As a Bitcoin novice, I was left wondering: is it a common misconception that Bitcoin is anonymous? Or rather, just how easy is it to trace someone's transactions if you know their wallet ID?
[0] http://www.wired.com/2015/04/silk-road-1/ [1] http://www.wired.com/2015/05/silk-road-2/
A mixing service will basically perform money laundering for you, disrupting the direct path back to your initial transaction.
tl;dr: It can be anonymous, but by default it's not really.
On a practical level its anonymous. Its trivial to move coins around to various exchanges that makes it difficult or impossible to trace. Jurisdictions come into play here as well. If I steal some coins in the US and move them to a Latvian exchange, then a Russian one, then a Swiss one, then finally cash out in a Chinese one, who will be even able to track me down? Who will respect all these warrants?
A real life example is what's going on with cryptolocker-like malware. People are paying hundreds of dollars in bitcoins to these ransomwares for almost two years now, yet there have been zero arrests.
I imagine laundering bitcoins is easy to do as well by trading value in a shared pot. Hell, you could just trade one 'hot' wallet for another and again and again. Now the path is even more obfuscated.
Reminds me of ATM skimmers, also particularly terrifying. I imagine they are kept at a certain degree of popularity for the same reasons.
One of my chief complaints about Windows 10 is that it does absolutely nothing to solve the "download invoice.pdf.exe" problem Windows suffers from. At least in Linux that file needs to be given a +x and in OSX non-Apple signed executable need to be approved in the system settings. Windows is still the wild west. Its a shame MS didn't use Win10 as a way to lock things down to address today's threats. Signature based AV cannot move faster than a certain speed and malware like Cryptovariants move much, much faster than that. Heuristics are terrible for some reason on popular AV's and everyone is constantly getting infected.
Yeah, leave exceptions for power users and enterprise, but by default it should not allow untrusted unsigned content to run by default.
I told myself that if I ever start my own company that actually allows me to quit my dayjob it would be 100% OSX environment on the client-side. MS just doesn't take security very seriously, its targeted badly, and even the pro-netsec people at MS that want to be better with security are knocked down by the other politics of having 20-30 years of legacy support for ancient apps and not breaking anything. Its just not able to keep up with modern threats. Its a shame Win10 isn't shipping with a Windows store only policy for installs and some kind of OSX-like exception in the control panel for whitelisting. Devs would hate, IT departments would lose their shit, but in a few months we'd all be used to it and the internet would be much safer.
Did they ever fix the RTL character problem, where you can name a file something[RTL]gpj.exe and it will look like somethingexe.jpg?
They don't force you to, though.
(That's the 770 BTC payment references in this article: http://motherboard.vice.com/read/how-a-two-timing-dea-agent-...)
So if you want anonymity you have to be careful that no one can connect you to a wallet ID.
It has to do with that if Alice gets a Bitcoin by selling uncensored newspapers in China, transfers it to wallet A in the tumbler, and then the tumbler transfers that to Alice's Coinbase account, Alice is going to jail. The transaction record tells us that Alice's Bitcoin came from the uncensored newspaper through an intermediary. The Chinese government can then arrest Alice on suspicion of selling illegal newspapers. At that point Alice must either prove somehow that wallet A in the tumbler is owned by the person who really sold the newspapers (which will be impossible), or admit that she sold the newspapers and used a (bad) tumbler in an attempt to hide her transaction. That is to say, if there's a chain of transactions connecting Alice to the newspaper sale, the tumbler has provided Alice no anonymity.
Contrast this with a more realistic tumbler design: the tumbler owner (let's call him Troy) deposits a bitcoin from Coinbase in wallet A. Alice is the first user of the tumbler, so she gets a bitcoin selling uncensored newspapers in China and deposits it in wallet B. The tumbler owner then forwards the coin from wallet A (minus a fee) into Alice's Coinbase account. Now Bob, as the second user of the tumbler, comes along and deposits a coin he got from selling LSD on the Silk Road into wallet C. Troy then sends the coin Alice got from selling uncensored newspapers (minus a fee) to Bob's Coinbase account.
