Re: How 'Anonymous' is Bitcoin?

[TonyT]

Armory is also working on an overhaul of their backend, so that will help speed things up further. Bitcoin Core devs are working to get bitcoind to download the blockchain from several peers (unlike just one, like it is now), so that will help speed up things too.

Thanks. I might send a donation to the Armory people, one of which posts here, as they seem good guys.  But I think they already are doing a 'several peers' download, since, as I type this, I notice the blockchain is being downloaded from "7 peers" it says.

TonyT

[Newar]

[...]

  But I think they already are doing a 'several peers' download, since, as I type this, I notice the blockchain is being downloaded from "7 peers" it says.

TonyT

That's the peers you are connected to. Only one of them will be the "sync-node" which is the one you actually get the data from. If you start a new system from scratch and that sync-node happens to be a slow one you can wait for a very long time. Unless you delete peers.dat and connect only to a single "known" quick node until you have the blockchain data. Once that's done you can connect in the regular way again.

You can see which one is the sync node in Bitcoin Core (formerly Bitcoin Qt) too: Go to the debug window and in the console type: getpeerinfo .



If you are using Armory, I highly recommend to donate

[isidore]

Thanks to OnkelPaul for the replies.

Here is a good article that's not too technical that explains how not reusing bitcoin addresses would make bitcoin virtually anonymous.  But when businesses reuse addresses, they become easy to spot. see:

http://www.bitcoinnotbombs.com/innovations-that-enhance-bitcoin-anonymity/

I guess a simple example of this might be:  if anonymous buyers, "A", "B", "C" buy something from a seller "S" who does not change their bitcoin address, and the seller S then uses the money from A,B,C to buy from a supplier SS, who also don't change their bitcoin address, and S and SS constantly deal with each other you might get a diagram like: A, B, C <--> (single link from each buyer to S) to S, which then has multiple links to SS and back to S in the blockchain (and SS never deals with anybody but S).  You can conclude that A, B, C are random retail customers of S, S is the middleman, and SS is the sub-contractor or supplier to S.  At least that's the way I think of it.

Another example might be if a unique Bitcoin amount that is very distinctive like the sum of 789.12345678987654321 bitcoins is passed around, but each time it is passed between parties then 10 bitcoins are subtracted from the sum, and everybody except S and SS in the above example uses new bitcoin addresses, and say S and SS are known drug dealers, and reuse their bitcoin addresses, and the 'word on the street' is that a large cache of meth is circulating, being passed from party to party, then it follows that everybody who processed the bitcoin sum of 789.12345678987654321 (minus 10 every transaction) is a drug dealer who is trafficking this meth, and taking 10 bitcoins for their trouble (sorry it's kind of stupid but it's the best example I could think of at the moment).  

TonyT

Not sure if I understood your original post, but using new addresses does not automatically make you safe and anonymous. If you have 10 btc and get it from coinbase, they probably have records. Even if you send it to a few different addresses, and have those addresses send it off to more addresses, it's still relatively easy to write a script to group them together when you spend any one of them. If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets.

[TonyT]

[...]

  But I think they already are doing a 'several peers' download, since, as I type this, I notice the blockchain is being downloaded from "7 peers" it says.

TonyT

That's the peers you are connected to. Only one of them will be the "sync-node" which is the one you actually get the data from. If you start a new system from scratch and that sync-node happens to be a slow one you can wait for a very long time. Unless you delete peers.dat and connect only to a single "known" quick node until you have the blockchain data. Once that's done you can connect in the regular way again.

You can see which one is the sync node in Bitcoin Core (formerly Bitcoin Qt) too: Go to the debug window and in the console type: getpeerinfo .



If you are using Armory, I highly recommend to donate

Thanks for that information.  It was 36 hours on a 1.5 Mbps connection before the blockchain (about 35 GB large it seems) was downloaded, and now, it is "Synchronizing with Network" and will take another couple of hours to do that.

BTW I am probably going to take my chances washing my bitcoins once I buy them, using Tor to anonymize the internet address, as recommended earlier.  You have to fiddle with the Armory settings to allow it to work with Tor according to the manual.

TonyT

[TonyT]

Not sure if I understood your original post, but using new addresses does not automatically make you safe and anonymous. If you have 10 btc and get it from coinbase, they probably have records. Even if you send it to a few different addresses, and have those addresses send it off to more addresses, it's still relatively easy to write a script to group them together when you spend any one of them. If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets.

Yes, when I wrote my original post I did not know that.  Can you recommend a coin mixer?  If so please let me know.  I will probably pick the 'most popular one' and take my chances with the minimum number of coins they let you wash at any one time.

