what about privacy? if all transactions are public, you can easily trace account

[pringesgood]

what about privacy?

since all transactions are public, you can just go through the blocks and trace an account to individual / groups

well really obvious ones, like for example, a account with 10,000 Bitcoin per month revenue, there are only so many organizations capable of that, and through process of elimination and probably other tracing techniques, you can find out the EXACT amount of bitcoins any individual/group has.

and not only that, you can deduce who these individual/groups do business with and how much is transacted.

[1715196242]

1715196242

[1715196242]

1715196242

[1715196242]

1715196242

[Stephen Gornick]

what about privacy?

since all transactions are public, you can just go through the blocks and trace an account to individual / groups

Bitcoin is not anonymous.  It is pseudonymous.  Or, as Jon Matonis describes it, Bitcoin has user-definable anonymity.

That's why no bitcoin thief has been identified from the bitcoins they've stolen -- they are using methods to protect privacy.  

But there aren't many clues to tie identity to a bitcoin address unless either the sender or recipient (or both) don't care about privacy and do stuff like use a static address for receiving payments.

well really obvious ones, like for example, a account with 10,000 Bitcoin per month revenue,

The way most merchants work is that there is one Bitcoin address for each customer payment transaction.  

there are only so many organizations capable of that, and through process of elimination and probably other tracing techniques, you can find out the EXACT amount of bitcoins any individual/group has.

Nope.  Especially if the merchant uses a payment process (such as BitPay, or WalletBit, etc.

You might take a moment to peruse the Bitcoin wiki.  Bitcoin can be a complex topic, depending on the level of detain needed, but the wiki provides some great information:

 - http://en.bitcoin.it
 - http://en.bitcoin.it/wiki/FAQ
 - http://en.bitcoin.it/wiki/Introduction
 - http://en.bitcoin.it/wiki/Myths

 -

[pringesgood]

wait, so you're saying that most merchants have a different address, one for EACH client? and they use some program to manage ALL those different addresses?!

[greyhawk]

wait, so you're saying that most merchants have a different address, one for EACH client? and they use some program to manage ALL those different addresses?!

No, one for each TRANSACTION.

[Foxpup]

wait, so you're saying that most merchants have a different address, one for EACH client? and they use some program to manage ALL those different addresses?!

No, not one address for each client, one for each transaction. A single client who makes several different purchases will (normally) be given a separate address for each one. It's not difficult to manage at all. Most merchants will already have a database to keep track of individual orders; the bitcoin address that goes with each order is just another entry in that database, and it's easy to automatically monitor these addresses for incoming payments (and a payment processor such as BitPay will do the latter automatically).

[Jeweller]

One thing to understand is that it's trivially easy to create a new address.  Takes your computer a fraction of a second.  So you can create thousands of addresses, have bitcoins sent to any of them, sent from any of them, and have them sending to each other, internally.  From the outside, nobody knows who controls which address though.

But they can try to guess, and trace things back.  http://blockchain.info/ lets you look around all the transactions.

If you're really paranoid, there are "mixing services" that let you send bitcoins to them, and have bitcoins come to a set of addresses you specify at some later time, from different addresses than where you sent them.

So things could be traced back to individuals, if they use the same address for everything, and post that address publicly.  But in most cases, there's no way to know who owns what.

[TangibleCryptography]

Our company has bought 180,000 BTC.  Please identify it on the blockchain, everything is public so it should be easy.

Most merchants (even fiat) give customers a unique order number right?  Nobody goes "OMG Amazon gives every single order a unique number.   How do they manage it all".  With Bitcoin it isn't any harder to give customers a unique deposit address as well.

[niko]

Optional traceability may be one of Bitcoin's strengths. It is a fact that in most countries today governments and private corporations can and do trace every penny that people spend. People, on the other hand, have no access to similar information about spending habbits of governments and corporations. Bitcoin ledger is public, and - if desired - can be used to audit spending and balances of entities using it.

[pringesgood]

Our company has bought 180,000 BTC.  Please identify it on the blockchain, everything is public so it should be easy.

Most merchants (even fiat) give customers a unique order number right?  Nobody goes "OMG Amazon gives every single order a unique number.   How do they manage it all".  With Bitcoin it isn't any harder to give customers a unique deposit address as well.

although i don't have the computing capacity

if every transaction ever made is stored in those blocks in a .dat file

then a sufficiently powerful computer with enough time can draw a picture and determine which address has how many bitcoin, and continually update that picture as soon as the next block in, so only ~10 minutes late.

although that won't identify who owns the address, but at least one would be able to see, oh that address has 180,000 BTC. so that address might be your company.

[TangibleCryptography]

I don't think you understand.  There is no 1 address which has 180,000 BTC.  Every transaction used a unique address which was only used once and only once.

Sure you can use a computer to determine the current balance of every address (all roughly ~130K non-zero addresses) and it doesn't have to be a particularly powerful one but that doesn't tell you much if you can identify who own what addresses. 

[Stephen Gornick]

I don't think you understand.

it is a complex process, to be fair.

