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Comment by toomim | Hacker News Reader

Bitcoin is not anonymous. (Reporter needs to get a clue.) Once you link an individual to a single transaction, you can trace them through every other transaction to and from that address.

In practice, this means that if you use coinbase, or any large web merchant, that merchant can link your identity to the wallet you use, and then to almost every other transaction you spend.

The bitcoin UTXO transaction graph adds in some anonymity, because it's hard to be sure which part of a transaction's output is going to the merchant, and which is coming back to the user in the form of change. However, in practice, forensics are quite good, and are certainly good enough for the government (if they hired any decent tech person) to figure out.

On the other hand, coins like Zcash and Monero are anonymous, and the IRS might have reason to actually fear those.

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> Bitcoin is not anonymous.

This is true and massive mistake on the reporters part.

However the overall concept of the article could be easily applied to coins such as Zcash and Monero that do have anonymous transaction methods.

In my comment [1] I argue that even then, these types of trades are not a concern for the IRS.

[1] https://news.ycombinator.com/item?id=16216069

Let's say I bought bitcoin on coinbase. Two days later, I sell it to a friend. He gives me cash, I give him the private key. Then he does whatever he wants. Am I now responsible for every transaction he makes from that address? Also, if I mined bitcoin, how would the IRS know?

Quite simply they can ask you to prove the origin of the bitcoins when you eventually want to use them/convert them to fiat/etc. Didn't buy them on an exchange or from another person? Well, then you probably mined them and they'll be taxed as income.

> I give him the private key

Why would you do this? Why would anybody ever accept a private key in a transaction. Now the key is no longer private!

I didn't say it was smart...it's just possible.

Yeah, at best Bitcoin is pseudonymous (through mixing or obfuscating through exchanges). But really, what person committing tax fraud or other underground activity wouldn't just use an actual privacy focused crypto such as Monero (as you said)?

When reading articles like this I substitute "Bitcoin" for "Cryptocurrency" and it makes more sense. The public has just recently normalized Bitcoin and so that's what they write about. Give it a year or so and they'll catch on.

> Bitcoin is not anonymous.

I get what you're saying, and I've been saying the same myself. Then again, maybe it is anonymous in the literal sense that transactions don't include your name. Without outside information, you can't look at a transaction, or a history of transactions, and tell to whom they belong.

PS: Never mind. I don't think I am making an important point.

Bitcoin transactions are not anonymous, but services such as Satoshi Dice do break the chain of transactions. Also, exchanging between various crypto currencies makes money very hard to trace.

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