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Author Topic: Questions around Pseudonymity and regaining Pseudonymity  (Read 244 times)
cozwaldo (OP)
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January 10, 2020, 10:48:34 AM
Merited by DdmrDdmr (2), Welsh (1)
 #1

Hi all,

Some years ago I purchased a small amount of bitcoin via CoinBase.From CoinBase I sent the coins to different exchanges for trading ect.
All of the exchanges(that are still around), require/required KYC.My identity is linked to those accounts.
So my coins are linked to me, is it true that :

 given any one of the addresses I have used people with enough skill(or gov's ect ) could determine my identity?
 given any one of the addresses I have used people with enough skill could determine my IP Address?
 What level of skill is required to deduce the information above?

If my assumption above is true is, how can i regain some Pseudonymity while keeping my current coins?


Thanks in advance
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January 10, 2020, 10:51:50 AM
Last edit: January 10, 2020, 11:02:38 AM by mocacinno
Merited by hugeblack (2), DdmrDdmr (2), o_e_l_e_o (2), Coyster (1), Heisenberg_Hunter (1)
 #2

given any one of the addresses I have used people with enough skill(or gov's ect ) could determine my identity?
yes

given any one of the addresses I have used people with enough skill could determine my IP Address?
yes

What level of skill is required to deduce the information above?
beginner level... You don't even need to know the technical details. The only thing one needs is the ability to follow a very simple input/output trail (or give a couple bucks to one of the many companies that specialise in this) and the power to ask the exchanges you used for the KYC documentation you provided (aka get a court order). Altough, with the security flaws in many of the exchanges, you might not even need the power to ask an exchange for KYC documents, sometimes exchanges are so vulnerable they get hacked and your private information is sold for pennies on the darknet...

If my assumption above is true is, how can i regain some Pseudonymity while keeping my current coins?
--snip--

Your coins exist as simple unspent outputs funding addresses you created (or that were created by an online service, altough i discourage storing funds on exchanges or online wallets). They're not physical things. You cannot regain pseudo-anonimity if you want to keep the exact same unspent outputs funding the exact same addresses. BUT: an unspent output x with value y funding address z is worth exactly the same as unspent output a with value y funding address b on the same chain.

If you're fine with this concept, you can create a brand new wallet (i prefer a hardware wallet or properly generated paper wallet, but a TRUSTED desktop wallet on a CLEAN PC might work aswell if you don't have enough funds). Then, you can use a mixer, a coinjoin wallet, or exchange your "traceable" coins to a high anonimity currency and back to BTC.

Basically:
"traceable unspent outputs" => mixer => "output from mixer funding brand new address from brand new wallet"
or
"traceable unspent outputs" => coinjoin wallet => coinjoin => "output from coinjoin funding brand new address from brand new wallet (or just keep using the coinjoin wallet)"
or
"traceable unspent outputs" => exchange => high anonimity coin => exchange => "output from exchange funding brand new address from brand new wallet"

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cozwaldo (OP)
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January 10, 2020, 11:28:26 AM
 #3

Thanks for your response.

I hadn't considered using a mixing service.I will do some research on the topic.

Im still having a hard time understanding the 3rd option, At the end i End up with some ZEC in a wallet,
but this still needs to be exchanged for BTC on an exchange? Which would put me back in the same scenario, ie some BTC on an exchange that my identity is linked to?
Or is my understanding wrong in this case?

Seems as if using a mixer is the best option.
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January 10, 2020, 11:47:44 AM
 #4

<…>
In addition to what @mocacinno stated, bear in mind that you’ve already left a footprint by purchasing crypto on an exchange and undergoing the KYC process.

There is a further footprint that ties you to cryptoactivities, which is the payment method you used to purchase your initial crypto. You’ve mentioned buying BTC on Coinbase, so presumably you did so by either performing a bank transfer, or using a card of some sort. That means that there is no way to hide (say from the taxation office) the fact that you have some crypto activity, even if you manage to break the potential tracing chain to the actual detail by the suggested methods.

Let’s say that part of the plan to anonymize one’s crypto activity is doable, but governments could still potentially know you has some doings by querying your banks (that happened last year in Spain during the taxation campaign), and even the exchanges themselves (although these are more difficult to fold to providing information than, say, your bank – depending on the applicable legislation).
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January 10, 2020, 11:52:27 AM
Last edit: January 10, 2020, 12:49:14 PM by mocacinno
Merited by Welsh (10), hugeblack (2), AB de Royse777 (2), Heisenberg_Hunter (2), Lucius (1)
 #5

Thanks for your response.

I hadn't considered using a mixing service.I will do some research on the topic.

