Topic: Re: How 'Anonymous' is Bitcoin? - page 2. (Read 5072 times)

Not sure if I understood your original post, but using new addresses does not automatically make you safe and anonymous. If you have 10 btc and get it from coinbase, they probably have records. Even if you send it to a few different addresses, and have those addresses send it off to more addresses, it's still relatively easy to write a script to group them together when you spend any one of them. If you're paranoid about that, better find a coin mixer, mix your coins after acquiring them, and then transfer them to a multitude of HD wallets.

That's the peers you are connected to. Only one of them will be the "sync-node" which is the one you actually get the data from. If you start a new system from scratch and that sync-node happens to be a slow one you can wait for a very long time. Unless you delete peers.dat and connect only to a single "known" quick node until you have the blockchain data. Once that's done you can connect in the regular way again.

You can see which one is the sync node in Bitcoin Core (formerly Bitcoin Qt) too: Go to the debug window and in the console type: getpeerinfo .



If you are using Armory, I highly recommend to donate

Thanks. I might send a donation to the Armory people, one of which posts here, as they seem good guys.  But I think they already are doing a 'several peers' download, since, as I type this, I notice the blockchain is being downloaded from "7 peers" it says.

TonyT

The few hours / days are mainly needed to get the underlying bitcoind to sync with the network and verify the addresses, once done Armory will build a database. But, say, if you restore your wallet on an online Armory system that has the blockchain and database already up to date, it probably takes not nearly as long (depending on amount of addresses and transactions those addresses were involved).

Armory is also working on an overhaul of their backend, so that will help speed things up further. Bitcoin Core devs are working to get bitcoind to download the blockchain from several peers (unlike just one, like it is now), so that will help speed up things too.

Yes, you are correct.  Apparently the comment I quoted was from an earlier version of Armory I just found out some minutes ago.  Just to show my ignorance, or lack thereof, I think the way Armory currently works is as follows ('deterministic wallet'):  you can generate an infinite number of bitcoin addresses with Armory.  Should you lose your private keys, if you know your Armory "root" key, which you can print out on a piece of paper when you first install Armory, you can then reconstruct all your private keys, now and forever more (infinitely many), and, then using the 50 GB+ blockchain, figure out how much bitcoin is associated with each private key (if non-zero), and then reconstruct your balance in your wallet.  It might take a few hours or days of computing power, depending on how many keys/transactions you've done, but it can be done.  At least that's what I understood, reading between the lines for the last few hours.  Please correct me if I'm wrong.

TonyT

There is a misunderstanding. Armory will generate as many addresses as you please. You will not even know when you have more than 100. Regarding this comment:
This is of concern only if you restore from a backup. The restored wallet will show 100 restored addresses, if you had more and want to see them you can do so from withing the client. However that has nothing to do with how many addresses Armory can generate.

Thanks to OnkelPaul for the replies.

Here is a good article that's not too technical that explains how not reusing bitcoin addresses would make bitcoin virtually anonymous.  But when businesses reuse addresses, they become easy to spot. see:

http://www.bitcoinnotbombs.com/innovations-that-enhance-bitcoin-anonymity/

I guess a simple example of this might be:  if anonymous buyers, "A", "B", "C" buy something from a seller "S" who does not change their bitcoin address, and the seller S then uses the money from A,B,C to buy from a supplier SS, who also don't change their bitcoin address, and S and SS constantly deal with each other you might get a diagram like: A, B, C <--> (single link from each buyer to S) to S, which then has multiple links to SS and back to S in the blockchain (and SS never deals with anybody but S).  You can conclude that A, B, C are random retail customers of S, S is the middleman, and SS is the sub-contractor or supplier to S.  At least that's the way I think of it.

Another example might be if a unique Bitcoin amount that is very distinctive like the sum of 789.12345678987654321 bitcoins is passed around, but each time it is passed between parties then 10 bitcoins are subtracted from the sum, and everybody except S and SS in the above example uses new bitcoin addresses, and say S and SS are known drug dealers, and reuse their bitcoin addresses, and the 'word on the street' is that a large cache of meth is circulating, being passed from party to party, then it follows that everybody who processed the bitcoin sum of 789.12345678987654321 (minus 10 every transaction) is a drug dealer who is trafficking this meth, and taking 10 bitcoins for their trouble (sorry it's kind of stupid but it's the best example I could think of at the moment).  

