Associating identities together

[btc9060]

A hypothetical situation: I create two addresses, A and B. Somebody sends 5 BTC to A, and somebody else sends 5 BTC to B. I then send 10 BTC somewhere else. Is it clear from the transaction history that A and B belong to the same wallet?

If so, does this mean that any traceable transaction can potentially compromise the anonymity of any other bitcoins that pass through the same wallet?

[theymos]

Yes to both questions. See:
https://en.bitcoin.it/wiki/Anonymity

[MoonShadow]

Anonimity is possible with Bitcoin, but it is neither automatic nor particularly convienent.

[btc9060]

Anonimity is possible with Bitcoin, but it is neither automatic nor particularly convienent.

It seems to me that it's NOT really possible, at least within a single wallet, without resorting to money laundering. Unless your outgoing transactions divide evenly into your incoming ones, it sounds like sophisticated analysis of the transaction graph would reveal a series of transactions that can all be reliably linked together, and therefore identified as coming/going to the same wallet. The only thing that breaks the chain is dropping your balance to zero.

Now maybe the situation isn't as bad as that, but it's clearly a common occurrence, and I think you guys are downplaying it too much. This would be terribly dangerous to anybody who needs some level of untraceability but doesn't understand the technical details.

This could be worked around by providing a good UI for managing multiple wallets, or segregated areas in a single wallet. As long as the user is made aware that all bitcoins in a single wallet are forever (potentially) associated together, they can act accordingly. But it's a serious risk, and you're not doing anybody any favors by downplaying it and making using multiple wallets difficult.

(And so I don't sound like an ass who's just here to complain, in general I think Bitcoin is one of the most important and game-changing inventions of the past millennium.)

[MoonShadow]

Anonimity is possible with Bitcoin, but it is neither automatic nor particularly convienent.

It seems to me that it's NOT really possible, at least within a single wallet, without resorting to money laundering. Unless your outgoing transactions divide evenly into your incoming ones, it sounds like sophisticated analysis of the transaction graph would reveal a series of transactions that can all be reliably linked together, and therefore identified as coming/going to the same wallet. The only thing that breaks the chain is dropping your balance to zero.

Now maybe the situation isn't as bad as that, but it's clearly a common occurrence, and I think you guys are downplaying it too much. This would be terribly dangerous to anybody who needs some level of untraceability but doesn't understand the technical details.

It's not as bad as that.  Anoniminity can be had even if your coins intermingle, as the secret data that really needs protecting is the association of your real world ID with those bitcoin addresses, and not the addresses from each other.  I do admit that more control over which addresses the client uses for any given transaction would be a helpful feature in this regard, however.  And yes, at the present time two wallet.dat files is a good idea if one intends to have an open Bitcoin identity as well as a anonymous one.  There are ways to get coins from one to the other without associations if one is purposeful and careful, such as the bitcoin mixer; but it would be useful if this were something that the UI could handle.  Someday it may.

[NoValues]

Having two wallets and using a service such as bitcoin tumbler will
give a high degree of anonymity.