Topic: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? (Read 619 times)
December 23, 2020, 11:24:37 PM
The one you're looking is non other but the core devs, because who else has access and very well verse in Bitcoin source code. It seems, that they've modified some of BTC's code while we weren't paying attention. Who knows, maybe in order to be accepted for mass adoption or to fight against illegal activity.
December 23, 2020, 10:00:31 PM
In past gambling sites are very common place where people use to mix their coins because of different addresses and masking their identity .
But nowadays gambling sites Will hold your account if they're Logs triggered by something close to mixing activities.
and also there are Mixing company that has been closed or freezed by authorities because of this kind of activities.
Having more strict rules and tools will prevent this from happening though sites is gaining really big on this.
But nowadays gambling sites Will hold your account if they're Logs triggered by something close to mixing activities.
and also there are Mixing company that has been closed or freezed by authorities because of this kind of activities.
Having more strict rules and tools will prevent this from happening though sites is gaining really big on this.
September 05, 2020, 07:27:52 AM
And yes while there plenty of precautions one can take to avoid a scenario like this how, how practical would that be to do for an everyday user who simply wants to buy a cup of coffee
It's probably worth pointing out that the entities freezing accounts or seizing coins are, to date, only centralized exchanges and centralized payment processors. I have spent bitcoin directly from mixers and from coinjoins at countless websites and physical merchants, and never once encountered a problem with where my coins came from or even been asked the question.In terms of the "cup of coffee" scenario, then long term this is likely a payment which would be being made over Lightning as opposed to on the main chain. Onion routing would solve this problem completely, as the merchant wouldn't even know the source of the coins, let alone whether or not they are tainted.
target wallets containing more then a certain threshold of tainted coins.
Provided you have not handed out your xpub or linked your addresses together in the same transactions, then it is impossible to even tell which two addresses belong to the same wallet.But history is on our side here, with governments time and time again trying to curtail a popular technology only to inevitably fail with massive blow-back.
Bitcoin is designed to be censorship resistant. They can blacklist as many different addresses or UTXOs as they like. Nothing can stop people from trading peer to peer. September 05, 2020, 06:42:39 AM
I know it might be possible with some help of some software to identify an address that is owned by a criminal, but it’s impossible to identify when the coins has been sent to an innocent person. There are people who buy their coins peer-to-peer, like some of my friends who send and receive bitcoins among themselves.
So, assuming that one of them was involved in a criminal activity and their coin is tainted, and they send it to another friend who is completely innocent, so the receiver will then have to suffer for something they have no clue about? Well, I know they are just doing all these things to keep the market safe.
So, assuming that one of them was involved in a criminal activity and their coin is tainted, and they send it to another friend who is completely innocent, so the receiver will then have to suffer for something they have no clue about? Well, I know they are just doing all these things to keep the market safe.
This is exactly what i fear. The thing is Bitcoin today is still just a drop in the ocean retaliative to the financial world. And i could very well imagine that as it starts to have a greater footprint in the financial world, at least large enough to make a government feel threatened, u could start seeing them taking increasingly arbitrary actions like this as a way to discourage the little guy from using/ adopting Bitcoin. (And yes while there plenty of precautions one can take to avoid a scenario like this how, how practical would that be to do for an everyday user who simply wants to buy a cup of coffee )
Now that's not to say how effective or feasible such arbitrary measures would be once Bitcoin proliferates in the hands of enough people (or with the implementation of privacy features) which is why i thought maybe they would try and target wallets containing more then a certain threshold of tainted coins.
But history is on our side here, with governments time and time again trying to curtail a popular technology only to inevitably fail with massive blow-back. The printing press comes to mind.
September 04, 2020, 12:27:46 AM
Exchanges marking bitcoins as tainted, or whatever they say it is, is totally wrong and is just a way for them to steal money. I know it might be possible with some help of some software to identify an address that is owned by a criminal, but it’s impossible to identify when the coins has been sent to an innocent person. There are people who buy their coins peer-to-peer, like some of my friends who send and receive bitcoins among themselves.
So, assuming that one of them was involved in a criminal activity and their coin is tainted, and they send it to another friend who is completely innocent, so the receiver will then have to suffer for something they have no clue about? Well, I know they are just doing all these things to keep the market safe.
So, assuming that one of them was involved in a criminal activity and their coin is tainted, and they send it to another friend who is completely innocent, so the receiver will then have to suffer for something they have no clue about? Well, I know they are just doing all these things to keep the market safe.
