Automatic Coin Mixing Idea

[Transisto]

Tracking tainted coins is already very challenging

Sorry but I always thought of this as a feature of Bitcoin and I will continue to see coin mixing as a non-issue for 99.99% of honest peoples and 99% of dishonest ones.

... Imagine in the future a naive user (your mom, your grandma) who is unaware of the technical details, and keeps receiving and sending Bitcoins always using the same and/or chained addresses.  Every time they buy something, no matter how trivial, they are potentially giving a determined snooper/attacker a window into all of their income and purchases since the dawn of time.  This is a disaster waiting to happen.  It will make life wonderful for criminals in countries (e.g. Latin America) where robbery and kidnapping and extortion are common. ...

Up untill the time Bitcoin is used by most mom-pop of this world it is more likely to be used as a tool facilitating extortion.
You're simply one step further away on that one and we're talking beyond 2024. By then most peoples will most likely be trusting secure 3rd parties for their everyday transactions.

You'd be surprised by how little interest there is in most grandma's banking history.
_{I wish we could be at the point were we teach them computer security basics but unfortunately it's hard enough explaining them they shouldn't put their life savings under their mattress.}

[bc]

So, should peer mix requests be in-band, or out-of-band (on a different port)? How realistic is it that the core devs would accept a pull request that extends the protocol for the purposes of mixing?

I'm thinking it would be cleaner with a simple mod to allow an rpc-request of the peer list, and use a separate, simple protocol for mixing.

[casascius]

So, should peer mix requests be in-band, or out-of-band (on a different port)? How realistic is it that the core devs would accept a pull request that extends the protocol for the purposes of mixing?

I'm thinking it would be cleaner with a simple mod to allow an rpc-request of the peer list, and use a separate, simple protocol for mixing.

I think a very basic level of mixing should be supported in the base client and protocol, but possibly only after support for tree pruning / meta tree is finished.  Support for reacting to messages relating to mixing should be optional and messages can be ignored if not supported.  The main reason I would like to see mixing in the protocol is a social one rather than a technological one - it is a defense against drawing nefarious inferences from the observation that someone is mixing their coins.  One can always plausibly claim their coin mixing is unintentional or innocent (they merely checked a privacy checkbox) rather than deliberate, if it is easily-enabled client behavior.

More robust mixing (e.g. mix nets that mix aggressively, or with massively multiple parties, or that use IRC or other methods for peer finding) would all be supported via an RPC call.

[goodlord666]

I have been entertaining thoughts very similar to casascius' but never finished writing my article on the subject because it was poorly thought out from a technical point of view.

But it involved your wallet doing automatic mixing in the background as a default mechanism.

Because I have no further use for my draft I'll post the final paragraphs here which outlined my reasoning at the time:

[...]

User A then ends up receiving amounts of BTC totaling his wallet's balance from a multitude of different addresses across the world, practically rendering all participating nodes legally liable for everyone else's transaction history.

The point is to offer plausible deniability as to the origin of the coins you spend once they've gone through the 'laundry', while making the process of mixing coins itself common practice for everyone.

[This] would help obscure coin movement and ownership to a degree where reversing transactions on legal grounds or effectively monitoring transaction routes would become virtually impossible. And bitcoins themselves would be 'good as cash'.

When you think about it this isn't much different from how money works today:

When I deposit $1000 at a bank today the clerk will jot down that I deposited $1000 but when I return the next day to withdraw it, the banknotes themselves will be entirely different from the ones I had carried in my hand the day before. Regardless of where exactly the money comes from I am entitled to spend $1000.

One doesn't pull individual banknotes from circulation saying that according to their transaction history they once rightfully belonged to somebody they had been stolen from [in reference to legally reversing transactions; I wrote this shortly after MtGox was hacked]. Such scenarios would greatly reduce the value bitcoins.

Neither should it be possible to say "The transaction history of your money shows that it was used in connection with an undesired organization so we link you to that type of organization."

Since the bitcoin you hold in your wallet doesn't have a reliable transaction history anymore, the moment you have it it's yours, just neutral money, just money.

An integrated coinmix is useful mostly for preventing legal entities from easily singling out your tainted coins on the grounds that they originated from something like a theft. The majority might never trust money which they feel may easily be taken away from them due to the transparent nature of its transaction history. At least I feel that way. Cash has to be anonymous/neutral.

I believe this to be vital for commerce and the general public to accept Bitcoins as a real currency.

[...]

