Topic: Blockchain Analytics is More of an Art Than Science (Read 1362 times)

It's always the "money" that creates problems and fixes them, these companies have the motive and the means to convenience or even force it on the government to buy and use their terrible tools, on the other hand, going against that doesn't earn you any money, who would spend millions of dollars to convince the government that this Chainalysis is nothing but horseshit? the a few people who have the perfect understanding of how the system works have no means of imposing their opinion.

We still have fools in our government who are highly influenced/controlled by the banking mafia who claim that Bitcoin was created by some sort of origination with the intent to collect as much money as they can before changing the password and deleting the Bitcoin website  , no matter how hard we try to explain the truth to them -- our voices are hardly heard because we don't have the tools our enemy has.

LN has a flaw of only 20 hop distance.. so they create "trampolines" where you send a message to a service that is distanced somewhere else on the network where they create the onion to the destination on your behalf.. meaning you tell them teh amount and destination you want..

LN has a flaw of only channel imblance and bottlenecks.. so they create "hubs" where you let them have your value, let them set up a channel and you just have some msat balalnce where you tell their software what destination you want and they read the gossit to create the path

LN has flaw of complicated integration of LN node and bitcoin node and scripts inbetween.. so they create "greenlight" that manages the node and communication process and onion routing paths and you just do the signing of value to the channel partner

[i can go on, and on]

and yet people think that LN is a decentralised system of user full control of funds..

when you look at all the big services that are all sister companies of DCG or other institutions that have to follow MSB regulations. it should awaken you to how many nodes are sharing data to chainanalysis

The only way is to run several lightning nodes with large liquidity, trying to make a conclusion out of the routed transactions. For instance, if I only own a channel, which to my unawareness is owned by Chainalysis, and I want to send a payment to a lightning node which also shares channels only with Chainalysis nodes, then Chainalysis can de-anonymize the payment.

Chainalysis will quickly notice that it isn't practical to own half the network, so we should expect the same guesswork with now, squared...

funny. you two always make me laugh at your ignorance
look at the DCG portfolio.. notice the main LN devs are in the same portfolio as chainanalysis. notice all the other portflios of services that share information

it only takes a few nodes in certain network positions to intercept paths of data. especially now those teams in DCG portfolio are also offering monitoring LN software
when "greenlight" manages the channels and payments. guess where that data goes

How do they analyze Lightning?

There is no ledger/blockchain to begin with...

ps1: Monero has not been broken (highly unlikely IMHO), but they will delist it from various CEX (which proves it's an actual danger, since the bounty hasn't been claimed so far). It's still listed in Binance, Kraken, KuCoin to name a few.

ps2: KYC is debateable and highly overrated.

Let's say that I buy 1 BTC from Binance (with my own identity) and I gift it/sell it to someone else (either hand the private key or send it to another address).

Chain analysis companies will still claim it's my own property, even though it no longer is.

Don't sweat it too much, as long as it's stored in your own personal wallet and not on a CEX (even if it's the "trustworthy" BlackRock with their ESG shenanigans -> could easily steal your BTC IOU if you don't comply to climate change demands for example).

Oh, absolutely. As we have seen in this thread, they fail to understand the most basic concepts about bitcoin (such as segwit v non-segwit), or indeed the most basic concepts about computers in general (such as bits v bytes). They fail to understand how easily their simply heuristics are fooled, such as with change being sent to different script types. They have absolutely zero evidence that their on-chain analysis is anything other than complete guesswork, and cannot say how many false positives they identify with their random guesswork. I am certain their Lightning analysis will be similar flawed, at best.

However, apparently none of that stops the government relying on this made up bullshit in court and using it as evidence to prosecute potentially innocent individuals. If Chainalysis are offering it, the government will be buying it and using it against anyone they like.

It's the perfect topic to comment out that part.

Monero is the best cryptocurrency in terms of anonymity, and second-best in terms of research, as per my experience goes. If Chainalysis could break it, I'm pretty confident they could tell the difference between a segwit and non-segwit address or the difference between bits and bytes.  

I can imagine how inaccurate their lightning network monitoring reports will be.  

It has been broken in the past:  https://www.schneier.com/blog/archives/2018/03/breaking_the_an.html.  There have been hard forks since then that enhance privacy further.  Its reputation is fine.

It is of course trivially easy to plant something with or without bodycams. And even if it were impossible, police could simply charge you for running a stop sign, running a red light, using your phone while driving, dangerous driving, or a hundred other things where bodycams are useless. More surveillance is never the answer, which is why even the NSA have admitted that mass surveillance has never prevented a single terrorist attack.

Note the bounty no longer exists.

The bounty eventually evolved to cover either Monero or Lightning transactions. It was awarded to Chainalysis in September of 2021, just before they publicly announced their "transaction monitoring solution" for Lightning (https://www.chainalysis.com/blog/lightning-network-support/).

So in other words the Monero bounty was unclaimed, and Chainalysis were awarded the money for instead offering the US government Lightning monitoring services.

If you think about it, nothing is really anonymous on the web.

As o_e_l_e_o said above, monero has a bounty of $625,000 if it gets cracked. If it gets hacked indeed, can you imagine how bad it will be for its reputation? Essentially the chain will be worthless.

So, creating a fully anonymous blockchain is also risky for this reason. Imagine Bitcoin, claiming to be anonymous, but getting hacked.

Satoshi didn't want to take away anonymity. He seemed to love anonymity. I suspect he was unable to fully guarrantee anonimity and therefore, he chose pseudonimity. Personal opinion, of course.

I think we are right on topic, the exact part that matters the most, anything that doesn't affect society at all might as well be ignored and not discussed, blockchain analytics are fine if people want to use them for educational purposes, fun or whatever other purpose they see fit, it's completely fine if someone wants to randomly point to a bitcoin address and say this is owned by that person, nobody would care about it -- but when such guessing becomes a tool in court on its own then that is a catastrophe that will affect people's lives directly.

