Tracing Newly-Minted Bitcoins?

[Abiky]

When a miner gets paid his/her share of the BTC block reward, coins are often freshly-minted on the Blockchain (virgin). I've done some "digging" on Bitcoin public blockchain ledger via a block explorer, and it seems that newly-minted coins don't leave much of a trace on the Blockchain other than being linked to a single address. If miners are smart, they could choose to mine new Bitcoin on different addresses to prevent traceability. Maybe I'm wrong and newly-generated coins (Coinbase) are traceable just like any ordinary transaction on the BTC blockchain? I mean, what's the difference between freshly-mined coins and those sent by a person on the blockchain privacy-wise?

If the origin of newly-minted coins cannot be properly traced, then this could open a whole new world of possibilities. It might be able to achieve privacy on Bitcoin by mining new coins, and saving them on separate public addresses on the Blockchain. Anyone who doesn't want to go through a centralized exchange to acquire BTC, can simply mine the coin himself avoiding KYC/AML altogether. Thoughts?

[1715297757]

1715297757

[1715297757]

1715297757

[odolvlobo]

Mined bitcoins are traced just like other bitcoins. The only difference is that the don't come from anywhere. They can still be traced when they are spent.

[mk4]

If the origin of newly-minted coins cannot be properly traced, then this could open a whole new world of possibilities.

Well, they can't be traced because they're literally newly-minted, because where are you going to trace them from? Newly minted coins aren't sent from a person's wallet. Just like how there's no previous owner when you bought a brand-new Prius(besides Toyota), because you bought it straight from Toyota. Probably a bad analogy, but you get what I mean.

[pooya87]

If the origin of newly-minted coins cannot be properly traced, then this could open a whole new world of possibilities.

Well, they can't be traced because they're literally newly-minted, because where are you going to trace them from? Newly minted coins aren't sent from a person's wallet. Just like how there's no previous owner when you bought a brand-new Prius(besides Toyota), because you bought it straight from Toyota. Probably a bad analogy, but you get what I mean.

coinbase transactions like any other transaction can be traced ONLY if the owner(s) of those coins have publicly linked the output to their identity. in a coinbase transaction it could be if the miner wrote its name inside its signature script (you see this as pool names) or if they sent the coins to an exchange where they have filled KYC.
that is the same with any other transaction, when you receive coins in a brand new key there is no way for the world to know who the owner of this new transaction output is but for example if you send received coins to an exchange it will be known.

[o_e_l_e_o]

Have a read of this example on the Privacy page on the Bitcoin Wiki: https://en.bitcoin.it/wiki/Privacy#Example_-_A_perfectly_private_donation

It might be able to achieve privacy on Bitcoin by mining new coins, and saving them on separate public addresses on the Blockchain. Anyone who doesn't want to go through a centralized exchange to acquire BTC, can simply mine the coin himself avoiding KYC/AML altogether. Thoughts?

This was certainly the case in the past when one could mine a block using their home computer or a couple of graphics cards. Now, even with a handful of ASICs, it would take you years on average to successfully solo mine a block. This option would only be viable for people with large enough mining farms that they could successfully solo mine within a reasonable time frame, which significant decreases their anonymity set.

[JeromeTash]

If the origin of newly-minted coins cannot be properly traced, then this could open a whole new world of possibilities. It might be able to achieve privacy on Bitcoin by mining new coins, and saving them on separate public addresses on the Blockchain. Anyone who doesn't want to go through a centralized exchange to acquire BTC, can simply mine the coin himself avoiding KYC/AML altogether. Thoughts?

Every transaction and Bitcoin address seems anonymous until it gets linked through transaction to your exchange account which has been verified with your KYC documents. Honestly, much as we hate it, KYC is inevitable as long as one want to exchange BTC for fiat or Buy BTC using fiat. Most non KYC P2P platforms have no much volume as compared to the centralized exchanges

So the question is, are the miners willing to just keep the BTC without ever thinking of cashing out?