September 03, 2020, 06:46:31 PM
If you remember legendary scammer 'pirateat40' the SEC had completely tracked every coin he spent and detailed how they did this in their court filing, look it up
September 03, 2020, 02:26:49 PM
-snip-
There will always be ways to obfuscate where your coins came from - mixers, coinjoin, payjoin, peer-to-peer trading, atomic swaps to and from Monero, and so on. If a state does blacklist your address, there will always be a way around it.It also becomes an impossible task as time goes on. Because of all the things I've just mentioned, particularly mixers and coinjoins, tainted coins regularly get mixed in among other circulating coins. Lets say there is a coinjoin with 1 tainted input and 50 outputs. Are all those outputs now tainted? What if all those outputs are later coinjoined again somewhere down the line, with another 50 outputs each. Are all 2500 outputs now tainted? If you look far enough back in time, then the majority of coins in active circulation can be claimed to be tainted in some way or another. With the growth of DEXs, mixers, coinjoins, etc., this is only going to get worse as time goes on. You obviously can't blacklist every address, so then you must choose a completely arbitrary cut off for how far back in time you look. 5 transactions? 10? 20?
September 03, 2020, 12:21:47 PM
and whenever a state or even a country forces ridiculous laws the companies simply relocate their headquarters as it has happened multiple times in the past.
Sure, but they can still be prevented from operating in a country or state unless they comply with specific rules and regulations, regardless of where they are headquartered.perhaps a centralized authority would try to blacklist them if it contains tainted coins above a certain threshold ( maybe above 25% - 30% or so).
I'm not sure I follow you here. Bitcoin itself does not have a central authority. Centralized exchanges, services, websites, etc., are free to blacklist coins, since they are private businesses and can essentially do what they like. There is central authority which could blacklist coins from being transferred or sent to another address altogether, though. The only way to do that would be with a fork which the community would never agree to.
What I meant here was not whether bitcoin has a central authority to stop the movement of blacklisted coins, one can always move your coins on a peer to peer basis.
But that the state could perhaps stop you or at the very least make it difficult for you to use wallets where chain analysis can prove that a large portion of the coins in said wallet can be traced back to a tainted wallet/source. Assuming of course that chain analysis becomes more sophisticated in the future as well.( while we are talking about chain analysis how effective do you think chain hopping is as a way of obscuring data from chain analysis companies)
And by stop or hinder i don't mean on a peer to peer basis but perhaps when an everyday average user who may have bought some bitcoin from a friend and is now trying to use this to make a payment at say a starbucks or a Walmart. ( wouldn't this then negatively effect the adoption of bitcoin as a day to day payment mechanisim)
Again maybe all this could be rendered moot once we can implement schnorr signatures and taproot or some other future privacy features.
Thoughts ?
September 03, 2020, 09:03:54 AM
Since converting to BTC costs money (always more than 1% in my experience, often MUCH higher (BTC ATMs)), it's beginning to look like BTC will not be a game-changer for privacy.
The obvious answer to this is to not convert back and forth between BTC and fiat and just stay in BTC as much as possible. Earn bitcoin, accept bitcoin, spend bitcoin.If that so, how can one identify the value of BTC? And since BTC is created as currency, we cannot avoid linking fiat currency to BTC. Old world is always linked to new world same with finances.
I am pretty confident that one day we will be using Bitcoin only financial instruments or, at least, that's my dream since being into BTC.
Well, we are already using Bitcoin as financial instrument but I think it is too much for a dream for Bitcoin to the only financial instrument to be use in this world and this will never happen.
In the end, yes! Just stay in BTC as much as possible. Earn bitcoin, accept bitcoin, spend bitcoin.
If only all merchants will accept Bitcoin as it is.
September 03, 2020, 08:57:11 AM
They label Bitcoin badly. In doing so, they accuse it of money laundering.I think Bitcoin decentralized has a successful sheltered system so sometimes I see good tags and get happy transfer money securely to each other in seconds with sample Bitcoin or it is a great app to buy an item. I think these tags are way better for Bitcoin.
September 03, 2020, 07:25:38 AM
and whenever a state or even a country forces ridiculous laws the companies simply relocate their headquarters as it has happened multiple times in the past.
Sure, but they can still be prevented from operating in a country or state unless they comply with specific rules and regulations, regardless of where they are headquartered.perhaps a centralized authority would try to blacklist them if it contains tainted coins above a certain threshold ( maybe above 25% - 30% or so).
I'm not sure I follow you here. Bitcoin itself does not have a central authority. Centralized exchanges, services, websites, etc., are free to blacklist coins, since they are private businesses and can essentially do what they like. There is no central authority which could blacklist coins from being transferred or sent to another address altogether, though. The only way to do that would be with a fork which the community would never agree to.Another question i had with regard to bisq was the fiat gateway and payment methods. Since a user would have to provide his own account details in order to receive or make a payment in fiat wouldn't this then open up its own risks, and couldn't a centralized authority then use this as way to trace a user and link bitcoins to their original sources ?
