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Author Topic: Big Brother tracking bitcoin transactions  (Read 5673 times)
TitanBTC
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August 18, 2013, 05:35:24 PM
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I'm not a conspiracy theorist, but I'm reading about the U.S. senate requesting that the Dept. of Homeland Security "look into this bitcoin thing".  If they aren't already, I'm sure they are going to start putting together a database matching bitcoin addresses with people's real identities.  They almost NEED to in order to comply with the Anti-money laundering legislation that the U.S. has in effect.  Other countries are bound to follow suit.  In the spirit of staving off a whole bunch of secret government surveillance programs, I'm wondering if we should beat them all to the punch.

I'm suggesting that we put together a public, searchable database that cross references people's identities with their bitcoin addresses.  Sort of like a yellow pages for bitcoin.

There will always be bitcoin laundry providers for people that need anonymity, but shouldn't those of us that aren't buying pot from the Dread Pirate Roberts be willing to build a bridge to the inevitable government push towards data collection?  Governments have been collecting information on people's revenue since the dawn of civilization and I think its naive that they won't figure out SOME way to do it with virtual currencies.    I love the idea of tax free income via bitcoin, but I also know that if bitcoins were more easily taxed then governments would be much more likely to start accepting it. 

Should we take a hit on our perceived anonymity for the sake of creating a more viable currency?

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pagan999
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August 18, 2013, 05:50:07 PM
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just use a new address with each transaction.

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August 18, 2013, 06:02:21 PM
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I'm suggesting that we put together a public, searchable database that cross references people's identities with their bitcoin addresses.  Sort of like a yellow pages for bitcoin.
Terrible idea.

Usually a shop generates a new adress for every customer to track payments since you don't know the customers sending adress it's impossible to track who payed for their 1BTC shoes and who didn't. This problem could be solved with some technical efford, but as long as everybody can generate a new adress it's pointless since it proves nothing.

On the other hand it is dangerous to have a database for kidnappers to search victims who are capable of anonymous payment of 1000BTC.

Actually I wonder why kidnappers don't use bitcoins yet ...

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August 18, 2013, 07:14:38 PM
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Apart from the problems pointed out by others, the biggest issue is that this doesn't work.
Bitcoin addresses have plausible deniability. I can trivially prove I control an address. But the reverse is impossible. Therefore the same person who publicly claims to own 1BTC can also own 100BTC in undeclared addresses, and no one can catch him. That makes a "yellow pages" absolutely useless to the government.
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August 18, 2013, 07:35:53 PM
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I find the idea of a central bitcoin database vile, myself.  I really do.  I'm just looking ahead a year or two and this is where I expect things will be going.  I'll admit that there a lot of people smarter than me on these forums, so I'm happy to be wrong, but creating new addresses for each transaction probably does NOT make you anonymous, especially if you actually use your bitcoins for things that link you to an identity. 

Read http://arxiv.org/pdf/1107.4524v2.pdf for a more detailed explanation on why real anonymity is something you have to work hard at with bitcoins. 

Law enforcement is already using bitcoin addresses to ID drug traffickers and even seizing bitcoins

http://www.dailymail.co.uk/news/article-2357954/First-Bitcoin-bust-Feds-seize-electronic-currency-connection-shadowy-internet-drug-bazaar-Silk-Road.html

Let's throw that case out though, for the sake of argument, and say that the guy arrested just didn't cover his tracks.

If at ANY time in the future, someone or some algorithm does start to connect the dots, then every transaction you've ever made leads back to you (unique addresses or not).  I'm not saying that it finds every address out there you own.  Obviously that's not possible, but it does link income and expenditures to you.  That makes it likely that a government is going to want a piece.  Whether its a piece of 1 BTC or a piece of 100 BTC will depend on how well you isolated yourself.  For a variety of reasons, it makes sense to know what addresses are linked to your ID and which are "undeclared".  No?



TitanBTC
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August 18, 2013, 07:41:52 PM
 #6

Should we take a hit on our perceived anonymity for the sake of creating a more viable currency?

Less perceived anonymity does not create a more viable currency.

I don't really care if governments decide to accept Bitcoin or not.

If you lie down with dogs, you get up with fleas.

Building bridges between the government and existing financial systems absolutely does create a more viable currency.  You SHOULD care if governments accept bitcoins or not because that will have a direct impact on their value and longevity as a storage of wealth. 

I'm assuming the "dogs" in your comment are supposed to be the governments that track revenues for the sake of collecting taxes?  If you currently pay taxes in any way, shape or form you're already "lying down with the dogs" on some level.  Might as well be the top dog if you're there.

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August 18, 2013, 07:48:05 PM
 #7

I'm suggesting that we put together a public, searchable database that cross references people's identities with their bitcoin addresses.  Sort of like a yellow pages for bitcoin.

On the other hand it is dangerous to have a database for kidnappers to search victims who are capable of anonymous payment of 1000BTC.

Actually I wonder why kidnappers don't use bitcoins yet ...

