Blockchain Analytics is More of an Art Than Science

[HmmMAA]

Blockchain analysis is a scam.

If chain analysis is a scam how do you explain cases like https://www.justice.gov/opa/pr/south-korean-national-and-hundreds-others-charged-worldwide-takedown-largest-darknet-child ? Those who got charged do you think were innocent and the deep bad state just decided to flip a coin and charge random people ?
I agree that someone can't be 100% certain all the time but there were cases that chain analysis led to child porn rings , especially in cases where the users were ignorant about how blockchains work .

As for the mixers , it's sad to see many people here claim that mixers is a tool to protect privacy , that kind of users that have nothing illegal to hide are just providing exit liquidity to criminals . As a proverb says "when you pee in the sea you will find it in the salt" .

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[BlackHatCoiner]

I agree that someone can't be 100% certain all the time but there were cases that chain analysis led to child porn rings , especially in cases where the users were ignorant about how blockchains work .

If you treat everyone guilty until proven otherwise, then definitely, some of the times they won't be innocent. The question you need to answer yourself is if it's worth to live under a regime that is discriminating against everyone who is trying to have some privacy, for the sake of seizing criminals.

It's easy to pinpoint that chain analysis is good when the criminals are ignorant. However, how many documented cases exist in which criminals who mixed their coins were apprehended? What happens if a criminal mixes their coins? Are new owners criminals now? Of course not.

As for the mixers , it's sad to see many people here claim that mixers is a tool to protect privacy , that kind of users that have nothing illegal to hide are just providing exit liquidity to criminals

I'm neither hiding an illegal activity by encrypting messages, but I do have something to hide; the message. Freedom of using cryptography can be exploited by criminals as well, but it is nonetheless a crucial, respecting part of our Internet world now more.

Why are you finding it so difficult to accept the fact that I may not want to reveal my financial activity to literally the public?

[o_e_l_e_o]

If chain analysis is a scam how do you explain cases like https://www.justice.gov/opa/pr/south-korean-national-and-hundreds-others-charged-worldwide-takedown-largest-darknet-child ?

From the article you linked:

Through the sophisticated tracing of bitcoin transactions, IRS-CI special agents were able to determine the location of the Darknet server, identify the administrator of the website and ultimately track down the website server’s physical location in South Korea

How do you propose blockchain analysis is able to "track down a server's physical location", given the blockchain does not store geolocations, IP addresses, or any other such identifiers? It is quite clear they were using data from other sources to identify the server in question.

And then:

The agencies have shared data from the seized server with law enforcement around the world to assist in identifying and prosecuting customers of the site.

Data from the server was what led to the arrest of individuals, not blockchain analysis.

Those who got charged do you think were innocent and the deep bad state just decided to flip a coin and charge random people ?

No, and I obviously have nothing against people committing non-victimless crimes going to prison. Especially not in cases such as this. These individuals can rot in hell. However, that still doesn't give the state the right to constantly surveil all its citizens.

As for the mixers , it's sad to see many people here claim that mixers is a tool to protect privacy , that kind of users that have nothing illegal to hide are just providing exit liquidity to criminals .

No offense meant, but "nothing to fear, nothing to hide" is a monumentally stupid argument. If you truly have nothing to hide, I'm sure you'll have no issue whatsoever sharing with me your real name, address, phone number, email address, bank statements, all your bitcoin addresses, all your WhatsApp/Telegram/Signal/etc. conversations, your internet browsing history, and the login details for all your social media accounts. I just want to have a good look around and publicly post anything I find interesting. After all, you've got nothing to hide, right!?

[BlackHatCoiner]

If you truly have nothing to hide, I'm sure you'll have no issue whatsoever sharing with me your real name, address, phone number, email address, bank statements, all your bitcoin addresses, all your WhatsApp/Telegram/Signal/etc. conversations, your internet browsing history, and the login details for all your social media accounts. I just want to have a good look around and publicly post anything I find interesting. After all, you've got nothing to hide, right!?

This is just the best response to this argument. Whenever someone asserts that they have nothing to hide, I politely request permission to access their phone. Surprisingly, this approach even works with my relatives. The temporary awkwardness that ensues clearly illustrates my point that we all have things to hide.

