The Anonymity of Bitcoin

[shamoons]

How is this for a lay-person explanation, regarding anonymity:

Cash transactions are entirely anonymous since no party is there to witness the transaction or identify the participants. Unless you give some personal information with the transaction, you are anonymous and it is impossible to track how much money you spent and on what, with cash. Most electronic forms of payment are not anonymous by virtue of the fact that you need to register with some company to use the online payment method. When you sign up for a credit card, you divulge almost all of your personal details to the issuing bank. The same is true of PayPal, Western Union and other online payment services. As a result, the records indicating what was purchased and by whom exist and can be subject to scrutiny, targeted-marketing or even criminal investigation.

Bitcoin transactions are completely anonymous by default since there is no need to register with any company in order to send or receive bitcoins. Although several services exist that ask for your personal information, such as exchanges, online wallets and payment providers, these are all services built on top of the Bitcoin network, which is inherently anonymous. Sending bitcoins to a recipient can be even more anonymous than a cash transaction because you do not need to be present to hand over the bitcoins – they are transmitted over the Internet. No information about your location, your IP address, your name, email address or any personally identifiable information is sent along with the transaction. While a record of the transaction exists in the public ledger known as the “Blockchain,” the identities of the participants in the transaction are not maintained.

This anonymity is a double-edged sword however. By publically announcing just one of your Bitcoin addresses, you create a link between yourself and your wallet that can be used to identify yourself. Imagine, for example, that you run a website and have a Bitcoin donation address; that Bitcoin address is forever tied to you in the public domain and it is trivial for anyone to see how many bitcoins have been sent to that address, along with when and how much has been spent.

[LiteCoinGuy]

lets wait for Zerocoin...

[shamoons]

lets wait for Zerocoin...

Until then, how is the explanation?

[hilariousandco]

How is this for a lay-person explanation, regarding anonymity:

Cash transactions are entirely anonymous since no party is there to witness the transaction or identify the participants. Unless you give some personal information with the transaction,

I wouldn't really call a cash transaction "entirely anonymous". Depends on semantics. How can it be truly anonymous unless you're doing it in the dark with gloves on and you don't know the other person? I go into a shop and hand over money: they see me; the cameras catch me; possible fingerprints from cash. You can also trace money from serial numbers, but you would already need to know them beforehand.

[AnonyMint]

Nothing will help you. Including mixers such as zerocoin.

I have no time to explain now; it will be explained soon.

[jellies]

if it isn't "practically" and "effectively" anonymous then how come not a single large btc theft has been traced to an individual?

[AnonyMint]

if it isn't "practically" and "effectively" anonymous then how come not a single large btc theft has been traced to an individual?

As usual the bad guys have experience with obtaining anonymity.

Basically they can hijack someone else's connection their WiFi router (or other form of break-in such as physical or hijacking your computer when you visit their website) or use a prepaid SIM card away from their normal locations in a country that doesn't require registration of identity, employ a VPN that doesn't log IP addresses, and finally over Tor. So 3 layers of anonymity. They might even run nested VPNs and run Tor as hosted service to get more proxy hops.

Sort of things your average Joe ain't gonna do.

[jellies]

I don't believe it, the anonymity is apparently good enough for even the stupid bad guys. Bad guys make lots of mistakes, but with BTC they have an easy time of it.

The anonymity risks are at the edge of the network, where you cash out.

Also consider whether you want practical anonymity, or anonymity from the NSA. BTC gets you practical anonymity but plausibly not from the NSA if they are actively monitoring the tx flows in grand style. But if your concern is the NSA, you're going to be letting someone like blockchain.info run the transactions for you, while you use them from a web proxy. Not hard.

[JTrain_51]

Nothing is anonymous people could find out who owned the bitcoin address by some former forum post and find out who the person is in real life and trace them but that most likely will not happen

[AnonyMint]

Nothing is anonymous people could find out who owned the bitcoin address by some former forum post and find out who the person is in real life and trace them but that most likely will not happen

If I am correct that the western governments will hunt down all wealth to confiscate it in a SHTF global sovereign debt / pension collapse of socialism starting 2016 and intensifying 2024 finally ending 2033 after all of you are destroyed, then the tax departments are going to be offering jobs to those who can hunt well.

I don't mean you failed to pay your taxes. I mean a crazy totalitarian outcome fully supported by the bankrupt majority to go after and confiscate all wealth because "you did not earn that without the government" existing.

Obamaroids. Merkelstasis.

[AnonyMint]

Nothing is anonymous people could find out who owned the bitcoin address by some former forum post and find out who the person is in real life and trace them but that most likely will not happen

You can prevent that,

Yes we could with a better design than Bitcoin.

but I think most bitcoin users don't want or need to be that anonymous. I have nothing to hide, so there is no reason for me to be practically untraceable.

Your knowledge of history must be limited.

http://www.ushmm.org/wlc/en/article.php?ModuleId=10007392

Martin Niemöller (1892-1984) was a prominent Protestant pastor who emerged as an outspoken public foe of Adolf Hitler and spent the last seven years of Nazi rule in concentration camps.