Im still having a hard time understanding the 3rd option, At the end i End up with some ZEC in a wallet,
but this still needs to be exchanged for BTC on an exchange? Which would put me back in the same scenario, ie some BTC on an exchange that my identity is linked to?
Or is my understanding wrong in this case?

Seems as if using a mixer is the best option.


Well, there are different trains of tought on the best option... Mixing is defenately the easyest option of the 3... But you'll need to put your trust in the mixing service... If i'm not mistaking Theymos (The admin) isn't a big fan of mixing services for this very reason... What if the mixer is a scam or a honeypot? What if they made mistakes in their security protocol, what if their servers get seized?
But, if you trust them, a mixer is a cheap and fast method Smiley

The 3th option isn't that hard either:

You controll unspent outputs funding your address, let's call it 1BtcAddressA. At this point, you go to an (on-the-fly) exchange and exchange your BTC to (for example) XMR (or ZEC or Verge or...). You create an XMR  wallet on your hardware wallet (or desktop wallet) and withdraw the XMR to your local wallet (you now have an unspent output on the XMR network funding address 4XmrAddressB). Since this is a high anonimity coin, only the exchange knows they funded 4XmrAddressB. Now, you either create a second new XMR wallet (or a new address within the same wallet if you trust yourself not to start mixing unspent outputs) and you use the unspent output funding 4XmrAddressB to fund 4XmrAddressC. At this point, the link is completely broken.
Now, you use a different exchange to exchange the unspent outputs funding 4XmrAddressC on the XMR network for an unspent output on the bitcoin network funding a brand new address on a new wallet (1BtcAddressD).

At this point the link is completely broken. If you're paranoid, you can perform these steps over Tor and VPN, or you can mix several methods just to be sure...

Edit: it's friday, i'm bored, i added a visual aid... Copyright: Me  Grin

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nakamura12
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January 10, 2020, 12:51:39 PM
 #6

Thanks for your response.

I hadn't considered using a mixing service.I will do some research on the topic.

Im still having a hard time understanding the 3rd option, At the end i End up with some ZEC in a wallet,
but this still needs to be exchanged for BTC on an exchange? Which would put me back in the same scenario, ie some BTC on an exchange that my identity is linked to?
Or is my understanding wrong in this case?

Seems as if using a mixer is the best option.

Yes, it still needs to be converted to btc. Mixers use their own coin to hide your btc and exchanged to btc later on. Mixers will take a percentage of your btc (as fee of course, they earn that way) and then they sent you other crypto with the same value as the deducted amount. Regarding to your problem, you should have another wallet address to receive your funds that is not linked to your identity.

Wallet address 1(linked to your identity - mixer - wallet address 2 (new one).

cozwaldo (OP)
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January 10, 2020, 01:34:39 PM
 #7

Thanks for your response.

I hadn't considered using a mixing service.I will do some research on the topic.

Im still having a hard time understanding the 3rd option, At the end i End up with some ZEC in a wallet,
but this still needs to be exchanged for BTC on an exchange? Which would put me back in the same scenario, ie some BTC on an exchange that my identity is linked to?
Or is my understanding wrong in this case?

Seems as if using a mixer is the best option.


Well, there are different trains of tought on the best option... Mixing is defenately the easyest option of the 3... But you'll need to put your trust in the mixing service... If i'm not mistaking Theymos (The admin) isn't a big fan of mixing services for this very reason... What if the mixer is a scam or a honeypot? What if they made mistakes in their security protocol, what if their servers get seized?
But, if you trust them, a mixer is a cheap and fast method Smiley

The 3th option isn't that hard either:

You controll unspent outputs funding your address, let's call it 1BtcAddressA. At this point, you go to an (on-the-fly) exchange and exchange your BTC to (for example) XMR (or ZEC or Verge or...). You create an XMR  wallet on your hardware wallet (or desktop wallet) and withdraw the XMR to your local wallet (you now have an unspent output on the XMR network funding address 4XmrAddressB). Since this is a high anonimity coin, only the exchange knows they funded 4XmrAddressB. Now, you either create a second new XMR wallet (or a new address within the same wallet if you trust yourself not to start mixing unspent outputs) and you use the unspent output funding 4XmrAddressB to fund 4XmrAddressC. At this point, the link is completely broken.
Now, you use a different exchange to exchange the unspent outputs funding 4XmrAddressC on the XMR network for an unspent output on the bitcoin network funding a brand new address on a new wallet (1BtcAddressD).

At this point the link is completely broken. If you're paranoid, you can perform these steps over Tor and VPN, or you can mix several methods just to be sure...

Edit: it's friday, i'm bored, i added a visual aid... Copyright: Me  Grin
http://www.mocacinno.com/hotlinkimages/exchangeforxmr.png


Thanks for your efforts, your response has cleared up the pros/cons of the available options to me now.
Also the visual aid helped in clearing up the Friday fog.