[LeGaulois]

(great discussion by the way, compared to what we're used to read here, thanks guys)

I'm coming with some stuff

The Department of Justice admits blockchain forensics to be “highly imperfect”, @ https://www.justice.gov/media/1169626/dl?inline
and precisely including Chainalysis in the report.

Bloomberg cites partial facts, dismissing concerns regarding Chainalysis accuracy in the ongoing Bitcoin Fog trial as a "smear campaign."
A smear campaign? I'm not a Bloomberg's reader but I wonder if they call this too smear propaganda when it's about Trump

And again
@ https://storage.courtlistener.com/recap/gov.uscourts.dcd.232431/gov.uscourts.dcd.232431.164.0_1.pdf

[buwaytress]

Forensics (which is probably the more accurate term in this instance) is what practitioners might argue is anyway more of an art, grounded in science. I might say many others who use scientific bases to guide findings and discoveries think the same.

I've a partner working in (traditional) compliance and you can always teach the frontliners and KYC about the science, but the nuance and depth of analysis is really hard to land at -- blockchain or Bitcoin transaction behaviour actually simplifies some of that nuance (there us, for example, no possibility to fake, double spend, or retroactively change, unlike in traditional transaction trails).

Let's not forget that Chainalysis whistleblowing in the past certainly points to at least a degree of uncertainty in their own methods -- this was years ago. And they're at that basic frontline level banks have right now -- knowing some rules, some parameters, and not knowing enough how to recognise and exclude the (many) false positives that are easy to create.

Advanced forensics rely on matching digital fingerprints -- not merely dusting for fingerprints, which is what Chainalysis does.

[o_e_l_e_o]

-snip-

Those quotes from "Government Experts" are absolutely damning. This whole thing is a clown show. I'll pull another few quotes for interest:

The final version of the internal Chainalysis study cited by Hanna Curtis in the webinar “Cryptocurrency Typologies: What You Should Know About Who’s Who on the Blockchains” which concluded that roughly 90% of the funds sent through mixers were done so for legal personal privacy reasons.

So even Chainalysis admit that the vast majority of mixer user is entirely legitimate and from regular users who just want to protect their privacy.

Q. Is it your testimony here that you really don't understand the intelligence heuristic that's involved in Chainalysis Reactor?

A. I don't know the full extent of what Chainalysis is doing for that heuristic, no, sir.

Lmfao. "Here's my evidence." "Can you explain it to us?" "No, I have no idea what any of this means. But I'm certain it's enough to put people in jail, even though I don't understand it at all!"

In what other trial could one party say "We have evidence that the defendant is guilty, but none of you are actually allowed to see that evidence. We will however give you a document that confirms we have evidence that the defendant is guilty. Totally trust us, bro."

What a fucking sham.

[HmmMAA]

Are new owners criminals now?

 Criminals no , idiots for using a tumbler/mixer by providing exit liquidity to criminals yes .

Why are you finding it so difficult to accept the fact that I may not want to reveal my financial activity to literally the public?

Because first of all the public gives a shit about your financial activity , same as mine . Because it's difficult (not impossible) for the public to connect me with all my accounts and aliases as i respect my privacy . Because i am not a target for the public ( probably you too ) . And many many other things .

 It is quite clear they were using data from other sources to identify the server in question.

Data from the server was what led to the arrest of individuals, not blockchain analysis.

Were they customers of that "service" if they were paying ? Does blockchain provide a proof of economic activity ? Was that proof another nail in their coffin ?

These individuals can rot in hell. However, that still doesn't give the state the right to constantly surveil all its citizens.

I'm glad we're on the same side about those scumbags .
As for the constant surveillance , i'm on the side who believes that cameras should be anywhere . The problem is that there's still no framework for these data to be handled "only" by authorities just in cases that a crime is committed .
Imagine a world where you would know that if you commit a crime you are almost 100% busted . Would you commit that crime ?
https://www.youtube.com/watch?v=BlT5SdLeXtM

No offense meant, but "nothing to fear, nothing to hide" is a monumentally stupid argument. If you truly have nothing to hide, I'm sure you'll have no issue whatsoever sharing with me your real name, address, phone number, email address, bank statements, all your bitcoin addresses, all your WhatsApp/Telegram/Signal/etc. conversations, your internet browsing history, and the login details for all your social media accounts. I just want to have a good look around and publicly post anything I find interesting. After all, you've got nothing to hide, right!?

