Couldn't you still analyze the transactions and track down individual Bitcoin users that need questioning?
Yes, there are two stages of laundering coins.
First stage, which is obvious and talked about everywhere, is how to transform dirty coins to fresh coins. There are several technical possibilities, which all break down to get the bitcoins from one, dirty adress to a clean one. The problem is that it's easy to follow when you have 527.3381 coins going in, and 527.3381 coins shpwing up half an hour later at a totally unrelated adress.
So you split it up into several adresses, possibly over a few days. So you end up with 500 and 27.3381 coins, or with 371.51 and 155.8281 coins, or some combination more clever than that. Doing that right, your individual adresses drown in the noise of the blockchain.
Voila, you effectively have anonymous coins. Or, at least, plausibly deniable coins.
Second stage?
If, at any time, you combine some of those coins into a tx, your cover is blown.
And since all data is public, it doesn't really matter when you do that.
An attacker would follow the 527.3381 coins until something funny happens. I guess he will immediately notice when some coinjoin or laundering or tainting happens. Then he scans every tx, and creates sets of tx where the outputs sum up to the original amount. With todays hardware, databases and network analysis programs it probably doesn't matter if he ends up with 100 or a million sets of tx. Even if you "cash out" clean coins in weeks it should be possible to find it as one set among many many others.
So, you accidently combine two of those tx? Bam, he will see it as a red flare lighting up, being one of a few candidates. And I see no problem to closely follow those five "red flares" manually, just as you would track unwashed coins to begin with.
I have a problem here, with my coins. I try to always use new adresses. So I end up with more and more adresses and smaller and smaller amounts, "dust". Every transaction results in one new adress. Even worse, everything I do with one lump of bitcoins, and later with the change, is adding to the datatrail of this particular lump. If I start to eventually combine dust, the datatrail combines to much more than before.
Do I like "laundering"? Yes.
Is it any good, in theory? No. Might even give a false sense of security.
Solution? Do "laundering" with every single transaction.
How? Probably not with Bitcoin altogether. I don't think there is a possibility for such a fork.
One of the very few valid reasons for an alt-coin, now I think about it.
Ok, I learned something new while writing this post. Sometimes talking helps, even if you're just mumbling by yourself.
Ente
