Another shower thought about tainted bitcoins

[witcher_sense]

Another shower thought about tainted bitcoins and why it is pointless to call certain bitcoins dirty, illegal and for criminals. Imagine a transaction coming from twitter hackers, for instance. All the UTXOs involved in given transaction are now considered illicit. All bitcoins are now dirty. But what about a fee hackers need to pay in order to have their transaction mined?

Basically, imaginary twitter hackers used dirty bitcoins to incentivize miners, they merely bribed them. Fees is a part of coinbase transaction  (coinbase transaction is a transaction with which miners are paying rewards to themselves, it consists of block subsidy (new bitcoins) + transactions fees (sum of all commisions from all included transactions).

What is really interesting about a coinbase transaction is the fact it does not consume any existing UTXOs. What it means is that surveillance company like Chainalysis cannot figure out what part of fees included in coinbase transaction is still dirty. Now they have to call all bitcoins from given coinbase transaction illicit. Even "virgin bitcoin" can now be called illicit because some of the transactions included in a block were involved in criminal activity.

Mining can now be considered a means to launder money, since miners take dirty bitcoins and return clean ones via coinbase transactions. Every block is now tainted, demonized and is potentially serving criminals. Bitcoin is a tool for criminals. If your transaction is in the same block as imaginary twitter hackers' one, you are in trouble, you are criminal.

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[Shimmiry]

Another shower thought about tainted bitcoins and why it is pointless to call certain bitcoins dirty, illegal and for criminals. Imagine a transaction coming from twitter hackers, for instance. All the UTXOs involved in given transaction are now considered illicit. All bitcoins are now dirty. But what about a fee hackers need to pay in order to have their transaction mined?

This is a discussion that had been talked about in many threads that has the same topics and ideas such as "Bitcoin being dirty" and so on. But yeah, the idea also is repetitive whereas it was a fact that calling nor tagging bitcoin as good/bad or clean/dirty is just nonsense. But it doesn't mean that having a bitcoin that was mixed with bitcoins of criminals can make/tag you as a criminal. Remember that there are bitcoin mixers out there such as chipmixer where it blends your crypto with many cryptos that uses mixers as well, and AFAIK those mixers prioritizes user safety hence making such mixing anonymous and private, more likely to be untraceable after.

[mk4]

Wait til mixing and coinjoining becomes the norm(hopefully someday, hopefully something built in on wallets that sort of happens automatically or something) that all circulating bitcoin becomes so called "tainted". By then, there will almost no be any tainted bitcoin and exchanges wouldn't be able to complain.

[20kevin20]

Wait til mixing and coinjoining becomes the norm(hopefully someday, hopefully something built in on wallets that sort of happens automatically or something) that all circulating bitcoin becomes so called "tainted". By then, there will almost no be any tainted bitcoin and exchanges wouldn't be able to complain.

How far fetched would then be to name any unknown Bitcoin address (unknown as in not linked to anyone's identity or fingerprints) dirty/suspect? It's been a while since Monero started getting a quite strong push backwards and I still haven't heard anything positive ever since. In fact, the most recent article I read regarding Monero is about the IRS willing to pay someone to crack XMR. To me it seems like this is likely to be the norm soon as well..

[tippytoes]

Wait til mixing and coinjoining becomes the norm(hopefully someday, hopefully something built in on wallets that sort of happens automatically or something) that all circulating bitcoin becomes so called "tainted". By then, there will almost no be any tainted bitcoin and exchanges wouldn't be able to complain.

I like that kind of scenario. If it will happen, no more business for these mixers or coinjoin services. I think there's possibility in the future that someone will create a btc wallet or crypto wallet that has mixer in it. Everything is possible in this space. So looking forward on that moment. Don't know how exchanges can still trace those tainted bitcoins. If that time will ever come, these hackers will be very happy.

[DaveF]

I guess the question is who cares and why?
Did you get some of those "tainted" coins from one transaction away are now trying to convert them to fiat and Conbase (or whoever) is putting you through hell?

Or did you get them and send them to me and then I sent them to someone else who sent them to someplace else and now they are so spread out and mixed that it really does not matter.

Unless you have freshly mined coins, it really is not going to matter because sooner or later something is going to be mixed with something else of dubious origins.

As for the miner fee, does not matter to most "fiat conversion" places from what I read years ago they are still tainted.

-Dave

[lovesmayfamilis]

Don't know how exchanges can still trace those tainted bitcoins. If that time will ever come, these hackers will be very happy.

Most exchanges already have an anti-fraud monitoring system. And the cryptocurrencies entered by the user are checked for origin. At the slightest suspicion, the source of origin is specified, if it is not there, then the cryptocurrency is returned. Can a cryptocurrency pass through mixers be considered clean by exchanges?

[mk4]

How far fetched would then be to name any unknown Bitcoin address (unknown as in not linked to anyone's identity or fingerprints) dirty/suspect?

I really can't say, because I'm not a developer, but I don't think it would be too farfetched for bitcoin to reach such levels of anonymity that plausible deniability will be the default for even the people who don't do anything to improve their privacy. I'm guessing it's just probably a matter of when. But then again, I'm just guessing lol.

[DaveF]

I created a thread about the funding of collectable loaded coins last year.
https://bitcointalk.org/index.php?topic=5146208

Discussed the possibility of having coins loaded with "tainted" funds sitting around for years.
Moving from person to person, but until that least person went to cash it out to fiat it looks like it was just sitting in a wallet waiting to be spent.