Upshot:
Instead of having coins sitting around idly while you're not spending them, they are [...] shuffled around the network night and day, further anonymizing the network and making the coins themselves even more cash-like, consequentially raising their value, as I believe there is a huge clientele of people who will consider Bitcoins valuable only when they have reached that level of collective anonymity. As well as potentially giving miners a new source of revenue*.

This would leave us with only two types of truly clean Bitcoins: 'newly generated' and 'gone through the puddle'...

* I was thinking of adding a courtesy fee or something like that for all coins going into the mix to make it profitable for miners.

[westkybitcoins]

... by default ?

What's the benefits of participating in mixing someone else coins ?

Say 98% of users do not have anything to hide and would prefer all transactions be traceable for the benefits of discouraging bad behaviors ?

I would much prefer someone who stole BTCs to pay a fee to shameless mixer than to help him unknowingly.

Hmmm.

I'd restate the highlighted portion as:

What's the benefits of participating in mixing someone else's coins, when no one else has to mix yours?

Even as someone who despises the concept of "tainted coins", and totally embraces anonymity, I have to admit, this proposal bothers me a little. Particularly the "opt-in" part.

I have the concern that by clicking to opt-in to mixing, I might wind up with the large majority of people I mix with being those trying to hide the source of stolen funds. What benefit is that to me? Sure, my financial history is obscured, but if that's achieved by hiding my financial movements among those of people with legitimately criminal financial activity, have I really gained anything?

If the rebuttal is, "well, most people will choose to opt-in" (which is questionable), then what's the point of the opting-in? Why not just make it a built-in, mandatory part of clients and be done with it?

I'm convinced passive coin mixing won't work unless it's automatic and widespread. Which means I'd be more supportive of an opt-out (or better yet, mandatory) client-level mixing methodology, but I still think the best way to do automatic, widespread mixing is to alter the protocol.

As a bonus, this would force those people who insist on having traceable transactions to go make their own fork.

[bc]

I'm convinced passive coin mixing won't work unless it's automatic and widespread. Which means I'd be more supportive of an opt-out (or better yet, mandatory) client-level mixing methodology, but I still think the best way to do automatic, widespread mixing is to alter the protocol.

You may be right, but maybe we can first work out the kinks with voluntary mixing. Each successful baby step makes the next one easier.

[hazek]

I love this idea.

[1455]

Great idea, keep going!

[Transisto]

Great idea, keep going!

Given people will pay to get a tracking of their stolen coins, coin mixing is very unlikely to be deemed "by default".

Ps : You're reviving a 2 month old thread.

[marcus_of_augustus]

There is both an individual and a social incentive to want to mix, so I'd guess that many if not most users will select the "mix" option if it was offered.

For the individual:
Simple question, given the choice, ask yourself would you rather have a bank account that is totally private with no possibility of anyone gaining information about your financial transactions or another bank account that is maybe private, but has no guarantees against who your financial transaction behaviour maybe data-mined by?

For the bitcoin community:
If an option to "mix" coins was used nearly globally, bitcoin, the currency, achieves a higher level of fungibility and is thus worth more to the market creating added demand over other less fungible (e.g. traceable) digital currencies ... leading to a higher valuation for bitcoin, simply put.

These are very similar arguments to why holding wealth in bitcoin, that cannot be frozen, is better than holding a digital fiat currency that can be seized without notice or due process ... most people will never have to worry about such a seizure but if you give an individual the choice and point it out plainly they will chose the superior option, it is simple, rational behaviour to minimise risk to one's financial well-being, albeit that risk is small for most individuals. And these are the reasons why gold has prevailed over many centuries of attack by state monies with inferior qualities, seizure and privacy being two of the primary ones.

[westkybitcoins]

There is both an individual and a social incentive to want to mix, so I'd guess that many if not most users will select the "mix" option if it was offered.

For the individual:
Simple question, given the choice, ask yourself would you rather have a bank account that is totally private with no possibility of anyone gaining information about your financial transactions or another bank account that is maybe private, but has no guarantees against who your financial transaction behaviour maybe data-mined by?

Then shouldn't it just be an automatic, mandatory thing, hardwired into clients, forcing those who want to avoid mixing to find clients that didn't mix?

[Transisto]

There is both an individual and a social incentive to want to mix, so I'd guess that many if not most users will select the "mix" option if it was offered.

For the individual:
Simple question, given the choice, ask yourself would you rather have a bank account that is totally private with no possibility of anyone gaining information about your financial transactions or another bank account that is maybe private, but has no guarantees against who your financial transaction behaviour maybe data-mined by?