Alice now has a coin from Coinbase, Bob has a coin from Alice's sale of an uncensored newspaper in China, and Troy the tumbler operator has a coin sitting in wallet C waiting for the next person to use the tumbler. The Chinese government has no way to track the transactions to Alice. IF Bob lives in China the Chinese government could come and accuse him of selling uncensored newspapers, but the accusation would make no sense; he has alibis for some of the days newspapers were sold, he's not educated enough to write, etc., because he didn't sell the newspapers. Bob can even say he used a tumbler, but he used it because he purchased a lot of bondage pornography: embarrassing, but not illegal. But more likely than not, Bob won't even be accused of Alice's crimes, either because he lives in a different country or because the accusations won't make any sense. Both Alice and Bob's anonymity has been protected.
I assume Troy is hidden to the authorities, who only have the Blockchain ledger and no other information to go on? That's waht I meant by "concentrated" above -- how likely is it that the Chinese government would find Troy and extract the information out of him with legal threats or with a heavy wrench?
Blackmail. This is (one of many) reasons it's important that Troy be a trusted actor.
However, there area number of attacks possible from Troy's perspective. He can keep a transaction history and use it to blackmail Alice and Bob. He can simply keep coins sent to the tumbler and send out nothing. It's very important that Troy be a trusted actor.
There's https://github.com/chris-belcher/joinmarket, which requires no trust in the other participants, and all of them would need to collude to identify you.
Not relevant to the example, but this is totally illegal.
If you know someone is connected to a given input, then you can trace them through any outputs to other parties.
So it's not quite as simple as a "wallet ID". The transactions in given Bitcoin wallet software may be connected to each other (by the mechanism I describe above), but are not necessarily connected, particularly if you generate a new address for each transaction for which you are the receiving party (and/or take additional precautionary measures). It's entirely possible to have a wallet full of untraceable transactions.
For a technical solution on bitcoin privacy and providing anonymous bitcoin transactions, see: http://zerocoin.org/
It felt to me like Feds wanted to do everything in their power to put him down for lifetime, and I wouldn't be surprise if more skeletons come to the light.
Namely, the part about him hiring a hit man was very fishy. First it was his coworker that agreed to helped Feds to play dead, but then you had some bikers performing multiple hits (supposedly all successful) on people Ross wanted dead. Uhm, so basically a motorbike gang agreed to play along with Feds, plus many "victims" agreed to disappear and play dead for months so that Ross is convinced all that money he paid the gang were for successful hits. Maybe in a Grisham book, but in real life things like that don't line up this good.
Then Feds didn't hesitate to tell judge about all this, but then they decided not to use "evidence" of Ross ordering hits, and focus only on his drug business.
So basically you have a judge that looks at a person that supposedly order multiple hits, who also created website to exchange some drugs. No wonder he got lifetime behind bars.
I don't think drug dealers go to jail for lifetime.
Another thing that struck me was allowing testimony of parents of a teen that drug himself to dead. Seriously? Sure, had not SR, he probably would have never found access to drugs somewhere else.. NOT. How about looking into the quality of their parenthood? Environment he lived in? His school and friends problems? etc etc. But no! Just exactly when was the last time you seen a family trying to shut down Ford car company and put the CEO behind bars because their two young children burnt to death in a car accident caused by a Ford vehicle??
EDIT: my point about Ford was that when did you see last time a car company CEO being found guilty and put in jail for lifetime because his company's vehicles are responsible for tens of thousands of deaths, including young children.
(never)
Are you joking?
This notion that the DOJ tainted the case by telling the judge about a murder-for-hire scheme without charging it is a meme that simply will not die. By repeating it, you're essentially broadcasting that you didn't even bother to read the Ulbricht indictment.