How 'Anonymous' is Bitcoin?

[Dabs]

As I pointed out upthread even if you succeed to be anonymous (e.g. using an ISP that breaks the law as you propose), the majority of the Bitcoin users are not anonymous, so you can be compelled to provide identity else no one will transact with you. This is after the governments start cracking down. Read my post upthread please again more carefully.

On the issue of you trying to convince a judge, the law has now changed to "guilty until proven innocent":

http://www.nestmann.com/could-the-government-force-you-to-tell-your-deepest-darkest-secrets

I don't believe you have a prayer of winning by using "Plausible deniability" in a court-of-law, when the spend transaction was sent from your connection. Especially given the $150 trillion debt implosion and the NSA+G20 promising to hunt down all wealth. The courts are going to say, "show us your records proving that someone else sent that transaction from your connection".

Majority of bitcoin users are not anonymous? You mean all Americans living and residing in the United States right? I'm all the way on the other side of the world.

Maybe you could also mean, all American citizens who live anywhere, since they must file taxes on world wide income regardless of residence.

My ISP is not breaking the law. They just don't keep logs long enough. So do a lot of off-shore VPNs. Or my ISP could be keeping logs, but since all packets are encrypted, they don't know what is in them, or to who they were (really) sent to.

Guilty until proven innocent is unfortunate; I have actually learned to accept that kind of thinking where I live. There are ways around that, if it ever gets to court. The best scenario for you, as an individual, is to never get that far.

As far as my government is concerned, (and as far as the US government too, since I've been there, and lived there for some time), I am a model citizen: paying taxes and filing records as needed. I have just barely enough records for them that I exist, just like all the other millions of other people with no bad records, no criminal records, zero traffic or driving tickets, squeaky clean police clearance, etc.

I'm no one. Or nobody. They're not interested in me.

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[AnonyMint]

As I pointed out upthread even if you succeed to be anonymous (e.g. using an ISP that breaks the law as you propose), the majority of the Bitcoin users are not anonymous, so you can be compelled to provide identity else no one will transact with you. This is after the governments start cracking down. Read my post upthread please again more carefully.

On the issue of you trying to convince a judge, the law has now changed to "guilty until proven innocent":

http://www.nestmann.com/could-the-government-force-you-to-tell-your-deepest-darkest-secrets

I don't believe you have a prayer of winning by using "Plausible deniability" in a court-of-law, when the spend transaction was sent from your connection. Especially given the $150 trillion debt implosion and the NSA+G20 promising to hunt down all wealth. The courts are going to say, "show us your records proving that someone else sent that transaction from your connection".

Majority of bitcoin users are not anonymous?

Yes. Most users don't even try to be anonymous!

Or they do something silly like pass their coins through a mixer, which may be a honeypot and they didn't even obscure their IP address well (maybe only Tor).

Not to mention other mistakes such as browsing to other websites where they have login account of identity saved with cookies on while they are on the same connection that made spend.

You mean all Americans living and residing in the United States right? I'm all the way on the other side of the world.

Maybe you could also mean, all American citizens who live anywhere, since they must file taxes on world wide income regardless of residence.

Apparently the EU has a change of plan coming for you all too.

For example France is a leading example, which even proposed tracking and taxing all internet traffic sending to outside of France.

Just wait until the core of the EU implodes from the $150 trillion debt crisis next year. Then you will see the true colors of the EU.

We've got another year or 18 months of this mirage that Europeans are living in.

My ISP is not breaking the law. They just don't keep logs long enough. So do a lot of off-shore VPNs. Or my ISP could be keeping logs, but since all packets are encrypted, they don't know what is in them, or to who they were (really) sent to.

I'm not very knowledgeable about EU laws, yet I believe your ISP is breaking the EU edicts on this. I'm aware that some VPNs for example in Romania defy this, but this apparently a legal gray area for the moment. I am aware of that small landlocked country Liechtenstein in Europe that has ISPs that offer anonymous, no logs hosting.

I expect the NSA and GCHQ are hacking into these ISPs and compromising them. Remember the USA and Germany even bribed employees to get bank records in Switzerland. These ISPs would not even know they've been rooted or otherwise hacked. These covert agencies though might save these hacks for the higher profile cases, so for the moment you might be anonymous. But remember upthread I underlined the word "reliable". My point is you don't know! So don't have peace-of-mind, unless it is ignorant bliss.

Encryption doesn't hide the IPs of source and destination.

As far as my government is concerned, (and as far as the US government too, since I've been there, and lived there for some time), I am a model citizen: paying taxes and filing records as needed. I have just barely enough records for them that I exist, just like all the other millions of other people with no bad records, no criminal records, zero traffic or driving tickets, squeaky clean police clearance, etc.

