It is criminality in this case. It's called money laundering. Like it or not, it has been illegal since money has existed for very good reasons.
The point of Cryptocurrency is not to enable anonymous money laundering by criminals. It is in fact the exact opposite: to shine light on the entire system, as the OP stated.
It would probably not be hard for an interested party to piece together a good deal of an individual's transaction history given a couple of known btc addresses, especially if they don't follow the practice of generating a new address for every transaction (e.g., they, or one of their transaction partners, is a site that says "Send btc to this address to donate/buy/whatever").
And that's without law enforcement powers. Imagine what would happen if the fuzz link an address a few levels up the chain to a drug transaction. How long can bitcoin remain "dirty" and subject to confiscation as proceeds from illegal conduct? I don't really want to be a test case for that.
When I use a credit card, I know that my bank and the vendor have those records, but I also know that a random person is very unlikely to be able to get to them. In that sense, bitcoin is much less private than your ordinary centralized transaction methods; at least in that case, you have some idea who is able to review your records.
Thus, it is a good idea to "mix" coins, IMO. Third-party mixers are useful because the blockchain also contains metadata about each transaction, including the IP address of the node that relayed the tx, timestamps, etc. and it takes a lot of manual effort to get enough steps away that it's not obviously just sending money back and forth to yourself (less some network tx fees each time). It's hard to self-mix well.
NB. When I say 'coinbase' I mean coin generation from mining reward. Not the company. (I hate that they deliberately chose a name to confuse new users)
It's good to be made aware of the term, I've surely seen it mentioned before and read it as the company.
How does deliberately mixing your coins with the proceeds of illegal conduct help that situation at all? I don't think the government will consider mixing to be a magical crime eraser. Mixers will be the test case.
This was on HN a while ago: https://www.americanbanker.com/opinion/money-laundering-is-f...
As far as this being the "point" of cryptocurrency, it's rather silly to suggest the point is to massively increase traceability in transactions. Maybe that's just a limitation of Bitcoin.
But isn't a verifiable ledger of public transactions a valuable thing in and of itself? I believe the original intent of Bitcoin was to also help facilitate things like land deed transfers. A blockchain could easily replace all the of the "legals" sections in newspapers.
If you want a currency technology and platform that constrains activities to morally benevolent activities, it must either be heavily regulated (traditional systems) or designed and implemented as such (no such system yet exists).
Neither of these claims are true.
"Money laundering" as it is understood today only emerged in the 1980s during the war on drugs.
It's a crime because it's easier to prove and prosecute than any actual crime that might be facilitated by anonymizing money, like tax evasion. I'm not sure if that's a good reason, although it is a practical one. It's kind of like making encryption illegal because people might use it to break copyright law. The use of encryption isn't the actual crime, but it's easier to prosecute.
Nonsense. From wiki: "The term "money laundering" is said to have originated with the Italian mafia and such criminals as Al Capone who allegedly purchased 'Laundromats' to commingle (or mix) their illegal profits from prostitution and bootlegged liquor sales with legitimate business sales"
But furthermore I don't think it needs to be argued that people have been hiding money from governments since there has been money and governments. It will always be an implicitly illegal act regardless of the existence of specific statute because you are in the end avoiding taxation.
It's usually highly illegal because it involves falsifying records, including those filed with tax authorities (and because the purpose of that falsification is to conceal another crime.)
EDIT: My point (to the downvoters) is that not all "illegal" activities are immoral, and that reasoned people could legitimately consider willfully defying & hiding their defiance as an act of freedom. Case in point: Tea in 1773.