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Author Topic: Blockchain-based betting services function as mixing services?  (Read 5209 times)
Stephen Gornick
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May 03, 2012, 11:38:22 AM
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I've been perplexed as to why there is so much activity for the recently launched SatoshiDice.com betting site.  Certainly, there are many, many options for wagering using bitcoins, as Mem's list shows: http://bitcointalk.org/index.php?topic=75883.0.  So why is this two-week-old site pulling in a thousand wagers or more each day now?

The reason I am so curious is that the number of transactions on the blockchain each day have skyrocketed recently:

 - http://bit.ly/JgmqmC

And it appears much of the growth can be attributed to wagers placed with SatoshiDice.com:

 - http://SatoshiDice.com

The Recent bets table shown on the site shows the 200 most recent bets made but now that consistently shows four to six hours worth before hitting 200 rows.  So that means between 800 to 1,200 wagers are placed on the site in a day (this may be off as I haven't measured each of the addresses to determine a full day's betting volume, but 800 looks to be safe to use as the lower bound.)

Each player making a wager sends a payment to an address for one of the bet types shown on the site.  The service then runs a calculation and returns either a transaction to the winner that includes the appropriate payout or it returns a transaction to the loser that includes a tiny fraction of bitcoins as a consolation prize.  The only way the player knows if the bet won or not is based on the return transaction.

So there are two transactions on the blockchain for each wager.   If there were 800 wagers for the day then there were 1,600 transactions on the blockchain.  With the total per-day activity to the blockchain exceeding 10,000 transactions recently, SatoshiDice wagering represents at least 15% of all blockchain traffic in a day.

In trying to come up with reasons why this site might be growing so fast, one of the suggestions offered to me was that it worked as a great mixing service.  That explanation didn't register with me at first, as the spend transaction is returned instantly, so there is a direct connection between the payment sent to SatishiDice and the transaction that is returned.

A mixing service not only mixes coins but also has a time factor.  Coins can be returned a little at a time to different addresses which makes tracing more difficult.

With SatoshiDice.com returning on average more than 99% of the wager amounts then a mixing strategy might be to send coins through multiple times.  Some earlier passes will be winners and payouts with "clean" funds are sent on the return transactions.  The coins used for wagers that lose get chewed up and only a tiny morsel is returned.  After a few passes the makeup of the wallet at the end would be coins that look significantly different from the coins that were held before the wagering.

Could it be then that these blockchain-based wagering services are being used widely for mixing coins?


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May 03, 2012, 11:45:23 AM
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Could it be then that these blockchain-based wagering services are being used widely for mixing coins?

I think this would be a stupid idea. All the transactions are publicly shown on the satoshidice website, so it is very easy to create a script which connects the transactions. And the rewards are returned to the same bitcoin addresses you send from, so it doesn't add any anonymity.

If we think that somebody wants to track the transaction, they can easily incorporate satoshidice transactions to their tracking system.

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May 03, 2012, 12:31:20 PM
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It's so addictional  Shocked

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May 03, 2012, 04:38:05 PM
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As proprietor of this great service, I think "mixing" purposes are not being used much if any right. I'm guessing this because A) coins sent back to the sender's address aren't washed very well and B) 98% of the bets are very tiny. Not a significant amount of BTC is being washed, in other words.

Now, I do plan to enable payouts to separate addresses and add a time delay, but for now, I think most bets are just because it's fun Wink And indeed, it should make sense, because betting at a normal casino is fun and they take large house percentages. SatoshiDice takes less than 1% (player's breakeven is roughly 99%).

Also, we're being good Bitcoin citizens as all the transactions sent out do have fees attached. Hopefully the site will get far more popular and we can test how scalable Bitcoin really is! Wink
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May 04, 2012, 04:45:45 PM
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Could it be then that these blockchain-based wagering services are being used widely for mixing coins?

I think this would be a stupid idea. All the transactions are publicly shown on the satoshidice website, so it is very easy to create a script which connects the transactions. And the rewards are returned to the same bitcoin addresses you send from, so it doesn't add any anonymity.