You say: "If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets".  Why transfer the mixed coins to a multitude of HD wallets?  Hard drive wallets?  Is this for security (as in Armory "offline" wallets that live on your hard drive but are not connected to the internet)?  Or in case one wallet is stolen or compromised, you won't lose all your money?  This goes to security, not anonymity, right?

TonyT

[arvindr]

Not sure if I understood your original post, but using new addresses does not automatically make you safe and anonymous. If you have 10 btc and get it from coinbase, they probably have records. Even if you send it to a few different addresses, and have those addresses send it off to more addresses, it's still relatively easy to write a script to group them together when you spend any one of them. If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets.

Yes, when I wrote my original post I did not know that.  Can you recommend a coin mixer?  If so please let me know.  I will probably pick the 'most popular one' and take my chances with the minimum number of coins they let you wash at any one time.

You say: "If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets".  Why transfer the mixed coins to a multitude of HD wallets?  Hard drive wallets?  Is this for security (as in Armory "offline" wallets that live on your hard drive but are not connected to the internet)?  Or in case one wallet is stolen or compromised, you won't lose all your money?  This goes to security, not anonymity, right?

TonyT

Even a Coin mixer wouldn't really guarantee anonymity. Incase you get into a legal issue, then the coin mixer will have to give up details on thee address from which funds are generated and to which they land into.

[jame2s]

Not sure if I understood your original post, but using new addresses does not automatically make you safe and anonymous. If you have 10 btc and get it from coinbase, they probably have records. Even if you send it to a few different addresses, and have those addresses send it off to more addresses, it's still relatively easy to write a script to group them together when you spend any one of them. If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets.

Yes, when I wrote my original post I did not know that.  Can you recommend a coin mixer?  If so please let me know.  I will probably pick the 'most popular one' and take my chances with the minimum number of coins they let you wash at any one time.

You say: "If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets".  Why transfer the mixed coins to a multitude of HD wallets?  Hard drive wallets?  Is this for security (as in Armory "offline" wallets that live on your hard drive but are not connected to the internet)?  Or in case one wallet is stolen or compromised, you won't lose all your money?  This goes to security, not anonymity, right?

TonyT

Even a Coin mixer wouldn't really guarantee anonymity. Incase you get into a legal issue, then the coin mixer will have to give up details on thee address from which funds are generated and to which they land into.

In theory this is correct, but in practice it is not. The court/government would first need to find the mixing service (both bitmixer and bitcoin fog essentially have anon owners, so finding them would be very difficult). Your statement also assumes that a mixer will keep logs, which is something that most mixers claim not to do, and if it is trust that mixers are not keeping logs then there is no information to give

[pitiflin]

Hello everyone,

I need your help here.

I'm currently using Armory (1 cold wallet and 1 hot wallet for small amounts) Both wallets with multiple addresses.

I want to use Armory with TOR because I don't want to show my real IP. I've read all the discussion about the IP not being shown in the blockchain but I want to be as safest as possible.

I have to configure Bitcoin QT and then change some parameter at bitcoin.conf if I'm not wrong.

My question is...

Is it secure enough? I lost 1 BTC using blockchain + TOR (a few days ago) and 1 BTC using coinbase + TOR ( a few months ago)

I used them as hot wallets, while the rest of the BTC were, and still are in a cold wallet with Armory.

So basically, I'm chanching now to Armory + TOR for a hot wallet since I no longer trust online wallets + TOR

What are your thoughts?

Is it a good idea?

Any tips?

Maybe it's better to don't use Armory + TOR for a hot wallet?

And what about Armory + TOR for a cold wallet? I've been running Armory without TOR all this time.

I'm quite paranoid and lost here, any help would be much appreciated!!

Best regards!!

[TonyT]

Is it secure enough? I lost 1 BTC using blockchain + TOR (a few days ago) and 1 BTC using coinbase + TOR ( a few months ago)

I used them as hot wallets, while the rest of the BTC were, and still are in a cold wallet with Armory.

What was your client for the hot wallet that you lost money in?  What brand? How did you lose the money?  Keyboard logger?

[pitiflin]

Is it secure enough? I lost 1 BTC using blockchain + TOR (a few days ago) and 1 BTC using coinbase + TOR ( a few months ago)

I used them as hot wallets, while the rest of the BTC were, and still are in a cold wallet with Armory.

What was your client for the hot wallet that you lost money in?  What brand? How did you lose the money?  Keyboard logger?

Blockchain and coinbase. On blockchain I had Google second factor authentication and a second password when sending money and in Coinbase I just had a password, and after a "conextion untrusted" screen, the funds were gone.

I've read that's because when using clearnet sites with TOR the exit node may be "infected" and the hacker can obtain your details, that's why I no longer trust online wallets with TOR and I've decided to use Armory for a hot wallet as well. But I want to use it with TOR, and I'm a Little paranoid to be honest. I also have a cold wallet in Armory and if they hack that wallet... that would de a disaster.