We've already seen people targeted for large scale bitcoin thefts.  The information is available to those that have the skills to find it.

However, the danger is not lost on me.  Having everyone's data publicly viewable might do more harm than good.  I personally would still want to see what addresses are linked to me, though.  It's in the same vein as wanting to know what my credit report looks like.

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August 18, 2013, 07:51:29 PM
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So, the Big Brother(DHS) will run a full node? Good! Maybe they could run a Stratum server along with it, no?

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August 18, 2013, 08:21:28 PM
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Reminds me of the paranoid "NSA are collecting the whole internet" stuff, I'd be more concerned if there was a viable way for them to use the data at the same rate they can collect it. Until they can turn the data into information at even half the rate at which it's reeled in, we're still winning, unless you try your best to get yourself noticed Cheesy. The money-flow between public keys of every crypto-coin around is never going to be easy to stay on top of, it's a game of cat and mouse that must be a nightmare to these enforcement agencies.

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August 18, 2013, 09:39:00 PM
 #10

Strong anonymity isn't a lost cause.

At the Bitcoin 2013 Conference, one of the talks I went to was on Zerocoin. Basically, there's a way to construct a "bucket", such that you can put a number in the bucket, and you can prove that a particular number is in the bucket, without anyone being able to deduce, out of all the times that something had gone in, which one was the one that added your number. In other words, you can bolt a trust-free coin mixer directly onto the blockchain. Unfortunately, it's not suitable for inclusion in Bitcoin itself for the moment; aside from problems with the lifetime of the accumulator, the proof necessary to redeem an anonymized bitcoin is something like 40KB long, which is far too much blockchain real estate for a single transaction. But the technology is there, so an optimist would say that it's only a matter of time before it's made practical.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
TitanBTC
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August 19, 2013, 01:06:15 AM
 #11

Strong anonymity isn't a lost cause.

At the Bitcoin 2013 Conference, one of the talks I went to was on Zerocoin. Basically, there's a way to construct a "bucket", such that you can put a number in the bucket, and you can prove that a particular number is in the bucket, without anyone being able to deduce, out of all the times that something had gone in, which one was the one that added your number. In other words, you can bolt a trust-free coin mixer directly onto the blockchain. Unfortunately, it's not suitable for inclusion in Bitcoin itself for the moment; aside from problems with the lifetime of the accumulator, the proof necessary to redeem an anonymized bitcoin is something like 40KB long, which is far too much blockchain real estate for a single transaction. But the technology is there, so an optimist would say that it's only a matter of time before it's made practical.

I agree that strong anonymity is valuable, but I disagree that anonymity should be the de-facto standard for how crypto-currencies operate.  We should use it when we need it.  I don't think the creators of the bitcoin protocol ever placed anonymity as a preeminent design goal.  There are lots of methods like what you discussed hearing about at the conference.  (It's AWESOME that you went, by the way.  I'm jealous). 

Maybe I'm wishing here, but I'd like to think that bitcoin will become a viable challenger to credit cards and wire transfers. 

I don't see that kind of mainstream adoption happening though if we can't beat the PR stigma of a "currency used for buying drugs and laundering money".  Doesn't matter if its true or not.  Crossing the chasm between the early adopters and mainstream non-technical users is a battle for public perception.  Don't you think that standing on the cornerstone of anonymity calls our motives into question?

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August 19, 2013, 02:07:35 AM
 #12

Not a new idea TitanBTC, but a good one nontheless.

Bitcoin is not to be coddled!  Sure, it is still young, more an entity of potential than one of power, but to achieve it's potential it must be prepared for adulthood.  Satoshi knew this when he made the code open source from the outset.  Sure, an attacker might more easily find a critical flaw, but this threat also stirred developers and white hats to harden the code and better prepare for disaster.  ASIC development, regulators/banks attacking exchanges, illegal activity, incompetent/deceptive reporting, hackers, scammers, all of these things are challenging Bitcoin in the short term, and making it more robust.

Of course, we should be careful not to overdo it.  I'm reminded of Satoshi's "No, don't 'bring it on,'" in response to the suggestion that Wikileaks accept Bitcoin as a challenge to it's enemies.  However, the maxim "that which does not kill us makes us stronger" is undoubtedly a theme to Bitcoin's story.

The open development of a public database will make clearer and more real the power that those tracking bitcoins in secret have.  If this project is completely unsuccessful in identifying even casual users and their purchases, then confidence in Bitcoin's often criticized practical anonymity will rise.  If, instead, the project is able to identify many people, even some of those who are relatively careful with their privacy, then great attention and funding will focus on the development of privacy.

The alternative may be a future where the power to track exists but rests only with the rich and powerful.  Is this not the antithesis of Bitcoin's spirit?  Wouldn't both total anonymity and total transparency be superior outcomes to this vulgar anti-symmetry?

