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Author Topic: [G+] The really dark pools of Bitcoins, where not even block explorer can track  (Read 2214 times)
BitcoinPorn
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August 11, 2011, 06:22:28 AM
 #1

https://plus.google.com/112111331968977501330/posts/G71dDfF66Kw
From http://www.reddit.com/r/Bitcoin/comments/jf84e/the_really_dark_pools_of_bitcoins_where_not_even/

Quote
by Eli Sklar

Imagine, if you will, a really dark pool.

Bitcoin are easily traded inside the block-chain going from one address to another. Bitcoins are not stored anywhere, some addresses simply have coins associated with them.

If you're following the bitcoin scene, you've probably heard about BitBills - an idea that allows people to trade Bitcoin offline, without going through the block-chain. Instead of bitcoin exchanging addresses we have people exchanging bitcoin addresses.

BitBill are small plastic cards, the size of a credit card, that have a public address fully visible on them, and you could for example verify their value by checking block explorer. And if you brake one of those, you'll find the private key hidden inside. This private key is what used to open the address and send bitcoins from it to some other address.

BitBill is basically the really dark pool where bitcoins change hands.

If bitcoin is adopted and becomes a major currency, people will trade bitcoin addresses and not just bitcoins. Millions of dollars, or coin, could exchange hands and no one will ever hear about it, it won't register on block explorer or any other bitcoin monitor.

The business for BitBill seems very, very promising.

Not an article, editorial, etc, just a post from Google+ Smiley

Interested in getting with some Bitcoiner's on Google+, see this thread https://bitcointalk.org/index.php?topic=33500.0

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Pentium100
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August 11, 2011, 07:21:01 AM
 #2

So, it is like cash whereas normal bitcoin transfers are like bank transfers?

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August 11, 2011, 07:41:59 AM
 #3

Pretty cool stuff.  I really like the bank card thing I might order one.  Their website could use a little fixing up, looks like something I would make and thats not saying much.

 Tongue

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August 11, 2011, 07:44:11 AM
 #4

You could effectively pass around a flash drive with wallet.dat for the same effect.

That being said, eventually bitbill currency (well, except for those that are irrecoverably lost or destroyed, of course) will eventually re-enter the digital world and the blockchain again, not really spectacular news.
wareen
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August 11, 2011, 09:34:37 AM
 #5

You could effectively pass around a flash drive with wallet.dat for the same effect.
Not really - BitBills have physical safeguards against the private key being read without leaving traces (you effectively have to cut the BitBill in half to read the private kay). I would never accept a wallet.dat from someone as payment because he might just as well have kept a copy. In fact, that's exactly the problem Bitcoin solves Wink

Of course with BitBills you'd also have to trust the company creating them. When the value of a BitBill address becomes large enough, the risk of somebody having read it out through non-invasive means along the line might become too high as well - therefore I don't see BitBills as an effective means to let "millions of dollars or coin exchange hands".

I personally wouldn't trust a BitBill worth more than a few hundred USD from what I know about their current physical specifications.
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August 11, 2011, 11:07:17 AM
 #6

While I like the idea, Bitbills isn't really the answer for this.

Hmm. On second thought, I don't think the "really dark pool" idea is viable for large values.

The problem is, to exchange value with bitcoin, you have to either transfer the bitcoins, or transfer the address holding the bitcoins. If all you're transferring is the address, then there's no way to be sure the person giving you the address hasn't kept a copy.

Now, with Bitbills at least you can be reasonably sure that the person giving you the card doesn't have a copy of the address, but there's still the risk that someone at Bitbills does. It's just unwise to trust it with high value.

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August 11, 2011, 12:02:22 PM
 #7

I personally wouldn't trust a BitBill worth more than a few hundred USD from what I know about their current physical specifications.

For an enthusiast at my level, this is really an interesting idea.  I want bitcoins but I'm not trying to trade on the exchanges with them.  I don't want to go through the hassle and expense of setting up an account on an exchange.  I don't want a million BTC, just 5 or 10; enough to have in case somebody actually sells a service I can use them with.