But HmmMAA insists Bitcoin was created to take away anonymity.

Don't you think the conversation has gone out of the general board's theme? I suggest we keep talking about the analytics and avoid posts regarding society in general.


No I didn't, thanks for clarifying that. I don't think satoshi wanted to create a fully anonymous chain, even though your posts are accurate and he seems to be in favor of total anonymity.

I think it's rather a tradeoff. I mean, the founder was pretty much in favor of anonymity judging by his posts[1][2]. The reason the network doesn't operate in "complete anonymity", as in Monero, might be because he wasn't aware of how to implement it at that time, or because it'd be a burden in terms of transaction scaling. If you didn't know it, Monero full nodes need to keep all the outputs and be able to efficiently index them, whereas in Bitcoin, you only need to keep UTXOs.

He surely wasn't against anonymity, as it's possible to achieve it using coinjoin.

[1] https://bitcointalksearch.org/topic/m.9074
[2] https://bitcointalksearch.org/topic/m.34

LOL @ people who claim multiple cameras can "save" innocent citizens. They're either useful idiots (claiming to have above average IQ ), or systemic trojan horses/government agents pretending to be laymen citizens.

Let me tell you one thing: the most ancient/advanced camera in the world are your own eyes. Infinite resolution, high frame rate, large color depth...

Have you ever seen magicians performing tricks right in front of your eyes? Were you ever able to figure out how they do it? NO!

So, who the hell tells you that policemen cannot receive magician training to plant you some kind of pill/drug in your car?

Only dystopia lovers will tell you that... the same kind of people who loved COVID lockdowns (and are going to love cameras in the future to enforce climate lockdowns, because we need "rules" in a society).

I don't think "taint" is an actual problem, but I believe it is our right to try to erase traces of previously owned bitcoin. That said, I am not afraid whether my coins will be accepted or not, I just want to "confuse" anyone trying to identify how I got my coins and from whom, because I don't think it's anyone's business to know.

I wouldn't call it an art. It's just business. Just like "taint", it's a "solution" looking for a problem. Once they convince people there is a problem, they have buyers for their "solution".

So all this money is spent to achieve what exactly? body-worn cameras provide an overview of the overall incident and that's it, I can still manage to slide a tiny Ecstasy pill under my car seat while being watched by 10 cameras, in fact, in of the cases the went public after another officer confessed what his co-worker told him was that he held a drug pill between his fingers, reached to the victim's pocket to search and and "found the pill".

This would only work effectively if the procedure states that policemen have to approach the vehicle naked, with their legs and fingers spread, mouth open (probably add a mount-camera too), but as long as there is the slightest possibility that the policeman can slide a tiny little object in your pocket/car/house then the whole process is flawed.

This is the very reason why the previous legislators wrote the rules in such a way that at least a few different organizations/departments need to coordinate in order to frame you, you need to have a bad cop and a bad prosecutor working together to frame you which is pretty much unlikely to happen compared to when a single person can arrange everything by themselves.



No, the problem is the police searching my car without a warrant, as explained above, cameras won't cut it, it would only make things a little bit more difficult but sure thing is -- it won't stop them.



You can't, anyone can frame you just like the drug example, say that I have a blacklisted address which the Chain analysis assumes that it belongs to me as an international terrorist who caused the death of 10000 people, what happens when I send a few sats to an address which you owned and confirmed ownership to it by KYCing yourself to the government, how are you going to prove that you were not in contact with me and that I sent you the coins to frame you?

Furthermore, if your funds sit on a CEX, not only they can partially frame you like that, but they could fully frame you by sending you "Tainted Bitcoin" and then withdrawing the same "tainted coins" to another address owned by you, this will be a perfect evidence that you and I are partners if we were to go with the assumption that those coins were indeed owned by me.

It's even worse if you think about it, there doesn't need to be an actual terrorist involved, the chain analysis company can just link those coins to anyone, they can just send you some random coins and they could just assume that you received them in exchange for trafficking a 10-year old boy, how are you going defend yourself against that when we don't know how they got to the conclusion and they won't share the "how" with anyone?

If you initiate a transaction that has two outputs one is 0.005655 and another has 0.001 all these chain analysis software will assume that the first output is the change address just because they believe it's impossible to end up with a change that is a round number, you could always fool these fools by ending up with a round change, everything else they build on it, later on, will be false, it is all but guesswork, greater for research purposes but terrible for court evidence.

So you want a safe community which is great, but you think all criminals are in the street you need to remember that many criminals are in government offices waiting to exploit anything against you, they would protect you from the street criminals but nothing will protect you from them, the more power you give them they more they will use it against you, not just against the criminals.

A safe world is achieved by increasing the standard of living not by spying on every aspect of the citizens' lives, there is no link between the cities with the most CCTV systems and low crime levels, and the opposite is correct, many cities are hardly watched and yet they have little no crimes.

I will leave the rest of the conversation aside, because I want to talk about it Bitcoin in this board.

Bitcoin provides pseudonimity, not anonymity.

To be honest though, there are too many implementations that will help you make tracing difficult (or even infeasible):

Bitcoin mixers, coinjoins, coin swapping, lightning swapping, selling for cash, buying with cash

Even though transaction history is available to everyone, if you just coinjoin properly, then there is absolutely no way for anyone to know for sure which path your original UTXO has taken.

I think being pseudonymous is a feature, not a flaw. In fact, there is no real anonymity on the internet. At the end of the day it is only a question of how well you can hide.

Youu got it wrong , they have evidence , the problem is that evidence is faked .
What's your solution to solve the problems you mention ? I'm really interested . Maybe i'm wrong after all .