Not a stupid argument , just an argument that doesn't fit your narratives . Believe me , there are people that know many / most / all of the things you mention about me . You are not in my circle that has the right to know detailed info .That's what privacy is . You share things that you want with those you want .  On the other hand anonymity tries to hide anything from anyone . I like privacy , i dislike anonymity .

[o_e_l_e_o]

As for the constant surveillance , i'm on the side who believes that cameras should be anywhere .

Then we fundamentally disagree. The state does not have the right to constantly monitor its entire population "just in case".

The problem is that there's still no framework for these data to be handled "only" by authorities just in cases that a crime is committed .

Because that is an impossible fantasy. Any and all data collected under already existing surveillance programs is used by the government for literally any purpose they want, including being sold to third parties and shared with foreign governments, and there is nothing you can do about it.

Imagine a world where you would know that if you commit a crime you are almost 100% busted . Would you commit that crime ?

Show me evidence that mass surveillance has prevented a single terrorist attack. There is none.

You share things that you want with those you want .

And I, and many others, don't want random blockchain analysis companies, centralized exchanges, governments, and so forth, spying on all our bitcoin transactions, holdings, addresses, and wallets. And so we use privacy enhancing tools.

[BlackHatCoiner]

Because first of all the public gives a shit about your financial activity , same as mine .

If all the people from the public don't care about your financial activity, it doesn't mean that a sub-group of people, which are specialized to analyzing financial activities, don't care either. They are caring more than anyone else.

Because it's difficult (not impossible) for the public to connect me with all my accounts and aliases as i respect my privacy .

It is evidently possible for the public to de-anonymize a large part of your Bitcoin financial activity. If you think that just by utilizing coin control you can protect yourself from firms which are funded by millions of dollars with the single scope of de-anonymizing as much blockchain activity as possible, then you're gravely mistaken. Even random people on this forum do it. You can't efficiently nor effectively gain privacy by coin control, you need at some point to enter a large pool of coins, which will make it hard for the observer to tell which is which afterwards (as in coinjoin).

You share things that you want with those you want .

So mixing is good, because it lets us define the limit of who's allowed to scrutinize our Bitcoin activity.

[SamReomo]

Or, they themselves could attack their own software if there's a benefit. They won't reveal you the manner which they discriminate coins, so why wouldn't they? It can go completely unnoticed.

Well, that's another possibility because they can sometimes attack their own software and may act as hackers to find the flaws that hackers could find with hacking tools. Sometimes they also might run bug bounty programs and pay hackers to find those bugs in their software.

This is so true. In fact, it's been noticed that many times developers who write closed-source software do follow the "security-through-obscurity" principle. People try obfuscation techniques believing that provides security, in stuff like web apps and steganography. Believing that closed-source is more secure than open-source, besides debunked, is a sign of utter arrogance; believing that no one can contribute to the security of your project as much as you've already done is excessive self-esteem. Windows is tangible evidence that this is bad practice.

Everything that includes cryptography should be developed transparently.

I agree with you and most of the closed-source software are packed with obfuscation techniques by keeping security in mind while sometimes they use those techniques to prevent open-source software developers from copying of the source-code. Those closed-source people aren't generous at all and they don't want open-source developers to view the code and make something similar and allow everyone to use it and contribute to it freely. Such software could contain many vulnerabilities and when a hacker finds those vulnerabilities then he/she may do anything with the systems of the users that are running those software on their systems. I strongly agree with you that the software which has cryptography should always be developed with complete transparency so that any developer could had improvements into it.

[HmmMAA]

Then we fundamentally disagree. The state does not have the right to constantly monitor its entire population "just in case".