[fiulpro]

When a miner gets paid his/her share of the BTC block reward, coins are often freshly-minted on the Blockchain (virgin). I've done some "digging" on Bitcoin public blockchain ledger via a block explorer, and it seems that newly-minted coins don't leave much of a trace on the Blockchain other than being linked to a single address. If miners are smart, they could choose to mine new Bitcoin on different addresses to prevent traceability. Maybe I'm wrong and newly-generated coins (Coinbase) are traceable just like any ordinary transaction on the BTC blockchain? I mean, what's the difference between freshly-mined coins and those sent by a person on the blockchain privacy-wise?

If the origin of newly-minted coins cannot be properly traced, then this could open a whole new world of possibilities. It might be able to achieve privacy on Bitcoin by mining new coins, and saving them on separate public addresses on the Blockchain. Anyone who doesn't want to go through a centralized exchange to acquire BTC, can simply mine the coin himself avoiding KYC/AML altogether. Thoughts?

When you mine Bitcoins , they will straight away be divided into the miners involved in solving the particular code , now those Bitcoins have No transaction History. At the same time according to a source , these Bitcoins can be sold for 10-20% more , since they are very hard to trace. Even people with fishy activities wants these So called Virgin coins .

According to a source , Chinese Miners do sell these Bitcoins with a comparatively higher price , that inturn ensures super Privacy for those people who attain them.

https://news.bitcoin.com/industry-execs-freshly-minted-virgin-bitcoins/
" According to this source these newly mined Bitcoins cannot be traced ! Contrary to what I see many people posting how they can be.

To trace something at least you would need the transaction history , which is impossible in this case.

[o_e_l_e_o]

Honestly, much as we hate it, KYC is inevitable as long as one want to exchange BTC for fiat or Buy BTC using fiat.

Nonsense. I've never completed KYC at any exchange ever, and I have no problem trading back and forth between bitcoin and fiat as needed.

Most non KYC P2P platforms have no much volume as compared to the centralized exchanges

Less volume doesn't mean no volume. More volume on DEXs would be good, but there's usually plenty of volume for me to buy and sell freely.

So the question is, are the miners willing to just keep the BTC without ever thinking of cashing out?

There are a lot of ways to spend bitcoin without first "cashing out" to fiat if you go for looking for them.

[hatshepsut93]

Anyone who doesn't want to go through a centralized exchange to acquire BTC, can simply mine the coin himself avoiding KYC/AML altogether.

This is unrealistic, you need to build your own mining farm for that, and have access to cheap electricity, and there's a lot of other variables at play here, so in the end you might pay for your coins much more than buying them off exchange. And it's impossible to solo-mine a block, so a mining pool will have at least some information about you - your email and IP and Bitcoin addresses. And it won't be hard to go back from one address back to the pool, and then ask it to provide all your withdrawal addresses, if authorities would really want to find you.

[Ucy]

I kind of prefer privacy-friendly method that will keep users who break no rule/law or who break no serious rules/law anonymous (if they choose to), but their important transactions/activities on the network should be immutable and linked to what uniquely identify the users in the system.
 Things that uniquely identify users should not even be visible to anyone unless the owners want them to. They can choose not to reveal these unique identifiers or any of their private contents/info linked to them, if they have done nothing bad or too bad against the network and others. Anyone who thinks a user has done something bad to derseve getting deanonimized should provide convincing proofs in his/her presence to determine if guilty or not, and ifekwe he/she deserves to get exposed to law enforcement.
Maybe if the freshly minted Bitcoin is large enough, you can get it linked to your unique (and anonymous) network identity for security reasons, until it no longer belongs to you.

[Twinkledoe]

Anyone who doesn't want to go through a centralized exchange to acquire BTC, can simply mine the coin himself avoiding KYC/AML altogether.