Then shouldn't it just be an automatic, mandatory thing, hardwired into clients, forcing those who want to avoid mixing to find clients that didn't mix?

I think you have it all backward,  even with today's with unsophisticated coin mixing services it is still near impossible to track the origins and ends of 99% of transactions.

What make you think 100% of people would want to help anonymize wrong doing using bitcoin.

Why don't you take it one step further and wonder why not everyone is willing to run a TOR exit node by default ? .  And why it wouldn't necessarily be a good thing ?

As if Bitcoin isn't revolutionary enough, it's required to provide 100% anonymous transaction while being ~97% anonymous already and criminals can easily achieve 99.999% anonymity with a small fee and some know how.

[franky1]

lol a semi good idea for the shady traders. but it has a flaw: a new way to steal coins

step one: call it a mixing service to allow other clients to extract coins from bob, jill, freddy, and daves wallet without those people sending them. and call it "automated" to make it seem like a benefit.
step 2 someone changes the code so that auto accept occurs and when its their turn to be Alice they receive the coins and keeps them instead of replacing them.

great idea.(sarcasm)

personally i dont care for such a feature. but thats maybe because my activities dont need the stealth that silk road users need.

but to whomever makes a client with a code tweak to auto accept transfers. while your at it you might aswell ask all the users of your bright idea for their online bank username and password so that they can make money transfers more efficient.. oh wait coinbase already drummed that idea up..

now put this sham of a project to bed as its going to make clients vulnerable.. atbest make your own little clients but dont try promoting this idea onto the official bitcoin client coders.

if anyone truly wants a mixing service,, just deposit your funds into mtgox, btc-E or any of the reputable exchanges,, wait a few minutes, then withdraw.

high chance the coins will be different..

if you really want to market something of benefit to the community, market bitcoin to actual businesses and expand out of the caldron of 100k regular users that just stir the pot between eachother thinking thats the only way to make wealth.. instead of having narrow minded thoughts about scamming or hiding transactions just to keep the silk road userbase happy.

and now

prepare the onslaught of scamming trolls replies trying to defend this idea purely because they see its scamming benefit it will bring with just a tweak of the sourcecode. pretending to be honorable users who see its honorable benefits.

[westkybitcoins]

There is both an individual and a social incentive to want to mix, so I'd guess that many if not most users will select the "mix" option if it was offered.

For the individual:
Simple question, given the choice, ask yourself would you rather have a bank account that is totally private with no possibility of anyone gaining information about your financial transactions or another bank account that is maybe private, but has no guarantees against who your financial transaction behaviour maybe data-mined by?

Then shouldn't it just be an automatic, mandatory thing, hardwired into clients, forcing those who want to avoid mixing to find clients that didn't mix?

I think you have it all backward,  even with today's with unsophisticated coin mixing services it is still near impossible to track the origins and ends of 99% transaction.

What make you think 100% of people would want to help anonymize wrong doing using bitcoin.

Why don't you take it one step further and wonder why not everyone is willing to run a TOR exit node by default ? .  And why it wouldn't necessarily be a good thing ?

As if Bitcoin isn't revolutionary enough, it's required to provide 100% anonymous transaction while being ~95% anonymous already and criminals can easily achieve 99.99% anonymity with a small fee and some know how.

It's not required.

But if you're going to try to do mixing at all (which is what the OP was about), I don't see the point in trying to go for half-measures. Keeping such a system "opt-in" discourages the majority from ever using it, and leaves the honest people using it more vulnerable.

The reason not many people want to run Tor exit nodes is because no one really has to, and because of that, claiming your computer only connected to Super-Evil-Terrorist-net because it was running a Tor node at the time probably won't protect you. If all internet activity was automatically onion-routed by default, no one could be condemned simply on the packets their computer sent. Everyone would be protected. Those who wanted to broadcast the purity of their packets could, with enough work, arrange things so their transmissions were uniquely identifiable.

Don't get me wrong, I'm happy with Bitcoin the way it is. I just don't think "opt-in" mixing will ever have enough honest users to be worthwhile.

Edit: And again, I find the claim that "most people will use it," while simultaneously declaring it should be an "opt-in" feature, to be a little inconsistent.

[franky1]

my bitcoin activities are all legal.. so why would I be willing to swap my clean coins for tainted ones? especially without at least some discount to cover any risks if SEC do a blockchain analysis on the coins I hold for purposes of AML issues.

its a great idea if proven uncrackable for ALICE grab funds out of wallets without consent. but only illegal traders would use it, as it would only benefit them. leaving them just trading tainted coins, which then makes the point of use redundant.