With Bisq, you only provide your fiat payment details to the other party, not to Bisq itself. Having said that, a government agency could still pose as a buyer on Bisq to collect bank details of people trying to trade. If this is a particular concern of yours, then you should look in to anonymous payment methods such as cash or anonymous money orders. September 03, 2020, 04:37:57 AM
Yes but while there may be no centralized wallet there is always the issue of the individual/organization controlling the Dex correct.
That's why I specifically mentioned Bisq.Not only is Bisq a decentralized exchange, but the Bisq platform itself is decentralized. You run the software yourself on your own computer, and connect directly to other users via Tor. Just like with bitcoin, even if governments shutdown the the website, shutdown the GitHub, stopped the developers from working on it, you can still run it yourself and connect to other users.
So i did some reading up on bisq and from what i could gather it does seem on a technical level to be what an ideal Dex should be like, and an exchange that could resist to a very large degree centralized censorship.
here are a few reviews on it that i read if anyone's interested
1) https://cryptogeek.info/en/exchanges/bisq
2) https://www.cointelligence.com/exchanges_list/bisq/
But the recent hack on it a few months back does show that it is still exploitable. An attacker here was able to change other users’ default fallback address for a failed trade to one controlled by him.
Source: https://www.coindesk.com/hacker-exploits-flaw-in-decentralized-exchange-bisq-to-steal-250k
Another question i had with regard to bisq was the fiat gateway and payment methods. Since a user would have to provide his own account details in order to receive or make a payment in fiat wouldn't this then open up its own risks, and couldn't a centralized authority then use this as way to trace a user and link bitcoins to their original sources ?
1) https://docs.bisq.network/payment-methods.html
Sure, using DEXs is currently not as easy as using centralized exchanges, but that doesn't make it impossible for the average user.
yes and this should only become easier with time as User interfaces gradually improve and we start seeing volumes on them, most definitely some thing to look forward to.
September 03, 2020, 03:53:18 AM
if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few.
I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.they will surely keep forcing KYC but it is different from freezing an account just because it had a transaction history that might have been coinjoin related.
Yes as the use of bitcoin increases as a payment mechanism, it is natural that governments in order to protect their own monopoly will force centralized exchanges to start freezing tainted accounts ( many already black list wallets with hacked coins), but what about real world transactions, could someone eventually try and blacklist wallets containing coins with a tainted history lets say wallets containing laundered coins or coins that have been passed through a mixer or Dex even if the current owner could seemingly prove that it was unknown to him when he acquired said coins. i think most wallets would contain some amount of coins like these, perhaps a centralized authority would try to blacklist them if it contains tainted coins above a certain threshold ( maybe above 25% - 30% or so).
I get that something like this would be very difficult to enforce assuming the use of bitcoin has proliferated in the hands of enough people and is used as an everyday payment mechanism , which is way i mentioned that they might try and target wallets above a certain threshold.
September 03, 2020, 03:18:25 AM
if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few.
I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.they will surely keep forcing KYC but it is different from freezing an account just because it had a transaction history that might have been coinjoin related. and whenever a state or even a country forces ridiculous laws the companies simply relocate their headquarters as it has happened multiple times in the past. there are lots of other countries that don't have such stupid rules they can go to or even a new exchange can be created there. the later is what i meant about multiplicity of CEX but i agree that the ultimate solution is using DEX all the way.
September 02, 2020, 11:13:51 AM
Yes but while there may be no centralized wallet there is always the issue of the individual/organization controlling the Dex correct.
That's why I specifically mentioned Bisq.Not only is Bisq a decentralized exchange, but the Bisq platform itself is decentralized. You run the software yourself on your own computer, and connect directly to other users via Tor. Just like with bitcoin, even if governments shutdown the the website, shutdown the GitHub, stopped the developers from working on it, you can still run it yourself and connect to other users.
Yea assuming you don't use a centralized exchange then that's fine, but how practical is that for the average user.
Sure, using DEXs is currently not as easy as using centralized exchanges, but that doesn't make it impossible for the average user. With the caveat I mentioned above, that the real long term solution is the proliferation of DEXs until they have become the "standard" way of buying and selling bitcoin, then I don't see this as an issue.For instance lets say an individual has received payment for goods and services provided in ether how could he then possibly know if said payment includes tainted coins or not (assuming it eventually gets identified as being tagged somewhere down the line). And wouldn't this then be harmful for the long term adoption of cryptocurrencies as a payment mechanism.