A central supplier of BitBills will gain a reputation and using that, I can evaluate risk.  My risk is limited to the time period between sending the cash and verifying the content of the bill.  As soon as I have the coins, I can transfer them to a different wallet and they'd be out of the control of issuing authority.  I'd be willing to pay a commission for that.



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August 11, 2011, 01:30:50 PM
 #8

This idea is a no go and here's why:

Who tells me that the private key I got is unique? There may be copies around. How would I know? The fact that nobody yet touched the address doesn't mean that I am the only one with access to it. The first who transfers the BTC is the owner, all others find an empty address.

This is bypassing the whole point of the public block chain.
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August 11, 2011, 01:51:57 PM
 #9

The important point here is that Bitbills, and other similar physical manifestations that will surely spring up, allow for even greater anonymity.

When a Bitcoin can change ownership with no transfer in the block chain, then it renders the blockchain ineffective for proving transaction histories. This is a great thing... for it means anonymity can be even greater for those who seek it. Imagine a court trying to prove ownership or transfer of X number of coins- all the defense need do is introduce the idea that transfers can happen beyond that block chain and the whole case falls apart. Bitcoin really does become as anonymous as cash.
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August 11, 2011, 02:20:38 PM
 #10

And according to bitbill they don't save the private keys etc. so it's not like they should be able to be hacked or anything? or am I missing a potential security flaw here?

The flaw here is that you have to trust them. They could be recording all the private keys for all we know... I like the idea, but I have no ideia where is bitbills located and who is running it.
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August 11, 2011, 03:07:20 PM
 #11

i dont think we should get used to trading private keys, its simply not secure.

for example, if i want to sell some pizzia, and i accept bit bills, i have to trust bitbills and the person that gave it to me. if i accept block chain only transactions i trust only the block chain.

another example

if i want to exchange a lot of coins not via the chain, and i trust the other person, they could make their own paper wallet and give it to me. then i only need to trust the person who made the paper wallet.

in addition you do not need to keep the physical wallet. you only need to trust its integrity until you send the coins the key claims to another address.

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August 11, 2011, 05:20:01 PM
 #12

Think you are missing the point a bit, while it is changing of private keys if the company proves 100% legit then you have the backing of that company.  Here is a feature list that I would think would ease your mind on the trust issue:

Each Bit Bill is assigned a single public and private key.
To verify the balance on the card one would only need to examine the block chain relating to that public key (correct?)
The public key is visible on the card and a QR code is with it as well for a speedy import to compatible apps.
The private key is hidden inside the card and the only way to get at it would to be destruction of the security features on the card and the card itself.  (This may not always be the case, perhaps someone comes up with a scanner that can read the key from within the card, but as of today it *should* be pretty reliable)
Once broken/tampered, even the Bit Bill company recommends you no longer accept that Bit Bill.

Assuming the company is 100% legit and the security features are at least comparable to what is out there currently in the financial world then it should be a relatively assuring and safe transfer mechanism.

ill give you an honest opinion from a guy who has made copies of USFRD for entertainment and did a good number of hours of research into counterfeiting things.

bitbill can be somewhat easily counterfeited.

if i got this right, you peel off that security hologram to reveal the private key. so all the security is gone once you are able to obtain another security hologram.

http://www.securityhologram.com/ they sell security holograms, so really, what is to stop me from making my own bitbills? i can literally buy everything i need to make them.

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August 18, 2011, 09:48:32 PM
 #13

Note: I am not a lawyer.



The best part is that producing fake bitbills in and of itself is probably not illegal.  Of course, using them to obtain goods and services is probably fraud, but making a bunch of fake bitbills with no keys inside and selling them to someone as a batch of fake bitbills (for that second party to do with as they please) is not against the law (save whatever copyrighted image is on them, which is a civil matter).