TonyT

Of course those nodes can keep a log of where they got a transaction from. If they show the information from this log, it's available to everybody. However, as they can only know the IP address from which they received a transaction, a node that wants to stay out of the spotlight could just send the transaction through another node that's not recording IP addresses, and then this node sends the transaction to other nodes who can't see from where it originally came.

Onkel Paul

And those nodes can only be revieling atm of the transaction, after that it's gone?!

No, why should it be?
See http://bitcoin.stackexchange.com/questions/193/how-do-i-see-the-ip-address-of-a-bitcoin-transaction
All you need in the blockchain is transactions and the proof of work as shown by the block hash. IP addresses are meaningless in this context.

Onkel Paul

If you are asking if an IP address is stored in the blockchain, the answer is no. Nodes will just see a transaction was relayed by X which may be your IP address or not.

NO ip address in the blockchain, my life is a lie!! . But seriously, it is in the blockchain right?

I didn't look at the blockchain data but there are lots of addresses of this kind. Most belong to companies, and the association between company and address is known to quite a number of users/customers/etc. so why bother with hiding it?


The charity example is actually a pretty good one. In such a case, the incoming funds address can be well-known, and for better transparency regarding management of their funds, charities might actually prefer to have all incoming donations on one address.


IP addresses are not in the blockchain. The only place where IP addresses and transactions can be connected is when a node receives a transaction from another node. Depending on the connectedness of the originating client, the transaction might originally come from that IP. For example, big mining pools often send their payments through few IP addresses to many well-connected nodes such as blockchain.info. Such a node can make an educated guess about the origin of the transaction. It is relatively easy to avoid by using a proxy and keeping only a few outgoing connections to small nodes which are unlikely to do IP/transaction analysis.

Onkel Paul

OK time for a concrete example on bitcoin security or lack thereof.

Examine this URL: https://www.biteasy.com/blockchain/addresses/1P62VZZ9kL97dzzcWhG7JZDssaW2MDgn82

Note the person(s) using this bitcoin address are not using a different bitcoin address for every transaction, but instead are receiving and sending a lot from this address (it seems to me, unless I am misreading the data).

1) Why don't people use a unique bitcoin address every time they receive money?  is it convenience, or maybe they advertise the bitcoin address and cannot change it easily (such as: 'please donate to my charity at this bitcoin address: 1P62...etc"?) ** UPDATE:  I see that Armory, a decent bitcoin wallet, will only generate 100 unique addresses before you need a new copy, see here: http://bitcoin.stackexchange.com/questions/9828/do-i-need-to-backup-a-wallet-every-time-i-generate-a-new-address   ("Please note that by default, Armory only generates 100 addresses. This means that when you use more than 100 and you lose your wallet, after you restore the back-up, the client will at first only see the first 100 addresses. You will have to specifically tell Armory to look for more addresses." so I supposed people don't want to go through extra effort in creating addresses is one reason, but apparently Armory can generate, if you let it, an infinite number of addresses, see: https://en.bitcoin.it/wiki/Deterministic_Wallet   So I supposed laziness / indifference is the main reason people use the same address over and over again?  ***

2) Where is the IP address associated with the address above?  Where is it buried in the blockchain?  I cannot find it.

TonyT

Paid VPN can be useful as a part of a strategy. Alone, no.  It also depends on what attack vectors you are trying to protect against, how you are paying for the VPN etc.

You can use electrum wallet and connect to a SOCKS5 anonymous server to make transactions when you run electrum from the Linux terminal. I believe that Tor is used by the server so your transactions remain anonymous in that your IP isn't revealed.

Someone correct me on this if I'm wrong.

+1

1. Run Tor
2. Bitcoin Core -> Settings -> Options -> Net -> Connect through SOCKS proxy -> IP = 127.0.0.1 ,    Port = 9150 if using TOR BROWSER BUNDLE
                or Port = 9050 if using TOR
3. Restart Bitcoin Core.
That's all  

Tor is not a browser.

How do we use tor for bitcoin wallet, considering its just a browser?

Are paid VPN services useful?
I recently tried out paid version of CyberGhost VPN (http://www.cyberghostvpn.com/en) where you can fake your IP to your choice of country.

Does this provide anonymity, given that we use new BTC address for every transaction?