EDIT:

And what happens if I use Armory withouth TOR? Do I remain anonymous? Will my IP be traced when sending/receiving BTC?

Maybe it's not really necessary to use TOR with Armory after all...

I just want to prevent someone to know my IP when sending/receiving BTC, that's all

[TonyT]

And what happens if I use Armory withouth TOR? Do I remain anonymous? Will my IP be traced when sending/receiving BTC?

Maybe it's not really necessary to use TOR with Armory after all...

I just want to prevent someone to know my IP when sending/receiving BTC, that's all

If you worry about IP addresses being tracked (which are not permanent, unlike BTC addresses), just follow this protocol:  wash your BTC twice, using two different mixers, sending the output of one into the input of the second, and the output of the second back to your Armory wallet.  Next, go to the VPN that accepts bitcoins, they advertise on this forum but they're easy enough to find (or find an equivalent service on the net) and buy a year (or month, etc) of VPN service.  Pay them in BTC with a fake name and some email address.  Click the checkbox in Armory settings so it works with the VPN (see the Armory Help files, it's easy to find).  Now you can use Armory without Tor, and not only are you secure but also your IP address is hidden by the VPN.  And the chances of the VPN ripping off your BTC in a 'man in the middle' attack is very small (they are a reputable company, I've looked them up).

[pitiflin]

And what happens if I use Armory withouth TOR? Do I remain anonymous? Will my IP be traced when sending/receiving BTC?

Maybe it's not really necessary to use TOR with Armory after all...

I just want to prevent someone to know my IP when sending/receiving BTC, that's all

If you worry about IP addresses being tracked (which are not permanent, unlike BTC addresses), just follow this protocol:  wash your BTC twice, using two different mixers, sending the output of one into the input of the second, and the output of the second back to your Armory wallet.  Next, go to the VPN that accepts bitcoins, they advertise on this forum but they're easy enough to find (or find an equivalent service on the net) and buy a year (or month, etc) of VPN service.  Pay them in BTC with a fake name and some email address.  Click the checkbox in Armory settings so it works with the VPN (see the Armory Help files, it's easy to find).  Now you can use Armory without Tor, and not only are you secure but also your IP address is hidden by the VPN.  And the chances of the VPN ripping off your BTC in a 'man in the middle' attack is very small (they are a reputable company, I've looked them up).

I don't trust mixers, I don't trust VPNs. Do I remain anonymous? Will my IP be traced when sending/receiving BTC?

What happens if I use Armory without TOR?

[TonyT]

I don't trust mixers, I don't trust VPNs. Do I remain anonymous? Will my IP be traced when sending/receiving BTC?

What happens if I use Armory without TOR?

mixers don't keep records, but if you don't trust them, your bitcoin can be traced to you more easily, even if you hide your IP.  Your IP address is not going to be logged unless the government or police are after you.  Then they will ask your ISP to track you, or they will install their own backdoor sniffer program without asking.  So you must trust somebody or you will be traced.  How do you intend to buy BTC?  The same trust exists, unless you buy it in person from a stranger in your town.

Using Armor without TOR is safer I have heard, than using it with TOR, since TOR has lots of spyware sites in it (the dark network) that will steal your BTC.  

But I'm a newbie, so ask around.  

[El Emperador]

Are paid VPN services useful?
I recently tried out paid version of CyberGhost VPN (http://www.cyberghostvpn.com/en) where you can fake your IP to your choice of country.

Does this provide anonymity, given that we use new BTC address for every transaction?

You can also use Security Kiss: http://www.securitykiss.com/

[Furio]

Are paid VPN services useful?
I recently tried out paid version of CyberGhost VPN (http://www.cyberghostvpn.com/en) where you can fake your IP to your choice of country.

Does this provide anonymity, given that we use new BTC address for every transaction?

You can also use Security Kiss: http://www.securitykiss.com/

Private InternetAcces does the trick for me, easy, encrypted and no logs.

[bigasic]

Not nearly as people think it is. While it does have some anonymity built in, its by far from being anonymous.

[ranochigo]

I don't trust mixers, I don't trust VPNs. Do I remain anonymous? Will my IP be traced when sending/receiving BTC?

What happens if I use Armory without TOR?

mixers don't keep records, but if you don't trust them, your bitcoin can be traced to you more easily, even if you hide your IP.  Your IP address is not going to be logged unless the government or police are after you.  Then they will ask your ISP to track you, or they will install their own backdoor sniffer program without asking.  So you must trust somebody or you will be traced.  How do you intend to buy BTC?  The same trust exists, unless you buy it in person from a stranger in your town.