The problem with the OP's solution here is one of trust.  It's the same reason why bitbills are doomed to failure.  There's no way for the recipient of a payment to be assured that nobody else has the keys that can be used to transfer the coins.

When you generate your own key and the sender makes a public transaction transferring those coins to you, you can be assured that nobody but you can transfer them.  When someone emails you a wallet.dat or hands you a bitbill, there is no assurance that someone else can't one day spend those coins.  If you want them to be permanently safe, you have to transfer the ownership to a new key, and that involves the blockchain.

I'm not really clear on why everyone's trying to invent coin transfers that avoid the blockchain.  They all involve some sort of trust scheme, and with smartphones approaching free (along with mobile internet connectivity) shortly we will all be speculating idly.
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August 19, 2011, 12:31:43 AM
 #14

To those who worry about someone retaining a copy of a wallet.dat...

I expect that at some point I may pay someone by giving them a wallet.dat  (or access to a wallet that they may already have whether they know it or not.)

I would not expect it to be a major problem that I may have kept a copy.  I would expect that the recipient would immediately open the wallet and at least verify the addresse(s) in it with block explorer, and they may as well go ahead and empty it at that point in whatever way they choose.

It would be possible that I give someone a wallet.dat for a legal transfer and it is passed around in that form for a few more transactions before being drained.  This would provide a pretty good amount of (plausible) separation between me and the next time the coins popped up in the transaction logs.

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August 19, 2011, 01:23:56 AM
 #15

something similar with paper wallets

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August 19, 2011, 01:36:34 AM
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To those who worry about someone retaining a copy of a wallet.dat...

I expect that at some point I may pay someone by giving them a wallet.dat  (or access to a wallet that they may already have whether they know it or not.)

I would not expect it to be a major problem that I may have kept a copy.  I would expect that the recipient would immediately open the wallet and at least verify the addresse(s) in it with block explorer, and they may as well go ahead and empty it at that point in whatever way they choose.

It would be possible that I give someone a wallet.dat for a legal transfer and it is passed around in that form for a few more transactions before being drained.  This would provide a pretty good amount of (plausible) separation between me and the next time the coins popped up in the transaction logs.


So they pull the money out of the wallet.dat and send it to their address...how is this any different than you just spending it directly to their address?
Sorry, just re-read the post. I guess you still have to have a high degree of faith that the wallet.dat file hasn't been copied somewhere along the way and drained before it reaches its' intended destination...
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August 19, 2011, 03:48:12 AM
 #17

To those who worry about someone retaining a copy of a wallet.dat...

I expect that at some point I may pay someone by giving them a wallet.dat  (or access to a wallet that they may already have whether they know it or not.)

I would not expect it to be a major problem that I may have kept a copy.  I would expect that the recipient would immediately open the wallet and at least verify the addresse(s) in it with block explorer, and they may as well go ahead and empty it at that point in whatever way they choose.

It would be possible that I give someone a wallet.dat for a legal transfer and it is passed around in that form for a few more transactions before being drained.  This would provide a pretty good amount of (plausible) separation between me and the next time the coins popped up in the transaction logs.


So they pull the money out of the wallet.dat and send it to their address...how is this any different than you just spending it directly to their address?

If I don't send BTC to someone's address then it would be difficult to prove that I did and pester me about my connections with the holder of that address.  This redresses some of the deficiencies of Bitcoin relative to cash.

If a wallet.dat (encrypted) got on to a lot of people's computers somehow, and I got the password to whatever entity managed to provided me with something that I wanted, it would be cumbersome and expensive to trace the relationships between different individuals.

A reason I am sensitive to issues such as these is that I believe that in todays world there is a huge amount of effort expended to track individuals and the relationships between individuals.  In my opinion these efforts either starts out unhealthy or rapidly becomes that way.  The damage that can come out of such databases is, to me, a much greater threat than 'terrorism' most of which is, I believe, pretty phony.

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August 19, 2011, 09:11:08 PM
 #18

does anyone know how many nodes there is in all?

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