I'm no one. Or nobody. They're not interested in me.

Irrelevant isn't it? If you commit a crime, you've lost that good status.

You didn't see the GCHQ went on a fishing expedition in Yahoo Messenger and has 180,000 images.

They are doing widespread data recording. The Utah facility can process 2 Yottabytes.

[creepywheepy]

"Live and learn"
I am embarrassed cause I haven't heard about Tor before I read this thread!
Thanks for this thread, useful for noobs like me!  

[AnonyMint]

My understanding of VPNs:

https://bitcointalk.org/index.php?topic=493803.msg5442845#msg5442845
https://bitcointalk.org/index.php?topic=493803.msg5454811#msg5454811

[mannie]

...

In reality, Bitcoin only gives you a degree of anonymity.  It gets you out of the scope of the NSA casually fishing through bank records to find likely names/addresses of people, but if somebody REALLY wants to find you, sooner or later, they will.  The more you interact with or trade with people, the more traces you leave.

In short, don't depend on bitcoin to keep you out of jail if you're breaking the law.  It isn't designed for that.  It is meant to keep you out of reach of "fishing expeditions", not a concerted law enforcement effort.

Coint taint is the biggest flaw to Bitcoin fungibility.

Now imagine the government tax and law enforcement authorities crack down in the coming years (and the G20+NSA are announcing this intent) wherein they say if you can't provide the identity of whom your purchased your coins from and sold your coins to, then all tax and criminal liability from the time of mining until the future is all yours. Because there is no way for you to otherwise prove that you didn't buy the coin from yourself and sell it to yourself.

So with that very simple ruling, the governments can at-will force all anonymous coin holders (past and present) to be revealed, because nobody is going to accept a coin without identity history any more.

You could still try to find someone to accept your anonymous coins, but since most users are not anonymous, your effort to find such vendors and market for your anonymous coins will become untenable.

This is why the only way I can see to keep fungibility (without losing anonymity entirely) is to make most of the users anonymous, and that includes all their IP addresses when they transact.

CoinJoin and Dark Wallet won't do this.

And Tor is not strong enough, as it can be foiled with timing analysis by an entity that can see all packets, such as the NSA.

So the reality is that Bitcoin will be the government coin. You see how easily the U.S.A. government effectively controlled the outcome of Mt.Gox.

I think a US gov crackdown is unlikely, considering all the VC involved and positions made by hedge funds already. They'll find ways to regulate exchanges and tax capital gains, surely, but a ban seems unlikely. Cash is far more problematic for crime and that's not going away any time soon. Stay away from illegal activity the same way you would with cash and you should be fine.

The US will be more worried about foreign investors fleeing US assets and domestic investors fleeing to gold once inflation kicks up. Massive USD inflation is a foregone conclusion thanks to Fed Reserve money printing. I suspect they have printed all this money not only to temporarily prop up the falling asset bubbles but use resulting inflation to default on US gov debt, letting inflation wipe it away. They know they have no hope of ever paying it back.

The above argument about complete anonymity is more relevant to communist countries such as China and Vietnam, which are more likely to try to crack down on crypto. How users in those countries get around surveillance of ordinary use will be interesting.

[sidhujag]

...

In reality, Bitcoin only gives you a degree of anonymity.  It gets you out of the scope of the NSA casually fishing through bank records to find likely names/addresses of people, but if somebody REALLY wants to find you, sooner or later, they will.  The more you interact with or trade with people, the more traces you leave.

In short, don't depend on bitcoin to keep you out of jail if you're breaking the law.  It isn't designed for that.  It is meant to keep you out of reach of "fishing expeditions", not a concerted law enforcement effort.

Coint taint is the biggest flaw to Bitcoin fungibility.

Now imagine the government tax and law enforcement authorities crack down in the coming years (and the G20+NSA are announcing this intent) wherein they say if you can't provide the identity of whom your purchased your coins from and sold your coins to, then all tax and criminal liability from the time of mining until the future is all yours. Because there is no way for you to otherwise prove that you didn't buy the coin from yourself and sell it to yourself.

So with that very simple ruling, the governments can at-will force all anonymous coin holders (past and present) to be revealed, because nobody is going to accept a coin without identity history any more.

You could still try to find someone to accept your anonymous coins, but since most users are not anonymous, your effort to find such vendors and market for your anonymous coins will become untenable.

This is why the only way I can see to keep fungibility (without losing anonymity entirely) is to make most of the users anonymous, and that includes all their IP addresses when they transact.

CoinJoin and Dark Wallet won't do this.

And Tor is not strong enough, as it can be foiled with timing analysis by an entity that can see all packets, such as the NSA.