The state should be able to to monitor everything . These data should be encrypted and only be viewable in crime cases . Courts and no one else should provide the keys to be able to decrypt the data . These are things that we will see in the future if blockchains stop being used only as a economic instrument . Bitcoin is a timestamp machine and has many more uses than we have ever imagined .

Because that is an impossible fantasy. Any and all data collected under already existing surveillance programs is used by the government for literally any purpose they want, including being sold to third parties and shared with foreign governments, and there is nothing you can do about it.

That's an impossible fantasy because we only tell people that bitcoin is the quick rich vehicle . And everyone that says that bitcoin is much more than that is considered a looney .

Show me evidence that mass surveillance has prevented a single terrorist attack. There is none.

I can point you to thousands of crimes that solved with surveillance cameras . Murders , abductions , burglaries and much more .
As for the terrorist attacks let's consider the Boston marathon bombers . These guys were caught by examination of the videos . Do you think they would continue to strike if weren't caught ? That's just an example , just to show that even in terrorist attacks surveillance is necessary and it might not prevent the first attack but gives a high chance there won't be another one by the same people . And there's a high chance that by recognizing them it's possible to find more persons that belong to that core and possibly prevent other attacks .

And I, and many others, don't want random blockchain analysis companies, centralized exchanges, governments, and so forth, spying on all our bitcoin transactions, holdings, addresses, and wallets. And so we use privacy enhancing tools.

That's your right , just don't act as a cry baby in case things go the bad way .

[BlackHatCoiner]

I agree with you and most of the closed-source software are packed with obfuscation techniques by keeping security in mind while sometimes they use those techniques to prevent open-source software developers from copying of the source-code.

Chain analysis companies not revealing the manners which they deem coins as "tainted", being to protect their source code and techniques from market competition is a cheap excuse. The real reason is that it removes their authority on labeling coins as "tainted". If CA company were to ever announce that after 20 transactions, coins coming from an illicit activity are now deemed "clean", then everyone sending 20 transactions to themselves would be enough to completely erase taint from Bitcoin.

The state should be able to to monitor everything . These data should be encrypted and only be viewable in crime cases . Courts and no one else should provide the keys to be able to decrypt the data . These are things that we will see in the future if blockchains stop being used only as a economic instrument . Bitcoin is a timestamp machine and has many more uses than we have ever imagined .

You do know that freedom to access standard cryptography is the definition of "the state cannot monitor everything", right? If you think the state should be able to monitor everything, then cryptography should be made illegal for public use by tomorrow morning.

[NotATether]

Then we fundamentally disagree. The state does not have the right to constantly monitor its entire population "just in case".

The state should be able to to monitor everything . These data should be encrypted and only be viewable in crime cases . Courts and no one else should provide the keys to be able to decrypt the data . These are things that we will see in the future if blockchains stop being used only as a economic instrument . Bitcoin is a timestamp machine and has many more uses than we have ever imagined .

They have a responsibility to monitor but they also have a responsibility to act on the data they receive to make arrests, lawsuits, and so on. We don't want NSA-types that don't take any action with info they receive about illegal stuff, except for continue to monitor. At least in the US, the agencies most actively involved in investigating crypto-crime are the FBI, IRS, and DEA.

Right now the only time you can get the feds to investigate surveillance is when millions of dollars worth of coins that are linked to illegal dark web operations are moving around.

If someone scams a bunch of people, or hacks a business and steals money, then usually, the victims are out of luck because these cases are not important enough to feds (usually because of a low budget)...

[o_e_l_e_o]

The state should be able to to monitor everything .

I can't disagree more. This is a crazy position. Imaging wanting to live in 1984!?

These data should be encrypted and only be viewable in crime cases .

Right, because there has never once been a single case of data being leaked, hacked, or used inappropriately? The fact is if this data is gathered, it will be used against you, regardless of whether you have committed any crimes.

As for the terrorist attacks let's consider the Boston marathon bombers . These guys were caught by examination of the videos .