This is unrealistic, you need to build your own mining farm for that, and have access to cheap electricity, and there's a lot of other variables at play here, so in the end you might pay for your coins much more than buying them off exchange. And it's impossible to solo-mine a block, so a mining pool will have at least some information about you - your email and IP and Bitcoin addresses. And it won't be hard to go back from one address back to the pool, and then ask it to provide all your withdrawal addresses, if authorities would really want to find you.

Very few can afford to have that kind of opportunity. But if you have the means, why not? And if you are not too paranoid with KYC/AML stuffs, you can just go the easy route of getting bitcoin. At some point, you will give your credentials to some organization. But just make sure that you are sending your docs to a legit company. 

[Abiky]

Well, they can't be traced because they're literally newly-minted, because where are you going to trace them from? Newly minted coins aren't sent from a person's wallet. Just like how there's no previous owner when you bought a brand-new Prius(besides Toyota), because you bought it straight from Toyota. Probably a bad analogy, but you get what I mean.

Thanks for the clarification. I've imagined it would be that way since block explorers show no inputs for the "Coinbase" transaction. I guess that smart miners would keep their newly-minted coins on several addresses for privacy. Governments and other third-parties will be unable to identify the exact origin of funds, making taxation practically impossible to achieve. Newly-minted coin's anonymity can be preserved by using a mixer. You'd get a greater degree of privacy this way than having Bitcoins sent from another person. The only downside to this is that not everybody can afford mining Bitcoin. The only option for true anonymity would be in-person trades from Fiat to BTC. Then, sending BTC to a merchant or individual would need to be done with a mixer to stay as private as possible.

All in all, it's good to know that newly-minted coins have greater level of privacy than regular transactions on the BTC blockchain. Miners will be able to save their Bitcoin without fear of getting their identity exposed to the public. Unless governments find a way to track miner's IP addresses across the Internet, "Coinbase transactions" (newly-minted coins) will be able to retain miner's privacy as long as the coins are not moved to other addresses on the Blockchain. Just my opinion

[NotFuzzyWarm]

Just like how there's no previous owner when you bought a brand-new Prius (besides Toyota), because you bought it straight from Toyota. Probably a bad analogy, but you get what I mean.

Actually, yes a bad analogy. In the US at least when a car is obtained direct from the manufacturer it comes with a Certificate of Origin which you then use to obtain a Title from the DMV. Found that out after a friend won a Corvette through contest. That of course means that the cars' origin is traceable. FYI, when buying a new car the fees a dealership charges for Title/transfer is what that is - the mfgr supplies cars to the dealership with Cert of Origin which they then have to convert to a Title of Ownership when someone buys the vehicle.

edit: I should also add that when a block is found the block header contains information about what miner found it, eg, from one I found on KanoPool last December

[2019-12-17 09:55:22.719+11] _bloks_add(): BLOCK! Status: 1-Confirm, Block: 608428/...000012e6e6870bff Diff 14.9T Reward: 12.557647, Worker: Fuzzy.Avalon841_2, ShareEst: 21049113647971.0 21T 163.46% UTC:2019-12-16 22:55:22.618675+00

If mining direct to an address instead of a Worker name it would be wallet address. In other words, even virgin coins can be traced to who found the block or (obviously) at least what address they were sent to.

[Abiky]

edit: I should also add that when a block is found the block header contains information about what miner found it, eg, from one I found on KanoPool last December
...

 If mining direct to an address instead of a Worker name it would be wallet address. In other words, even virgin coins can be traced to who found the block or (obviously) at least what address they were sent to.