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January 10, 2020, 02:11:51 PM
 #8

Well Satoshi seems to have managed to remain anonymous, so maybe we can learn from him. Smiley

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January 10, 2020, 03:28:19 PM
 #9

Jet Cash, Satoshi was able to remain anonymous because for some reason he decided to move off-the-grid. What he has done demands a very great renunciation of the modern way of life, in his case the complete breaking of any connection with what he was or did before. There is no doubt that this degree of anonymity can be achieved, but let's be real, 99% of people are not ready for such a step in life.

I think it's much easier to follow the tips from mocacinno, at least as far as coin anonymity is concerned.

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January 10, 2020, 06:57:43 PM
Merited by hatshepsut93 (1)
 #10

Well Satoshi seems to have managed to remain anonymous, so maybe we can learn from him. Smiley

satoshi never spent his bitcoins. that's his secret. it's transacting with other people/businesses that leaks personally identifying information. even purely physical p2p transactions reveal your identity to the other party.

the KYC exchange example mocacinno provided is just the most direct way to identify bitcoin users. even where KYC is not involved---for example, web payments at an online merchant---your identity is at risk. third party trackers "typically possess enough information about the purchase to uniquely identify the transaction  on  the  blockchain,  link  it  to  the  user’s  cookie,  and further to the user’s real identity." from there, an adversary could perform cluster analysis on your wallets to identify most of your other bitcoin activity.

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January 11, 2020, 11:01:03 AM
Last edit: January 11, 2020, 11:17:51 AM by Welsh
 #11

First of all, this wouldn't be just the way you use Bitcoin, but the way you access the internet, and how you have your computer setup. Some websites go as far as collecting the languages which you have installed on your local machine. While others just collect information like computer screen size, and agent. So, to keep your identity, and your online fingerprint unique, and changeable you need to always be thinking about changing up your digital fingerprint, and blocking a lot of content on the web. This can, and almost certainly will break most of the websites that you visit.

However, mixing coins is a way to protect your identity, and as others have stated its probably the easiest to do, while also remaining cost effective. This does mean you're still trusting a third party, although some coin mixing services terminate all data after a certain period of time. Although, you can't verify that this is true, and that's one of the issues with several users on this forum. Although, there are some trustworthy services out there.

Another option is to exchange your Bitcoin into altcoins, and back again. However,  remember that for this to work you would need to find an exchange that doesn't keep data on their system. The best possible way of doing this would likely be P2P. Although, you're still trusting one person. Anonymity in modern times is very difficult, especially because websites deliberately collect information on their users to either sell on their data, make their website more usable or advertise to them more effectively. Remaining anonymous is possible, but its entirely up to you how far you want to go to achieve that.  

Take note that government could identify that you use mixer & it's troubling if the country (where you and your exchange located) have strict regulation.
Are there many countries that have restrictions on cryptocurrency mixing services?

satoshi never spent his bitcoins. that's his secret. it's transacting with other people/businesses that leaks personally identifying information. even purely physical p2p transactions reveal your identity to the other party.
I believe Hal Finney received a transaction from Satoshi as a test back in the early days of Bitcoin. I believe it was 10 Bitcoin or somewhere around that figure. Therefore, Satoshi has spent his coins. His identity might not be known, but his addresses are tied to him, and everyone knows the addresses that he has used in the past. The way Bitcoin is designed, its not great for remaining completely anonymous, because of the way the Blockchain works every transaction is public, and if you are known to send any amount of coins publicly then you're linked with that address. This doesn't mean they know your identity, but you have become linked with an address.

Jet Cash, Satoshi was able to remain anonymous because for some reason he decided to move off-the-grid. What he has done demands a very great renunciation of the modern way of life, in his case the complete breaking of any connection with what he was or did before. There is no doubt that this degree of anonymity can be achieved, but let's be real, 99% of people are not ready for such a step in life.

I think it's much easier to follow the tips from mocacinno, at least as far as coin anonymity is concerned.
I'd have to check again as I might be mistaken, but I believe Satoshi dipped into different dialects, and ways of saying things. For example, he would spell words different from time to time just like British, and American people spell humour (humor) different. I believe he was very aware of the way he went about things, and retaining that for a long period of time can be exhausting simply because typing is quick by nature, and usually your brain is going 110mph, which tends to mean your typing reflects the raw way of you thinking about things. He was very aware of his linguistic style.

Like I said I'd have to check to confirm this, but considering there would have been a few high level media outlets, and amateur investigators analyzing Satoshi's every move, and going as in depth as stylometry.
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