Videos from businesses and individuals, not from government surveillance cameras.

https://www.eff.org/deeplinks/2013/05/after-tragedy-boston-more-government-surveillance-not-answer

The old cliché is often mocked though basically true: there’s no reason to worry about surveillance if you have nothing to hide. That mindset creates the incentive to be as compliant and inconspicuous as possible: those who think that way decide it’s in their best interests to provide authorities with as little reason as possible to care about them. That’s accomplished by never stepping out of line. Those willing to live their lives that way will be indifferent to the loss of privacy because they feel that they lose nothing from it. Above all else, that’s what a Surveillance State does: it breeds fear of doing anything out of the ordinary by creating a class of meek citizens who know they are being constantly watched.

[franky1]

blackhat and o_e_l_e_o are on a drug induced paranoia plot.
funny thing is although there is alot of data unencrypted available from multiples sources of the internet.. the thing they dont realise is that the "government" are not watching them as much as they think

if they tried to do some sane research when sober they would realise the government are not actively surveilling everyone all the time. instead they are reactive to reports and then look into information they can find based on received reports.

from what i can easily tell from blackhat and oeleo is that they dont actually care about privacy. instead they care about scamming people into using services they are affiliated with for their own profit/gain.

there are actual ways to move value without taint. but these guys only adore advertising mixers without even understanding that regulators have already ruled that mixing is a subject of suspicion which WILL get people flagged if people use mixers.. thus defeating the point of using one

yep thats right by using a mixer, your coins trigger a suspicion flag that causes services to then monitor those coins and generates a report which would cause governments to look at available data.. thus as i just said defeats the point of mixers

if blackhat/oeleo cared about actual privacy instead of these sham services they promote, they would care more about other services, features, tools not listed as suspicious by regulators. thus avoid having flags thus avoid reports thus avoid active surveillance.. but they would have to be sober to think to be able to do that first

in short. governments are not watching everyone.. instead they get reports based on certain things being used which triggers active surveilance. and yep as i told them many many times mixers are on that list.. so advice to other people if you dont want to end up on a report that triggers active monitoring.. dont use a mixer.. find another tool

[cryptosize]

As for the constant surveillance , i'm on the side who believes that cameras should be anywhere .

The state should be able to to monitor everything .

https://en.wikipedia.org/wiki/Mass_surveillance_in_China
https://www.nytimes.com/2018/07/08/business/china-surveillance-technology.html

So you want the West to become like China... sounds awfully similar to Klaus Schwab's vision:

https://blog.independent.org/2022/12/01/klaus-schwab-china/

I guess you could have literally ZERO rape cases if the state installed cameras everywhere (including your own bedroom/bathroom). Would you agree with that? Cameras recording couples having consensual sex.

Just because I don't want cameras everywhere, doesn't mean I'm a potential rapist/criminal, nor do I condone rape.

I'd rather have a non-ideal society where a small percentage of rapists exist, rather than a sterilized society/dystopia where zero rapists exist, but I'm forced to accept cameras everywhere intruding my own privacy.

Wishing to have zero crimes is like wishing to have zero earthquakes. I'm sorry, but it's natural phenomenon, despite being unpleasant for anyone experiencing it.

Only fascists have these grand delusions of bringing "Paradise" to earth. I don't mind China, because they don't claim to be "democratic", but I do mind the "democratic" West becoming a China totalitarian regime copycat.

Imagine a world where you would know that if you commit a crime you are almost 100% busted . Would you commit that crime ?

That's just an example , just to show that even in terrorist attacks surveillance is necessary and it might not prevent the first attack but gives a high chance there won't be another one by the same people . And there's a high chance that by recognizing them it's possible to find more persons that belong to that core and possibly prevent other attacks .

Seems awfully familiar to "Precrime": https://www.imdb.com/title/tt0181689/

Cameras everywhere + AI usage can definitely make this sci-fi dystopia a reality and you know it very well.

People should realize the repercussions before suggesting these things.

You think the state (legalized criminals) only cares about illegal criminals, but in reality they care about controlling everyone, including innocent citizens.

It seems the COVID lockdowns/vaccine mandates have taught you nothing... well, you should wait for CO2 mandates, because apparently climate change is caused by human beings eating red meat and driving their petrol cars.

I never understood why guys like you got into Bitcoin into the first place. You should embrace CBDC, because it's going to tackle "criminals" (i.e. people refusing to eat ze bugs).