So the reality is that Bitcoin will be the government coin. You see how easily the U.S.A. government effectively controlled the outcome of Mt.Gox.

I think a US gov crackdown is unlikely, considering all the VC involved and positions made by hedge funds already. They'll find ways to regulate exchanges and tax capital gains, surely, but a ban seems unlikely. Cash is far more problematic for crime and that's not going away any time soon. Stay away from illegal activity the same way you would with cash and you should be fine.

The US will be more worried about foreign investors fleeing US assets and domestic investors fleeing to gold once inflation kicks up. Massive USD inflation is a foregone conclusion thanks to Fed Reserve money printing. I suspect they have printed all this money not only to temporarily prop up the falling asset bubbles but use resulting inflation to default on US gov debt, letting inflation wipe it away. They know they have no hope of ever paying it back.

The above argument about complete anonymity is more relevant to communist countries such as China and Vietnam, which are more likely to try to crack down on crypto. How users in those countries get around surveillance of ordinary use will be interesting.

Right.. inflate it away then do another qe because we are actually in deflationary spriral dontcha know? Buy low sell high in one big trade. Thats how they are cutting debt down... as far as smart money they have no choice but to buy it there is no other option.. err was no other option.. gold cant be currency.

[AlexGR]

As I understand the situation, DRK may achieve a status of "legally anonymous", which is anonymous for all intents and purposes minus the largest players like NSA who controls all devices, all networks, serious AI pattern recognition software, etc etc. These large players will be unable or unwilling to explain their methods in a court of law, or they will have to admit all their illegal activities - which would compromise their activities around the globe.

I mean, consider this: They go to a court and say we have these evidence, obtained by these illegal methods of spying every single device (that would be a "smash" for high tech exports  ), or the networks of several FOREIGN COUNTRIES (and that would cause no international uproar, lol), and some HINTS by this pattern recognition software which INDICATE (not conclusively prove) that the X amount was transferred from entity A to entity B because the wallet of A emptied by 1 DRK and the wallet of B got 1 DRK.

And even if this can happen in the US, it will not happen in other countries. For example, in Greece, the right of the individual to privacy (including telecommunications) cannot be breached unless there is some SERIOUS crime. That's on the constitution. You can't just eavesdrop and use these information as ...evidence. Illegal evidence = bye bye mr prosecutor, you've just admitted to committing a crime yourself. Additionally, when say traffic is routed throughout the world, how many countries can say that they have access to all the networks in order to convince a judge that yeah that transaction went from here, to there, to there, to there, and then back to this place. And the judge will be "ok, and you know this HOW?".

Parody trials where the accuser / prosecutor will not have to actually submit the evidence or methods of obtainment, is another issue altogether that is more serious than anonymizing bitcoin, darkcoin etc.

[AnonyMint]

Why Tor isn't anonymous and analysis of the flaws of DarkCoin (DRK):

https://bitcointalk.org/index.php?topic=421615.msg5465510#msg5465510

The NSA won't have any problem providing records to the tax and law authorities. They've already announced coordination with the G20 to do so.

You guys are just thinking the world is going to remain sane. You are going to be shocked when this shit spirals into chaos 2016ish.

I'm tired of arguing with you. Have it your way at Burger King. Enjoy your bliss.

[AlexGR]

AnonyMint who do you think created Bitcoin? Was it the "good" guys (common people), or the "bad" guys (aka establishment masquarading as a pseudonymous creator)?

[gollum]

For instance, would running behind Tor protect me?

Tor = Government spying network

Try a trustworthy VPN instead. And bitcoin mixing services, but don't send too many coins, you never know when you get "goxxed"

[gollum]

AnonyMint who do you think created Bitcoin? Was it the "good" guys (common people), or the "bad" guys (aka establishment masquarading as a pseudonymous creator)?

Hypothesis A) Bitcoin was created with a good intention by the idealist Satoshi, and the official story is true.

Hypothesis B) NSA invented bitcoin, and to prevent free competetive alternatives to gain first mover advantage they released bitcoin as open source and crerated the cyber jesus "Satoshi".
Their strategy with internet and bitcoin: First they give you more freedom than you are used with, then they collect data about you without you knowing about it and finally they sue you,  blackmail you or put you in jail (if you are a threat).

[AnonyMint]

gallom, I couldn't have said it better. Thanks.

The only two ways I know of to be reliably anonymous w.r.t. to making it impossible to connect your IP address to your identity, at least until I release my new technology for anonymity of a block chain.

Note I think Zerocoin has a very important role to play combined with my design for mixing, but not by itself.

Others are starting to understand that low-latency Chaum mix-nets such as Tor aren't reliable anonymity.