If we think that somebody wants to track the transaction, they can easily incorporate satoshidice transactions to their tracking system.
I'd have to think that there is a limit to how much of a log the site keeps(Just thought of the fact that the wallet can act as a log).  Long-term (6 months+) I would expect that sites like this could do this.  And I would expect that you would want to use small bets so as to limit the chance of losing a large amount of the coins you wanted to wash.

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Stephen Gornick
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May 04, 2012, 05:06:45 PM
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Could it be then that these blockchain-based wagering services are being used widely for mixing coins?

I think this would be a stupid idea. All the transactions are publicly shown on the satoshidice website, so it is very easy to create a script which connects the transactions. And the rewards are returned to the same bitcoin addresses you send from, so it doesn't add any anonymity.

If we think that somebody wants to track the transaction, they can easily incorporate satoshidice transactions to their tracking system.
I'd have to think that there is a limit to how much of a log the site keeps

A player never needs to visit the site, so the logs don't provide much information that the blockchain doesn't.  And the blockchain holds the information forever.

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May 04, 2012, 08:06:34 PM
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Glad your site is getting more business - but i really hate these blockchain-spamming sites that create so many tiny transactions and blockchain spam. If you are going to provide a service like this, do it right. Let people set up accounts, play as many times as they want, and then withdraw. 1 deposit, lots of plays, 1 withdrawal.

These desposit-play-insta-withdrawal sites are a plague on the blockchain and should not be supported.

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May 04, 2012, 08:09:54 PM
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Glad your site is getting more business - but i really hate these blockchain-spamming sites that create so many tiny transactions and blockchain spam. If you are going to provide a service like this, do it right. Let people set up accounts, play as many times as they want, and then withdraw. 1 deposit, lots of plays, 1 withdrawal.

These desposit-play-insta-withdrawal sites are a plague on the blockchain and should not be supported.

Then start requiring fees for your mining hashpower and the problem solves itself.  Complaining about high transaction volume when all miners are happy to accept 0 fee tx by the truckload is kinda silly.
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May 04, 2012, 08:24:17 PM
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Glad your site is getting more business - but i really hate these blockchain-spamming sites that create so many tiny transactions and blockchain spam. If you are going to provide a service like this, do it right. Let people set up accounts, play as many times as they want, and then withdraw. 1 deposit, lots of plays, 1 withdrawal.

These desposit-play-insta-withdrawal sites are a plague on the blockchain and should not be supported.

I disagree that creating thousands of transactions is "spam" or harmful in any way:

A) All payout transactions have fees attached to them... so the system is paying for every transaction it creates. Most input transactions have fees also, but we can't control if some people avoid those fees (it does however usually delay their bet, sometimes by quite a while, so the incentives are aligned properly).

B) Bitcoin as a global payment network better be able to handle FAR FAR more transactions that what SatoshiDice is creating.

If anything, this should be considered a minor stress test, and a stress test that is being paid for by SatoshiDice. Thus, it shouldn't engender any ill-will, even if next week it's processing 10x the transfers.
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May 04, 2012, 08:24:54 PM
 #10

From the site: "This is safe because it always builds the answering transaction with the output of your bet transaction"
Your input of "bad coins" would taint the output and they would "taint" whatever was the output. This would all be recorded in the blockchain.

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May 04, 2012, 11:01:43 PM
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These desposit-play-insta-withdrawal sites are a plague on the blockchain and should not be supported.

I think that it is easier to stop drug dealing with bitcoin than stop this kind of services.

I agree with evorrhees, at this point all kind of block chain spam is very welcome. We need to test the technology as much as we can.

Stephen Gornick
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April 01, 2013, 05:30:08 AM
 #12

And the rewards are returned to the same bitcoin addresses you send from, so it doesn't add any anonymity.

Sorry for the necro thread, but there was a suggestion as to how a blockchain-based wagering service like dice could offer mixing:

How Satoshidice is/can launder coins
 - http://bitcointalk.org/index.php?topic=162807.msg1713104#msg1713104

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