Flow analysis using just the information from the blockchain won't give much info.    Combine that information to external sources, such as static bitcoin addresses used for donations, and now you can see all the donations given to that party.    But that's because bitcoin wasn't being used to protect privacy.  For instance, LewRockwell just started accepting bitcoins, but they use a payment processor and each transaction gets a new bitcoin address.
 - https://www.lewrockwell.com/donate/

So there's no association between these transactions. Looking at the blockchain you might be able to determine that LewRockwell donations ended up being sold in bulk by the payment processor but you couldn't tell which of those coins were LewRockwell donations versus BitconStore purchases (another of the 2,000 merchants that use BitPay).

Flow analysis linked to third party info:
 - http://anonymity-in-bitcoin.blogspot.com
 - http://toolongdidntread.com/announcement/the-future-of-blockviewer/  <--- Looks like the author got bored (or frustrated) trying to figure out who bought what with bitcoins

[TangibleCryptography]

it is a complex process, to be fair.

[snip]

Agreed.   Everything you said was correct but the OP seemed to be indicated he believed there was some giant static address.  Your larger point which may be overlooked by the OP is that Bitcoin can either be very easily traced or virtually impossible to trace it really depends on how the user uses it.  

Static donation address, putting transaction details to include addresses or tx id on public pages, and address re-use all make the job easier.
On the other using addresses once, always using a new random change address, using mixers (either formal mixers or informal services which act like mixers) and making "fiat air gaps" (BTC -> fiat -> BTC) can make tracing essentially impossible without inside information (like a stolen list of an entities public addresses).

[pringesgood]

thanks i think i understand now

but what manages all those addresses!? what program...payment manager

so if this 'manager' were to pay an address 100 btc, it would transfer funds from say 250 different address to that 1 address? and this entire transaction would be all under yet a new and unique address?

[niko]

thanks i think i understand now

but what manages all those addresses!? what program...payment manager

so if this 'manager' were to pay an address 100 btc, it would transfer funds from say 250 different address to that 1 address? and this entire transaction would be all under yet a new and unique address?

These are good questions, and are answered - along with many more - in the Wiki. The FAQ section is a good place to start. Another good resource is the Stack Exchange. Finally, technical reference paper ("the" Bitcoin paper) is available for download from bitcoin.org.

Have fun, and keep in mind that Bitcoin is still in its infancy, going through growing pains and exciting times...

[Stephen Gornick]

but what manages all those addresses!? what program...payment manager

Well, if you are using a payment processor, the address exists in their wallet.  Then when a payment is sent, only then does that address appear in the blockchain.

Here's a useful example:

 - https://www.bitaddress.org

Those addresses are created, on the fly, by the javascript code in your browser.   You can save a copy of that page (e.g., to thumb drive), then disconnect your computer from the Internet, reboot and while disconnected load that page and generate more addresses.  None of those addresses are known anywhere else.  But they are entirely valid addresses that can be used.

When you give the Bitcoin address (the Load & Verify) to someone else and they send a payment then that's when the blockchain first sees that address. There's no "management" of addresses, there's simply transactions to addresses.
 

so if this 'manager' were to pay an address 100 btc, it would transfer funds from say 250 different address to that 1 address? and this entire transaction would be all under yet a new and unique address?

Bitcoin transactions are simply inputs and outputs.  An input is one or more payment that was previously received in a wallet.   An output is one or more payment destinations.   Here's a typical transaction:

Alice wants to send 2 BTC to Bob.  Bob prints a paper bitcoin using BitAddress.org and shows the "Load & Verify" Bitcoin address to Alice.  So Bob's address for this transaction is Address W.

Alice's wallet has a 1 BTC payment (that she received at Address X) and a 5 BTC payment (that she received at Address Y).  So to send to Bob 2 BTC, the transaction needs to use both of those transactions, so the total amount of inputs is 6 BTC (5 + 1 = 6).   The total amount being sent (the total amount of outputs) is 2 BTC.  So the change would be 4 BTC.    Alice's client will generate a new address for the change, Address Z.   Except, there should also be a fee paid, so let's say a fee of 0.0005 BTC is going to be being paid.

The transaction then looks like:

INPUTS:
Address X: 1.0 BTC  (An earlier payment Alice received)
Address Y: 5.0 BTC  (Another earlier payment Alice received)

OUTPUTS:
Address W: 2.0 BTC   (The payment to Bob)
Address Z: 3.9995 BTC  (The change back to Alice)

If you add up the inputs:  6.0 BTC
Add up the outputs:  5.9995 BTC.
Difference?  0.0005 BTC.  Any difference between the INPUTS and OUTPUTS goes to the miner.

Here's an example of a transaction.  In this instance, there was just one input needed.  It was a wager to SatoshiDICE, with a fee paid:
 - http://blockchain.info/tx/92499ef5ba9bb457d67803ef1c9cf667c430b55ebb4fe248bb8d4d7ebc95e4e7
(At the bottom of the page, click the Advanced: Enable)   That way you will get a link for the (output) as well.

Now, ... nobody needs to know any of this to just use Bitcoin.  You are asking questions about the innards of the system.

If you use the Bitcoin-Qt client, for instance, none of this is really exposed.  You have a Balance.  You send payments.   To receive a payment, you click New Address.  That's simple.   Easy peazy.  (Well, except for the confirmations thing ... that is one difference from your online banking, for instance.)

There are shared (hosted) EWallets that make it even easier.  PayTunia, or CoinBase, for instance, remove anything that isn't necessary to use Bitcoin.   And InstaWallet even removes the need for a username and password (presuming you bookmark the URL).