Sorry, but I don't believe in good intentions from anyone. The road to hell is paved with good intentions. Nobody (not even me) should have that much power over citizens.

This whole "the state cares about its citizens, just like your father/mom does" mantra has gone way too far IMHO. Dictators always claim to care, but their actions say otherwise.

There will never be an ideal state with zero hidden agendas.

[cryptosize]

Let's see one more example about why cameras shouldn't exist everywhere:

https://twitter.com/cosminDZS/status/1704544700710203739

Do you think the woke puppets/brainwashed fanatics (like Trudeau) won't exploit this technological infrastructure to impose fines (via CBDC + social credit score) on "homophobic" people (parents who want zero LGBT indoctrination in schools)?

You guys have zero idea of what's coming next... you're in for a RUDE awakening!

I lose faith in humanity when I see Bitcoiners (!!!) embracing state authoritarians.

The state is not your friend. NOBODY is your friend. Including pink-washed ESG corporations.

[HmmMAA]

For Bitcoin as timestamp machine, it's already possible with OpenTimestamps[1]. Some news also report Italian bank already use it[2].

[1] https://opentimestamps.org/
[2] https://www.coindesk.com/markets/2017/04/11/intesa-sanpaolo-trials-data-recordkeeping-on-the-blockchain/

That's a first step , but with blocksize of 1MB and such fees not much can be created on BTC in massive scale .

I can't disagree more. This is a crazy position. Imaging wanting to live in 1984!?

Is that what you got from reading the book? Seems that i got different things from it . In 1984 Orwell talks about the power of propaganda (something like what we see in bitcointalk that mixers are a tool to enhance privacy ) and the power to change history at will . He talks about the power a party gained by prohibiting books and writings and how the corruption of language takes away from society the right thinking. He talks about the destruction of the family institution . If you haven't read it, I would recommend it , so that you can escape from the fairy tale of surveillance promoted by the leftist's camp.
If you think of it he describes Stalin's state at that time perfectly .

Right, because there has never once been a single case of data being leaked, hacked, or used inappropriately? The fact is if this data is gathered, it will be used against you, regardless of whether you have committed any crimes.

Why am i not in jail right now ? Why aren't you in too ? Haven't they got much of our data for some years/decades ?

Videos from businesses and individuals, not from government surveillance cameras.

So , you are pro private surveillance and only against surveillance from gov's ? What's the difference , as authorities have access to that material ? I really don't understand your arguments . Do we agree that surveillance helps solving crimes or not ?

And something i din't notice earlier .

The final version of the internal Chainalysis study cited by Hanna Curtis in the webinar “Cryptocurrency Typologies: What You Should Know About Who’s Who on the Blockchains” which concluded that roughly 90% of the funds sent through mixers were done so for legal personal privacy reasons.

So even Chainalysis admit that the vast majority of mixer user is entirely legitimate and from regular users who just want to protect their privacy.

If chainanalysis is a scam service how do we know this is true ? Maybe they got the results totally wrong .

[o_e_l_e_o]

Is that what you got from reading the book?

...yes? Did you miss the slogan "Big Brother is watching you"? Did you miss the Thought Police? How do you propose The Party manages to prohibit specific books, specific speech, and specific thought, if it isn't conducting mass surveillance? Your assertion that "the state should be able to monitor everything" is the first step on the road to 1984.

Why am i not in jail right now ? Why aren't you in too ? Haven't they got much of our data for some years/decades ?

Because I've committed no crimes. Which is all the more reason the state has no right to surveil every aspect of my life.

Do we agree that surveillance helps solving crimes or not ?

People taking out their phones to film a specific event is completely different to blanket mass surveillance at all times. And no, as I've shared previously in this thread, there is zero evidence that mass surveillance prevents crimes, and even the NSA admit that.

If chainanalysis is a scam service how do we know this is true ? Maybe they got the results totally wrong .

We don't. But either you accept that blockchain analysis is bullshit and therefore all their claims should be completely dismissed and ignored, or you believe they are completely accurate in which case you must also accept that the vast majority of mixer use is perfectly legitimate, as they themselves claim.