An individual cannot possibly know all the different algorithms that different centralized services are using to tagged coins as "tainted". But as I said above, this is bad for the long term outlook of centralized exchanges - they are adopting an untenable position that will be impossible for them to continually enforce as time goes on. I don't see this as bad for bitcoin. If anything, it will encourage people to use more peer-to-peer and decentralized services, which I see as a positive. September 02, 2020, 11:05:11 AM
perhaps by tainting any coins that pass through them.
It is very difficult to track coins which are traded through a true DEX, for the exact reason that there is no centralized wallet to which the coins must first be deposited. In some cases the coins pass directly from one person to another, and in others they pass first of all through a multi-sig escrow address which is a single use address and is indistinguishable from other multi-sig addresses. Blockchain analysis fails in these cases, and the only way to reliably track these trades would be to infiltrate the DEX in question.Yes but while there may be no centralized wallet there is always the issue of the individual/organization controlling the Dex correct.
For example the Ether delta case where the sec bought charges against its founder Zachary Coburn.
Source: https://www.sec.gov/news/press-release/2018-258
Further, even if government's did manage to taint coins being traded peer-to-peer, then who cares? Provided you don't use centralized exchanges, it doesn't actually matter if they think your coins are tainted or not.
Yea assuming you don't use a centralized exchange then that's fine, but how practical is that for the average user. For instance lets say an individual has received payment for goods and services provided in ether how could he then possibly know if said payment includes tainted coins or not (assuming it eventually gets identified as being tagged somewhere down the line). And wouldn't this then be harmful for the long term adoption of cryptocurrencies as a payment mechanism.
September 02, 2020, 08:49:18 AM
perhaps by tainting any coins that pass through them.
It is very difficult to track coins which are traded through a true DEX, for the exact reason that there is no centralized wallet to which the coins must first be deposited. In some cases the coins pass directly from one person to another, and in others they pass first of all through a multi-sig escrow address which is a single use address and is indistinguishable from other multi-sig addresses. Blockchain analysis fails in these cases, and the only way to reliably track these trades would be to infiltrate the DEX in question.Further, even if government's did manage to taint coins being traded peer-to-peer, then who cares? Provided you don't use centralized exchanges, it doesn't actually matter if they think your coins are tainted or not.
Also how how would one implement a Dex or another solution for say bitcoin.
Fiat to bitcoin (and vice versa) DEXs already exist. Look at Bisq as a great example. September 02, 2020, 08:29:41 AM
if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few.
I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.Exactly this I think the only real solution is dexes, and seeing the current volumes on uniswap is really encouraging, wether that is part of the current Defi trend, or a long term trend is still up in the air though.
However with regard to a Dex can anyone think of a way where the government could impose restrictions or some form penalties on the facilitators(maybe the operators of the dex) or perhaps by tainting any coins that pass through them.
Also how how would one implement a Dex or another solution for say bitcoin. Assuming you don't want to use wrapped coins
Chainalysis has made $10 million in five years from the U.S. government, with nearly a dozen agencies and a military branch tapping the blockchain forensics firm for everything from tracking tools to training on analyzing network data.
These companies were not set up or launched by the government, but now that they exist, the government is more than happy to use them. There are many more firms which US government agencies have been paying for their privacy-invading expertise. Here are a few examples you can examine for yourself:Chainalysis - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CHAINALYSIS+INC.%22
Elliptic - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22ELLIPTIC+INC.%22
CipherTrace - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CIPHERTRACE%2C+INC.%22
Coinbase - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22COINBASE%2C+INC.%22
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I think the biggest in the bunch here is coin base I mean it is still the go to exchange for most people's first crypto purchases, so it could be very easy for a centralized govt to create issues for users ( freezing accounts and such ) which could harm a lot of innocent people how many have no idea regarding the origin of some their coins.
September 02, 2020, 05:59:08 AM
Chainalysis has made $10 million in five years from the U.S. government, with nearly a dozen agencies and a military branch tapping the blockchain forensics firm for everything from tracking tools to training on analyzing network data.
These companies were not set up or launched by the government ... September 02, 2020, 05:45:24 AM
if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few.
I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.Chainalysis has made $10 million in five years from the U.S. government, with nearly a dozen agencies and a military branch tapping the blockchain forensics firm for everything from tracking tools to training on analyzing network data.
These companies were not set up or launched by the government, but now that they exist, the government is more than happy to use them. There are many more firms which US government agencies have been paying for their privacy-invading expertise. Here are a few examples you can examine for yourself:Chainalysis - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CHAINALYSIS+INC.%22
Elliptic - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22ELLIPTIC+INC.%22
CipherTrace - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CIPHERTRACE%2C+INC.%22
Coinbase - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22COINBASE%2C+INC.%22
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