TL;DR: Such a database, if open and public, would ultimately bolster bitcoiners' true financial privacy in the long term.
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August 19, 2013, 06:50:33 AM
 #13

The open development of a public database will make clearer and more real the power that those tracking bitcoins in secret have.  If this project is completely unsuccessful in identifying even casual users and their purchases, then confidence in Bitcoin's often criticized practical anonymity will rise.  If, instead, the project is able to identify many people, even some of those who are relatively careful with their privacy, then great attention and funding will focus on the development of privacy.

I take your point here.  Nevertheless I think it would not be a good idea to make such data readily available to everyone ... even when I should be aware that, if I don't use bitcoin correctly, someone with sufficient skills can deduce information about my identity and my purchases, I don't think it is a good idea to allow everyone, even my technically unskilled neighbours or the kidnappers cited above, to find that information with a simple web search about me (or something like that).

However, I think that research into ways to analyse the blockchain data and uncover identities is necessary on a public and academic level, so identify possible attacks and give everyone the information necessary to mitigate them in order to protect as good as possible from black hat attackers.  Think of things like the research papers already existing on blockchain analysis or the "taint analysis" function of blockchain.info - and hopefully more advanced results in the future.  Those give me as well as developers of mixing services the power to investigate the available privacy and identify security holes, if I want to.

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August 19, 2013, 07:21:48 AM
 #14


I'm not a conspiracy theorist, but I'm reading about the U.S. senate requesting that the Dept. of Homeland Security "look into this bitcoin thing".  If they aren't already, I'm sure they are going to start putting together a database matching bitcoin addresses with people's real identities.  They almost NEED to in order to comply with the Anti-money laundering legislation that the U.S. has in effect.  Other countries are bound to follow suit.  In the spirit of staving off a whole bunch of secret government surveillance programs, I'm wondering if we should beat them all to the punch.

I'm suggesting that we put together a public, searchable database that cross references people's identities with their bitcoin addresses.  Sort of like a yellow pages for bitcoin.

There will always be bitcoin laundry providers for people that need anonymity, but shouldn't those of us that aren't buying pot from the Dread Pirate Roberts be willing to build a bridge to the inevitable government push towards data collection?  Governments have been collecting information on people's revenue since the dawn of civilization and I think its naive that they won't figure out SOME way to do it with virtual currencies.    I love the idea of tax free income via bitcoin, but I also know that if bitcoins were more easily taxed then governments would be much more likely to start accepting it. 

Should we take a hit on our perceived anonymity for the sake of creating a more viable currency?

http://dot-bit.org/Namespace:Identity

It's decentralized. Electrum integration is planned so you can send BTC directly to an id.


To keep anonymity it would be interesting to link to an address generator.



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August 19, 2013, 11:16:07 AM
 #15

I take your point here.  Nevertheless I think it would not be a good idea to make such data readily available to everyone ... even when I should be aware that, if I don't use bitcoin correctly, someone with sufficient skills can deduce information about my identity and my purchases, I don't think it is a good idea to allow everyone, even my technically unskilled neighbours or the kidnappers cited above, to find that information with a simple web search about me (or something like that).

However, I think that research into ways to analyse the blockchain data and uncover identities is necessary on a public and academic level, so identify possible attacks and give everyone the information necessary to mitigate them in order to protect as good as possible from black hat attackers.  Think of things like the research papers already existing on blockchain analysis or the "taint analysis" function of blockchain.info - and hopefully more advanced results in the future.  Those give me as well as developers of mixing services the power to investigate the available privacy and identify security holes, if I want to.

If public, academic research and a small market of privacy enthusiasts provides adequate security, then why should we expect the development of the described database to lead to a public, easy to use, and effective web-search of bitcoiners' personal financial information?
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August 20, 2013, 11:23:44 AM
 #16

- snip -
I'm suggesting that we put together a public, searchable database that cross references people's identities with their bitcoin addresses.  Sort of like a yellow pages for bitcoin.
- snip -

Something like this?

http://blockchain.info/tags

hayek
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August 20, 2013, 05:22:16 PM
 #17

What a terrible idea.

No. Learn more about bitcoin and why this doesn't matter.
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August 20, 2013, 05:28:51 PM
 #18

No need to track bitcoin transactions. They are archived forever in the block chain, so why would you need to track them?

As long as the public/private key encryption holds up, there will be no way to link different addresses. So just create a new address for each TX.

If for some reason this encryption doesn't hold up, then bitcoin users could be in trouble and their anonymity would be lost. But, that could be a long way in the future.
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August 20, 2013, 07:49:15 PM
 #19

As long as the public/private key encryption holds up, there will be no way to link different addresses. So just create a new address for each TX.

Of course there is, already now:  By following change coins to new addresses, and when you use more than one input for a transaction.  Using new addresses for every transaction makes it more difficult to uncover your trail, but it is still far from impossible (even without breaking any encryption / ECDSA).  Only mixing or things like zerocoin can help you there.

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August 20, 2013, 07:53:27 PM
 #20

- snip -
As long as the public/private key encryption holds up, there will be no way to link different addresses.
- snip -

This is not true.

If for some reason this encryption doesn't hold up, then bitcoin users . . . anonymity would be lost.

This is not true either.

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