Niemöller is perhaps best remembered for the quotation:

First they came for the Socialists, and I did not speak out--
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out--
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out--
Because I was not a Jew.

Then they came for me--and there was no one left to speak for me.

Perhaps you don't realize that Hitler printed his own money (no central bank debts) to fund infrastructure and universal health care, which was for years viewed as a great triumph and everyone was happy and rejoicing. When that failed economically, they had to "cull the weak" in order to afford the health care and other social services.

Basically the economic implosion turned on the people as a resource for extraction.

The current western socialism is headed the same direction.

Of course you never think "they" will come after you to take everything you have, maybe even your life.

Who is "they"? It is you. You the people will demand your government to provide for you the people. How does a government fulfill that? By taking from you the people to give to you the people.

But don't forget there are always middle men siphoning from that, and redistribution from group A to group A is never efficient.

For example, Obamacare dictates maternity care insurance for men (equality!).

Wasting resources is the same as planning a megadeath outcome.

History says so, over and over again.

[shamoons]

So any more critique?

[jellies]

since everyone thinking about anonymity within bitcoin thinks (or worries) about IP addresses, I would attempt to explain more clearly the link between ones IP address, and a transaction one instigates, under the various popular ways one can transact from one address to another.

[shamoons]

So any more critique?

I believe you gave a talk to NJIT alumni and has the Bitcoin Nj plate?  if you have any more talks let me know.  I wen to Rutgers and I am trying to get some professors involved.

Right you are, on both counts.

Damn, there goes MY anonymity

[AnonyMint]

The NSA knows all and sees all. You cannot hide anything from them. They will trace any electronic footprint you leave anywhere. Be forewarned!  

emunie
zero coin
anoncoin

will put an end to this

zerocoin, proxy mixers (e.g. anoncoin) and other P2P coin mixers have the same problem that they can be honeypotted with Sybil identitites, or if the other participants reveal their identities, then yours is revealed by process of elimination.

Exchanging between altcoins on an exchange is equivalent in terms of anonymity of using a coin mixer that is an exchange site. These are not going to guarantee you anonymity for numerous reasons, including they can be honeypotted with Sybil identitites, or if the other participants reveal their identities, then yours is revealed by process of elimination, and the various ways exchanges can be compromised.

The NSA can not always look inside an exchange, although there are many ways it might be inside.

Look at what facebook is up to:

http://www.pakalertpress.com/2013/12/06/facebooks-future-plans-for-data-collection-beyond-all-imagination/

Add this:

http://www.activistpost.com/2013/11/social-logins-for-government-services.html

Also the governments can force users to abandon anonymity on Bitcoin.

Suggestion:

https://www.google.com/search?q=how+can+i+erase+myself+from+facebook

[hilariousandco]

The NSA knows all and sees all. You cannot hide anything from them. They will trace any electronic footprint you leave anywhere. Be forewarned!  

emunie
zero coin
anoncoin

will put an end to this

zerocoin, proxy mixers (e.g. anoncoin) and other P2P coin mixers have the same problem that they can be honeypotted with Sybil identitites, or if the other participants reveal their identities, then yours is revealed by process of elimination.

Exchanging between altcoins on an exchange is equivalent in terms of anonymity of using a coin mixer that is an exchange site. These are not going to guarantee you anonymity for numerous reasons, including they can be honeypotted with Sybil identitites, or if the other participants reveal their identities, then yours is revealed by process of elimination, and the various ways exchanges can be compromised.

The NSA can not always look inside an exchange, although there are many ways it might be inside.

Look at what facebook is up to:

http://www.pakalertpress.com/2013/12/06/facebooks-future-plans-for-data-collection-beyond-all-imagination/

Also the governments can force users to abandon anonymity on Bitcoin.

Suggestion:

https://www.google.com/search?q=how+can+i+erase+myself+from+facebook

Jesus Fuck, some of that is just straight-up plain scary:

Facebook’s patent holdings are just a taste of what’s arriving here and now. The way you type, the rate, common mistakes, intervals between certain characters, is all unique, like your fingerprint, and there are already cyber robots that can identify you as you peck away at keys. Facebook has even patented methods of individual identification with obviously cybernetic overtones, where the machine becomes an appendage of the person. U.S. Patents 8,306,256, 8,472,662, and 8,503,718, all filed within the last year, allow Facebook’s web robots to identify a user based on the unique pixelation and other characteristics of their smartphone’s camera. Identification of the subject is the first step toward building a useful data set to file among the billion or so other user logs. Then comes analysis, then prediction, then efforts to influence a parting of money.

I honestly don't know whether to go down the outraged paranoid conspiracy theory route, or the well it's just a company offering a free service and trying to capitalise on it so what do we expect route?

[AnonyMint]

Add this speculation:

http://www.activistpost.com/2013/11/social-logins-for-government-services.html

I guess you know the founding angel investors for facebook were the typical banksters such as Goldman, JP Morgan, etc. Zuckerberg appears to be on "medication".