcoint technology.

I imagine Bitcoin to behave like a physical banknote, but with unusual face values, for example 0,0135 BTC. Of course, the global Bitcoin network is like the mint that creates such "banknotes" and certifies its value.

So, as an ordinary banknote, it has a "serial number" that can be traceable.

If you take money from an ATM machine, the system will record that you withdraw an amount of money in cash, but certainly I'm not aware of any ATM machine that also records the serial numbers of the banknotes you withdraw.

But I think this is not the case with Bitcoin!

So, if I have a Coinbase account in which I've to be fully identified (like in any other brick-and-mortar Bank) and I buy Bitcoins using my credit card thru the Coinbase platform, I'm fully identified. All right, I understand it.

I also have an Electrum wallet in my PC.

If I send 0.1 BTC from my Coinbase account to an address of my Electrum wallet, the only information available will be that 0.1 BTC has gone from my Coinbase account to someone's else, that could be myself or not if I'm paying for some service, or is a tip or a donation.

But if I now pay something, sending the 0,1 BTC from my Electrum wallet to a Bitcoin address, it can be proved that the very same 0.1 BTC that I sent at first to some unkown recipient, has been also sent afterwards to another recipient, and imagine that this other recipiet is fully known (for example, some shop that accepts payments in BTC).

In this way, it can't be 100% proved that I did the second payment, but certainly it would be highly suspicious, isn't it?

So the question is: Do thing work this way?

Thanks,

[TryNinja]

You can use a mixer (e.g ChipMixer) to break this link between the Coinbase address and the final destination. You deposit in ChipMixer (the 0.01BTC which was spent on March 29) and they gill give you a “chip” (a private-key) funded with coins received on the date March 22 (example). This way, there is no direct connection between the transactions.

Coinbase -> Unknown Address A (ChipMixer)

- break the link -

Unknown Address B (ChipMixer’s chip) -> Final address.

[theymos]

https://en.bitcoin.it/wiki/Privacy

[Jet Cash]

Leaving aside the use of a mixer, you could break the use of a proof of payment chain by using a throwaway wallet. Create a wallet, and send the coinbase coins to that. then make the final payment. Whatever you do, you will probably create a taxable withdrawal from coinbase, but you could claim that the coins were exchanged for cash in a personal meeting, and the final payment was not from you. My personal view is that this is deceitful, and should not be encouraged though.

[Awesomus Maximus]

Create a wallet, and send the coinbase coins to that. then make the final payment.

Yes, this is a great idea. Even more, I think this throwaway wallet can be another exchange's wallet. I don't think it will make any difference, provided that the exchange doesn't require KYC or other forms of identification. For example, decentralized exchanges can serve this purpose very well. Just make sure there are no surprises in terms of withdrawal fees.

[nakamura12]

There's no doubt that the best option is to use mixer where the mixer will hide or disguise where the bitcoin came from by breaking the link as mentioned in previous replies. The mixer will break the link between sender and the receiver/final address so it will make it hard to trace the transaction.

[andulolika]

Hi all,

Just a very beginer in the Bitcoin world, and I'm trying to understand all implications. So, I'm trying to figure out what happens in the following scenario with my current understanding of Bitcoint technology.

I imagine Bitcoin to behave like a physical banknote, but with unusual face values, for example 0,0135 BTC. Of course, the global Bitcoin network is like the mint that creates such "banknotes" and certifies its value.

So, as an ordinary banknote, it has a "serial number" that can be traceable.

If you take money from an ATM machine, the system will record that you withdraw an amount of money in cash, but certainly I'm not aware of any ATM machine that also records the serial numbers of the banknotes you withdraw.

But I think this is not the case with Bitcoin!

So, if I have a Coinbase account in which I've to be fully identified (like in any other brick-and-mortar Bank) and I buy Bitcoins using my credit card thru the Coinbase platform, I'm fully identified. All right, I understand it.

I also have an Electrum wallet in my PC.

If I send 0.1 BTC from my Coinbase account to an address of my Electrum wallet, the only information available will be that 0.1 BTC has gone from my Coinbase account to someone's else, that could be myself or not if I'm paying for some service, or is a tip or a donation.

But if I now pay something, sending the 0,1 BTC from my Electrum wallet to a Bitcoin address, it can be proved that the very same 0.1 BTC that I sent at first to some unkown recipient, has been also sent afterwards to another recipient, and imagine that this other recipiet is fully known (for example, some shop that accepts payments in BTC).

In this way, it can't be 100% proved that I did the second payment, but certainly it would be highly suspicious, isn't it?

So the question is: Do thing work this way?

Thanks,

You shouldn't link your wallets, one of the best mixers might be altcoins but you never know.
When you make a transaction i think you might leave your ip around, so coinbase could link
other sites aswell, privacy is very harsh these days even if you take all these measures, could say they are pointless without extreme care. But nothing to do with bitcoin itself as you can mask your ip afaik.

[PrimeNumber7]

You can use a mixer

use of a mixer,

best option is to use mixer

I would invite all of you to review this thread. An attacker can use the "services" of a mixer, and use advanced blockchain analysis to determine most if not all of the addresses used by the mixer, and can use additional analysis to trace specific transactions.

PS - sending coins to a single intermediary address is not going to enhance privacy more than marginally

[TryNinja]

You can use a mixer

use of a mixer,

best option is to use mixer

I would invite all of you to review this thread. An attacker can use the "services" of a mixer, and use advanced blockchain analysis to determine most if not all of the addresses used by the mixer, and can use additional analysis to trace specific transactions.

PS - sending coins to a single intermediary address is not going to enhance privacy more than marginally

At the bottom:

¹ Chipmixer was the only centralized mixing service which I did not break fully. However, I did not put much work into checking this mixing service.

[Velkro]

But if I now pay something, sending the 0,1 BTC from my Electrum wallet to a Bitcoin address, it can be proved that the very same 0.1 BTC that I sent at first to some unkown recipient, has been also sent afterwards to another recipient, and imagine that this other recipiet is fully known (for example, some shop that accepts payments in BTC).

In this way, it can't be 100% proved that I did the second payment, but certainly it would be highly suspicious, isn't it?

So the question is: Do thing work this way?

Yes and no, its difficult subject.
If you send one transaction from your address that is indentified with your personal data, then from this another address that there is no connection with your personal data, you can't be sure it was sent by same person. You can assume that tho by various side-data.
I would like to hear more experienced person here to explain that in full.

[r1s2g3]

I am wondering if you are thinking for your privacy then starting with coinbase is not the right start at all. Second,what kind of goods you are looking to buy from store? If it is online delivery physical goods then again you address is exposed.  I guess most feasible solution without depending upon third party is to create multiple wallets and rotate the payments from them and abandoning the wallets after certain period of time.