[Rassah]

I wonder. To track bitcoin, especially if things like Tor and CoinJoin are used, you need quite a few resources, on the level of the NSA. On the other hand, if AnonyMint's prophesized economic devastation happens, maybe by bitcoin itself starving governments of tax revenue, that would mean that economy collapsed, along with governments, and there is no money to extract from citizens to pay for such a program. So wouldn't Bitcoin's anonymity be asured by bitcoin itself as it cuts off the flow of funds to the very thing that has any chance of breaking its anonymity?

[AlexGR]

if AnonyMint's prophesized economic devastation happens, maybe by bitcoin itself starving governments of tax revenue, that would mean that economy collapsed, along with governments, and there is no money to extract from citizens to pay for such a program.

The governments are doing a pretty "solid" job to bankrupt themselves without the assistance of bitcoin. I doubt bitcoin will really play any role in their bankruptcy and certainly not from lost taxes. What bitcoin can do is to reduce the faith in national currencies by people switching to it.

Most governments are not really 100% dependent in tax revenue for their operations - and that's especially true for western governments with national currency / own issuing of money (eurozone is an exception). If they have a deficit (more expenses than income) they simply print more money to cover the difference.

If the US for example was basing all of its operations on the tax income, then these operations would need to be slashed by 25% because the tax income is not enough (income ~2.7 trillion / expenses ~3.5 trillion). Instead, the US government borrows more money which is covered by the Fed, indirectly. So there is always money to go around, as long as the issuing of new currency doesn't destroy people's faith in it.

Bitcoin is an alternative to national currencies but gold and silver are also. And when you have "preppers" for the economic armaggedon stacking gold and silver coins for like a decade, that's a larger problem for a government than Bitcoin because it's about person-to-person transactions that aren't monitored from a central console like the movement of bitcoins, nor can they be regulated by software solutions.

[Ix]

I wonder. To track bitcoin, especially if things like Tor and CoinJoin are used, you need quite a few resources, on the level of the NSA. On the other hand, if AnonyMint's prophesized economic devastation happens, maybe by bitcoin itself starving governments of tax revenue, that would mean that economy collapsed, along with governments, and there is no money to extract from citizens to pay for such a program. So wouldn't Bitcoin's anonymity be asured by bitcoin itself as it cuts off the flow of funds to the very thing that has any chance of breaking its anonymity?

Might come down to a matter of luck and timing on which system could exert enough power over the other first. It would be really helpful for bitcoin to have a backup network that didn't have an off switch, though.

[timk225]

I think I've figured out some good ways to stay anonymous, here's the short version.

A laptop with a fully zero wiped hard drive with no personal information.  Then load Windows or even better, a Linux variant.

A bicycle with which to ride to open wireless access points.

Night time works well for making security cameras useless, as does a disguise.

And, as I live in a big city with many many many free WiFi points, that makes it easy to find an internet connection that is not in my name.

Multiple BitCoin wallets on the laptop.

Tor Browser

And NEVER connect the laptop to your home network and do anything with it!

The first step to staying anonymous is to not use it at the IP address registered in your name!

I'm not saying the NSA couldn't find me if I'm doing things like this, but I'll make them work a little bit!  

[timk225]

Anyone see any flaws in my oh-so-simple-but-oh-so-effective security measures?  I don't.

[spyro]

There must be something simpler now, no?

[fbueller]

There are a number of ways you lose your privacy with bitcoin.

You need to connect to other nodes for blocks, so your IP is revealed.

Spv wallets - the nodes these connect to have the IP, and a huge list of addresses all owned by that person.

All transaction history is public, unchangeable, so retrospective analysis is possible. If you were up to no good on the silkroad, imagine the FBI set up a node to service SPV clients? And they logged the IP of owners of addresses linked to the silk road? Are you sure you removed that key from your wallet? :-p

Into transactions now.. Services that use multisig are bad for privacy if you don't tumble coins. If you pay into a multisig address s, coins can't be mixed up (not talking about bitfog here, just the wallet preferentially spending older coins to keep fees low - this means seller might get diff coins to the one you lodged). So, if I have a list of multisig addresses a marketplace used, I can learn the address of the buyer and seller.

If someone redeems the funds from the multisig, everyone learns the public keys of the people involved. Imagine you keep that key in your wallet, expecting to never use it again... But your node gives away that you own it by bloom filters mentioned above?

There is a full stack of software to understand.. Plus, have you read all the research papers on the topic? Martin and Harrigans was in 2011, so you've plenty to read from between now and then.

[adsactly]

Thank You Dany Hamilton this clears up alot of questions most people have regarding
the Anonymity of BITCOIN!