That's the issue. But I think what you've said applies with "pooled mining" rather than "solo mining". Pools nowadays require you to give them your BTC address to send the funds to. With solo mining, there's no middleman which can "leak" your utmost sensitive information to the authorities. I know that it's hard to "solo mine" with Bitcoin (because of the high network difficulty), leaving you with no other choice but to use mining pools to start earning Bitcoin. You can have a better chance of achieving full-fledged privacy with altcoins, though. At least, newly-minted coins don't have any previous inputs on the Blockchain. What governments can do is require mining pools to give information about Bitcoin wallet addresses in order to try to track & trace the origin of newly-minted coins. With solo mining, the task becomes difficult to achieve. But what if it's possible to obtain the IP address of the person mining Bitcoin on the network? It seems that there's always a "catch" when it comes to achieving full privacy on the Blockchain.

Nonetheless, it's interesting to know how "Coinbase transactions" (newly-minted coins) are displayed on the Blockchain. Miners can have several BTC addresses with "Coinbase transactions" in order to obtain privacy on-chain. As long as those coins aren't sent to other addresses on the network, tracing the origin of funds will become somewhat impossible to achieve. Just my opinion

[hatshepsut93]

All in all, it's good to know that newly-minted coins have greater level of privacy than regular transactions on the BTC blockchain. Miners will be able to save their Bitcoin without fear of getting their identity exposed to the public. Unless governments find a way to track miner's IP addresses across the Internet, "Coinbase transactions" (newly-minted coins) will be able to retain miner's privacy as long as the coins are not moved to other addresses on the Blockchain. Just my opinion

I seriously doubt that there's anyone today who can solo-mine even one block. It would probably take years for a single farm to find a block. And you're wrong that it gives better privacy, in fact I would say it's worse privacy, because you can't hide a mining farm, all mining equipment sales are monitored on border, mining draws a ton of electricity, so if someone would really want to find out the owner of some solo-mined coins, they could make a list of potential miners and go from there. Also this "privacy" only lasts for 1 transaction, then it's just like the regular transaction chain.

"Virgin bitcoins" is a thing, but not because of privacy - some investors want them because it gives them a guarantee that there's nothing shady in their coin's history that might lead to attention from officials in the future.

[Abiky]

I seriously doubt that there's anyone today who can solo-mine even one block. It would probably take years for a single farm to find a block. And you're wrong that it gives better privacy, in fact I would say it's worse privacy, because you can't hide a mining farm, all mining equipment sales are monitored on border, mining draws a ton of electricity, so if someone would really want to find out the owner of some solo-mined coins, they could make a list of potential miners and go from there. Also this "privacy" only lasts for 1 transaction, then it's just like the regular transaction chain.

"Virgin bitcoins" is a thing, but not because of privacy - some investors want them because it gives them a guarantee that there's nothing shady in their coin's history that might lead to attention from officials in the future.

Without a doubt, it's extremely difficult to solo-mine blocks on the Bitcoin blockchain. But in the case of altcoins with low network hashrate, that's another story. It's true that mining equipment sales are monitored "across borders", especially when it comes to ASICs for mining Bitcoin. But there's always the choice to "rent hashrate" in order to divert the attention from the government. Coins like Ethereum and Zcash are mineable with GPUs, which allows miners to have a greater level of discretion. Sending GPUs across borders will not raise suspicion, unlike ASICs. One could easily justify that those GPUs will be used for gaming. Then, miners can exchange their mined altcoins to BTC using a non-custodial exchange to avoid exposing their identity to the authorities. There are many ways to do this limited to one's imagination.

It's a good thing that "newly-minted" Bitcoins have no previous inputs. If miners decides to leave those coins on the Blockchain without moving them, no one will be able to link those coins to their identities. Personally, I would mine Bitcoin on several addresses without moving them at all. If I'd want to sell them, I'd do so via a decentralized exchange. The only issue is pooled mining. Luckily, developers are working on solutions to further decentralize Bitcoin's PoW consensus. If successfully implemented, mining pools' dominance within the BTC network will be greatly reduced. Individual miners will have more power, further increasing privacy and decentralization of the entire Bitcoin blockchain. By all means, "newly-minted" coins are clean (not tainted), making them ideal for mixing services (mixers) in the crypto/Blockchain space. Just my thoughts