Using Armor without TOR is safer I have heard, than using it with TOR, since TOR has lots of spyware sites in it (the dark network) that will steal your BTC.  

But I'm a newbie, so ask around.  

Mixer can keep records, you don't know if they are saying the truth. Your Bitcoins can easily be tracked if you don't use a mixer and a new address for every transaction. Unless you are a criminal, no one is going to waste their time inspecting blockchain for your transactions. To try to gain maximum anonymity, try using time delay feature on bitmixer.

There isn't any risk to send Bitcoins by tor, your Bitcoins aren't going to get stolen as it doesn't visit any website, just connecting to nodes and broadcast your transaction. The security risk here is minimal.

[OnkelPaul]

There isn't any risk to send Bitcoins by tor, your Bitcoins aren't going to get stolen as it doesn't visit any website, just connecting to nodes and broadcast your transaction. The security risk here is minimal.

This is only true if you do it properly (i.e. run your wallet on the PC, and let it connect to the bitcoin p2p network through Tor).
Connecting to online wallets through Tor is risky, because there are malicious exit nodes performing man-in-the-middle attacks and stealing passwords.
I don't use online wallets or Tor, so I can't give advice on how to do this securely.

Onkel Paul

[Borisz]

There were some papers and articles published about the deanonymization the bitcoin network and such, reading those may help you understanding how such techniques work. One of them e.g.

http://www.coindesk.com/eavesdropping-attack-can-unmask-60-bitcoin-clients/ (June 2014)
Informal description of the client deanonymization attack on the Bitcoin P2P network

"The researchers also found that the attack could be designed to prevent the use of the Tor network, which anonymises traffic. Additionally, the attack can 'glue' transactions, so that transactions performed on one machine using multiple bitcoin addresses can be grouped together."

(Also asking here, is this concept/theory correct?)
Something like this tells me that if all transactions (and hence addresses) in a wallet can be tied together, then if a single transaction reveals your identity (at any point in time), your wallet and subsequent transactions are compromised. Assuming someone is willing to invest the time and effort.

[TonyT]

There were some papers and articles published about the deanonymization the bitcoin network and such, reading those may help you understanding how such techniques work. One of them e.g.

http://www.coindesk.com/eavesdropping-attack-can-unmask-60-bitcoin-clients/ (June 2014)
Informal description of the client deanonymization attack on the Bitcoin P2P network

"The researchers also found that the attack could be designed to prevent the use of the Tor network, which anonymises traffic. Additionally, the attack can 'glue' transactions, so that transactions performed on one machine using multiple bitcoin addresses can be grouped together."

(Also asking here, is this concept/theory correct?)
Something like this tells me that if all transactions (and hence addresses) in a wallet can be tied together, then if a single transaction reveals your identity (at any point in time), your wallet and subsequent transactions are compromised. Assuming someone is willing to invest the time and effort.

Yes, the concept/theory of a poisoned node is correct.  It is because, like Skype actually, every time you use a full wallet (like Armory) it broadcasts your IP address every time you boot up and/or send or receive (it's not clear to me which, but it's one or the other).  From this information a dedicated person can track your activities--if they have specialized software like the researchers from the paper below.  Or, as in the paper involving Tor, they can set up 'poisoned nodes' next to yours (possibly geographically located, so they are the first nodes to greet your PC when you boot up), and intercept your bitcoin communications that you think are heading to Tor, but in fact are going to the poisoned nodes.  But to do so, they need to have lots of such bad, poisoned nodes (the article mentions renting lots of servers), to trick the good nodes, which is something only either a big government agency or a very sophisticated criminal syndicate can afford to do, not your casual basement hacker.

TonyT

 
https://www.getbitcoin.com.au/bitcoin-news/investigation-white-paper-anonymous-bitcoin

Although numerous Bitcoin clients exist, none of them are specialized for data collection. Available clients often need to balance receiving and spending bitcoins, vetting and rejecting invalid transactions, maintaining a user's wallet, mining bitcoins, and, perhaps most detrimental to our study, disconnecting from "poorly-behaving" peers; these were precisely the peers we were interested in.  Because existing software had integrated functionality that interfered with our goals, we decided to build our own Bitcoin client called CoinSeer, which was a lean tool designed exclusively for data collection. For 5 months, between July 24, 2012 and January 2, 2013, CoinSeer created an outbound connection to every listening peer whose IP address was advertised on the Bitcoin network. We maintained that connection until either the remote peer hung up or timed out. In any given hour, we were connected to a median of 2,678 peers; for the duration of our collection period, we consistently maintained more connections than the only other Bitcoin superclient we know of - blockchain.info. This data collection effort required storing 60 GB of data per week