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January 16, 2013, 01:49:52 AM |
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Hi all, I am aware that anonymity has been, and will continue to be, one of the most-discussed topics here. However, I couldn't find a good discussion about solutions to this problem:
Every time bitcoins are exchanged, clearly the two (or more) parties must know the addresses that are involved in the exchange. From that point on, these parties can track the flow of bitcoin using these addresses and will always know how much the others have and where their bitcoins go. Anonymity is lost forever for these particular bitcoins.
I understand that it's generally recommended to use many addresses, and the address specifications support a large number of addresses, so there is little concern of "running out." But if you make a large sale ( a house, or a car), you will eventually want to use these funds for yourself, and anonymity is not increased by spreading these funds around many addresses that you own. The other party will forever be able to know where these funds go.
Sure, not everyone cares about strong anonymity. However, if bitcoins gain widespread use, this non-anonymity can cause large problems for people, whether they care or not. Just the fact that others will know how much money I have is troubling; never mind that they can see where it goes.
Right now it's possible to use an exchange, convert to local currency, then purchase bitcoins to a new address again. But this method incurs fees, and is inconvenient, and, most importantly, is not feasible when/if bitcoins become the primary currency of the world (which I suspect they will). This method works well for small transactions, but is difficult for large sales.
Other than using mixing services, and the additional security risks that they present, are there other solutions to regaining anonymity for bitcoins after their owners have been revealed to each other? Is there any way to address this in the underlying protocols?
I know this must have been discussed before, and if someone can point to recent discussions, that would be useful, too.
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