-Dave

[BitcoinGirl.Club]

I think somewhere I have said that if we start going back at some point we will see some of the coins that I am holding came from an unexpected incident but I am the one who do not know about it. Will you put me in the jail for that?
There are no point of thinking about it. The haters will always try to find something that will scare you. Don't bother and care about it.

[DaveF]

I think somewhere I have said that if we start going back at some point we will see some of the coins that I am holding came from an unexpected incident but I am the one who do not know about it. Will you put me in the jail for that?
There are no point of thinking about it. The haters will always try to find something that will scare you. Don't bother and care about it.

It's not the haters. And it's not that people are going to put you in jail.
It's the annoyance that when you want / need to convert to fiat for whatever reason and some exchange gives you a hassle and wastes your time.

I don't like using Coinbase / Gemini to convert but at times I need to. I have been asked at times where coins have come from. Same way when I sold an expensive piece of machinery I had to deal with an IRS form 8300. If you are US based it's just part of life.

-Dave

[pooya87]

first of all nobody in decentralized world of bitcoin (that means all full nodes and all miners) gives a rats ass about "tainted coins" because there is no such thing in bitcoin as that. the only place you'll even encounter the term is in the centralized world which shouldn't even be used in the same sentence as bitcoin let alone we use them with bitcoin!

secondly if a "tainted coin" is being spent as a fee (eg. having 1BTC and paying 0.9999 of it as fee) it is obvious where the coins went! it is not really hard to say that the new output in that particular coinbase tx is the same "tainted coin" and follow where that one goes.

and finally the centralized world can not push this nonsense about "tainted coins" forever. eventually all wallets will have coinjoin and similar options to improve privacy and they won't have any other choice but to accept that this notion was stupid in first place and in fact using it pushed people to use more coinjoin-like options!

[slaman29]

Hmmm apart from the tainted coin subject which I think we all agree is pointless, actually I always thought fees are paid directly to the miner, but thanks to your post now I'm really wondering as well how did all those inputs combine? You pay a fee, every tx does, and all those fees automatically become 1 input? Or how does it work now, very good question to me in my mind!

[bitsurfer2014]

I suppose there is no such thing as tainted Bitcoin and I believe with @pooya87 remarks. I also think that "tainted Bitcoins" is a wrong perception from users who likes to associate or make an analogy with tainted fiat money that have serial numbers which is most often used to uniquely identify its integrity, origin, etc... e.g. "marked money" (used in law enforcement) and I'm afraid such feature was absent with Bitcoin - which makes it hard to distinguished if its "tainted"or not. Imho.

[Jet Cash]

What is going to be next? Are we going to have to register the ethnicity and religion of the wallet owner?

[BitcoinGirl.Club]

It's not the haters. And it's not that people are going to put you in jail.
It's the annoyance that when you want / need to convert to fiat for whatever reason and some exchange gives you a hassle and wastes your time.

I don't like using Coinbase / Gemini to convert but at times I need to. I have been asked at times where coins have come from. Same way when I sold an expensive piece of machinery I had to deal with an IRS form 8300. If you are US based it's just part of life.

-Dave

We need more adoption for bitcoin. Imagine for selling your coin you do not need to go to an exchange but you have a known network who are exchanging in between them. I am lucky to have such a few circle however I do use exchanges when I need to buy any alt with the hope that the BTC price against it will increase at some point an I will make some profit.

[hatshepsut93]

I don't thin chainanalysis techniques consider the fee part of a transaction as tainted, since it's a separate field from the output. I don't even think that they use the term "taint" in a meaning that "this coin and all the coins that come in touch with it are dirty forever". They just track where the coins are going, and if they find a centralized service somewhere in the chain of transactions, they can contact them to ask if they have KYC on that address in their system. And since at this point nearly any Bitcoin has some traces of taint, the chainanalysis techniques use some taint score that can be increased or decreased or reset. They are not stupid.

[lixer]

All these talk about dirty bitcoins is quite funny , there are limited number of bitcoins and imagine that they all eventually gets tainted? Which is likely to happen, and if that happens, what are we going to do about that, will everybody that’s making use of Bitcoin be considered a money launderer?

This is a really a big case. I think we really need to look for ways to solve these problems. I know that the reasons as to why they came up with this idea of identifying dirty coins is because they are trying to track down those are involved in criminal activities and such, but they should find a better means to solve these issues.

[bitsurfer2014]

All these talk about dirty bitcoins is quite funny , there are limited number of bitcoins and imagine that they all eventually gets tainted? Which is likely to happen, and if that happens, what are we going to do about that, will everybody that’s making use of Bitcoin be considered a money launderer?

Perhaps its  just an absurd perception from some individuals who are concerned with illicit use of Bitcoins. To be honest, no one really cares if Bitcoin has been used for or came from some kind of illegal activities as long as we see its still spendable in our wallets.

Case in point, if my memory serves me right, the U.S. Government has seized large amounts of Bitcoins from illegal activities before but they weren't concerned about its origin or history or if its "tainted" or not.

In fact, they gladly auction it off to the public - effectively making it "clean" again so to speak.

[MCobian]

Such topics have been discussed quite often, which in the end tainted Bitcoin did not make the demand for Bitcoin decrease.
Because most people only focus on making profit from Bitcoin, regardless of where it comes from. I am sure that all of us are
unconsciously using Bitcoin originating from illegal activities, but until now it has been difficult to prove this. Because many
scammers disguise their Bitcoin transactions by using Bitcoin mixers. Hopefully in the future there will be tools that can trace
Bitcoin originating from illegal activities, so when we buy Bitcoin, we can be sure that what we are buying is not tainted Bitcoin.