[Serith]

my bitcoin activities are all legal.. so why would I be willing to swap my clean coins for tainted ones?

There could be an option to put less bitcoins into swap then you get from it, and you could earn a small profit out of it payed by someone who for any reason wants to swap his coins. An if it's enabled by default for everyone then there is no such thing as tainted coins because it becomes pointless to try to track it.

[franky1]

another way to ruin any chance of getting bitcoin some clean legal rep' to go to mass market.

by making everyones coins dirty......

great for the druggies in the sort term. but not great for any expansion plans into real world markets. not great for bitinstant when every single coin they receive has taint. and banks stop dealing with them. causing all legitimate FIAT conversion services to disappear..

causing bitcoin to be harder to buy into or sell out of.

causing bitcoin to move back 2 years..

atleast think of the wider picture for the whole community and bitcoins future. not your own personal selfish desires to hide your drugg obtained funds.

all i can say is make ur own client and let the druggies swap between themselves and those that dont care about taint that have clean coins can join the mix only if they are given a good profit to outway the risk.. but in no way, shape, or form should this be adopted as a standard practice for all clients and all users of bitcoin.

[marcus_of_augustus]

another way to ruin any chance of getting bitcoin some clean legal rep' to go to mass market.

by making everyones coins dirty......

great for the druggies in the sort term. but not great for any expansion plans into real world markets. not great for bitinstant when every single coin they receive has taint. and banks stop dealing with them. causing all legitimate FIAT conversion services to disappear..

causing bitcoin to be harder to buy into or sell out of.

causing bitcoin to move back 2 years..

atleast think of the wider picture for the whole community and bitcoins future. not your own personal selfish desires to hide your drugg obtained funds.

all i can say is make ur own client and let the druggies swap between themselves and those that dont care about taint that have clean coins can join the mix only if they are given a good profit to outway the risk.. but in no way, shape, or form should this be adopted as a standard practice for all clients and all users of bitcoin.

You don't understand money. Hint: research fungibility.

Your wallet is full of cash that has been used for all sorts of nefarious activities ...  ... feeling slimy yet?

Money is dirty. ... if you want to be pure give it all away to the poor and give your life to god.

Preaching about clean money is an oxymoron.

[franky1]

i do understand money. but u dont understand the world and statistics.

so a quick lesson..

FIAT money was developed for the trade of food and provisions like horseshoes, candles, etc.. u know the morally accepted stuff.. (couple centuries later) drugs only play a small part of it. if you do that statistics research you will see under 2% of money is directly linked to a drugs trade. and 10% of bank noted are tainted with drug residue.

that is the general statistics.. those who actually do drugs will find all their notes get residue on them from their mucky paws touching them. where as a retail store in a upperclass neighbourhood may see only a few percent taint. so don't quote me on the last paragraph as any statistic has to be put into context.

so thats the reality. FIAT has an acceptable taint because its a small ripple in a very big pond compared to the many legitimate uses it has.

but bitcoin has been noted as atleast 30% of trades have a near or direct link to drugs trade. and a higher percentage then that is tainted even after passing hands many times for legitimate trades after the fact.

bitcoin doesn't have big uses to buy food, clothing, cars, pay wages, utility bills. so the dominance of drugs within bitcoin is high, to high to ignore.

if you are worried that when you cash your bitcoins into bitinstant for FIAT. a taint analysis will show the drugs trade and you lose your earnings. here is a perfect solution for you.

help push bitinstant to do a 'litecoin to fiat' service then simply trade your BTC for LTC and then give bitinstant your LTC. that way 0 taint as it is a totally different blockchain...

no need for mixing services or putting vulnerable backdoors into clients for ALICE clients to steal. just swap it for a different currency.

and secondly if you want to hold the stance that all money is tainted then there is no need for programs to mix your coins, coz everything is dirty.. (in your mind)

[marcus_of_augustus]

It sounds like you'll never be convinced of your wrongness, so I'm not going to attempt it, except to point out that you have seem to be involved in some kind of self-justifying circular loop where all money has to be proven to be morally correct (like some kind of a reverse Mises regression theorem for the pureness of all money since time immemorable) ... good luck with that approach. Just think of all the slave/whore/drug trading that was done with the gold in Fort Knox that begot your 'pure' dollars ...

Keep your "pure" coins close ... they maybe the only ones left in the fullness of time, but then who would you trade them with?