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This article is terrible honestly. Statements like "tracing a cryptocurrency that once seemed untraceable". Excuse me what? Who thought this? Idiots at three le

by shiado 4y ago

This article is terrible honestly. Statements like "tracing a cryptocurrency that once seemed untraceable". Excuse me what? Who thought this? Idiots at three letter agencies? Pedophiles and drug dealers? Here's what the Bitcoin whitepaper itself speculated. "As an additional firewall, a new key pair should be used for each transaction to keep them from being linked to a common owner. Some linking is still unavoidable with multi-input transactions, which necessarily reveal that their inputs were owned by the same owner. The risk is that if the owner of a key is revealed, linking could reveal other transactions that belonged to the same owner." And here's an early Bitcointalk thread. Traceability was discussed and acknowledged from the very beginning. https://bitcointalk.org/index.php?topic=241 https://bitcointalk.org/index.php?topic=241

kache_ 4y ago
If only there was a way to avoid bitcoins traceability problem? https://bitcointalk.org/index.php?topic=770.msg9074#msg9074 https://bitcointalk.org/index.php?topic=770.msg9074#msg9074 Ah, from satoshi himself! Group signatures. I wonder if someone implemented a protocol that does this? https://en.wikipedia.org/wiki/CryptoNote https://en.wikipedia.org/wiki/CryptoNote Aha!
- yjftsjthsd-h 4y ago
  Is that widely used? There's a world of difference between "theoretically possible" and "commonly used", and I'm not familiar enough to know which this is.
  - kache_ 4y ago
    monero implements the cryptonote protocol (with some additional innovations of its own) and as far as I can tell, it's pretty widely used https://bitinfocharts.com/comparison/monero-transactions.html#log&7y https://bitinfocharts.com/comparison/monero-transactions.htm...
skilled 4y ago
Surprised it took you that long. I was done at “they couldn’t have been more wrong”.
Aaronstotle 4y ago
Because of BTC's prominence on darknet markets, people who hadn't heard of it naively assumed it wasn't traceable. It's reasonable to assume that if you were purchasing illicit substances online, that the currency wouldn't be traceable, when it reality it was because no one really cared at the time for this new bitcoin thing. Keep in mind how most people don't read documentation for anything, let alone a whitepaper
- werber 4y ago
  I probably am not alone, but if I hadn't wasted money on drugs a decade ago and had just kept the bitcoin I would be a rich person. No one I know read a white paper back then, we just found the Wild West, snorted, shot and popped it up
  - ogma 4y ago
- xiphias2 4y ago
  I thought that all darknets moved away from BTC to more private digital currencies after they realized how easy it is to trace. I think Lex Friedman did interview with a drug dealer and he told this as well. At the same time I don't use Monero for example as I'm not a drug dealer and they are using really complex cryptography for me to verify and trust.
  - Aaronstotle 4y ago
    That seems largely correct, Monero came out in 2014, so I think it was a combination of law enforcement becoming more familiar with how to track BTC payments and markets realizing there's a better alternative. I think the fact that the U.S. Government put out a bounty for cracking Monero shows that it's working fairly well so far
    - anonporridge 4y ago
      The thing about monero, is that even if it is impossible to track today, all the transactions are still in the public blockchain, even if heavily obfuscated. It is quite possible that it eventually will be cracked and all historical transactions deobfuscated. Then it becomes as simple to track things down as bitcoin is today. If this ever happens, it could lead to a massive wave of crime resolution on par with what happened when DNA testing became cheap and ubiquitous. Because of this, when it comes to significant organized crime, physical cash and seedy banks like Chase and Deustche Bank are still king. Bitcoin is for people who don't mind living in the light.
Auracle 4y ago
I don’t understand why these types of markets don’t only take Monero. Privacy is the whole point of that coin, no?
- vmception 4y ago
  They do now. Governments know they have to act very decisively on these kinds of markets and activities because each time they act it galvanizes everyone to implement the more resilient technology. This is the antifragile nature that some proponents acknowledge and like. Before there is proof of a state action, forums go back and forth ad nauseum on what level of work and inconvenience is necessary. After there is proof of a state action, they just go ahead and implement the multisig escrow (making sure consumers and merchants can get their money even if the government seizes the servers, greatly increasing the costs for the government while lowering the bounty collected) privacy enhanced coins (like Monero), contribute to UI/UX improvements for making Monero easier to use, etc If you look at these darknet busts, the level of effort and coordination has gone up by orders of magnitude over the last decade while the amounts seized have gone down.
  - voldacar 4y ago
    What are the biggest and most reputable darknet markets currently? Do they still get taken down frequently? My understanding is that it's easy for state-level actors to unmask hidden service IPs through traffic correlation attacks
    - vmception 4y ago
      Not sure, the way I would find out is open Tor browser and go to dark.fail and then switch to the onion service version of the site (the browser might prompt you, but there should be one on dark.fail to copy and paste) Then just use that site like normal and it will have a list of popular onion services like the New York Times and Dread and also including darknet markets (DNMs) and their mirrors, and the liveness of those URLs Then I would go on Dread (if its up) and see what people are saying about any particular DNM, else I would find the darknet market subreddit to see if there is anything there, else find articles about current top markets. some last for so long and are still lasting that they're pretty reliable, so I would probably skip all this if I've still got credentials to one thats still up. its a hassle to sign up to some markets and some more secure ones so it thwarts my curiosity for just browsing those sites I'm fine with Tor browser, but if you actually want to buy things or download things or communicate with a vendor I would say stick with Whonix (or Tails if thats fine for you) because you need other apps and having Tor for all connections and other anonyming techniques at all times is better. (if you are going to a site with more objectionable content for even viewing, don't use Tor browser either. dark.fail doesn't list those)
jjulius 4y ago
>This article is terrible honestly. Statements like "tracing a cryptocurrency that once seemed untraceable". Excuse me what? Who thought this? Idiots at three letter agencies? Pedophiles and drug dealers? There's often a disconnect on HN between what HN users collectively know by virtue of this being their field of trade, and what the average non-tech person is aware of. It's this latter group of people that, by and large, as Bitcoin started to become popular, were under the impression that it was anonymous. Edit: It doesn't help that, as the article states, Satoshi even said, "Participants can be anonymous," back in 2008[1]. To your point, he did say this as he linked to the white paper you mentioned, but average users are less likely to read the white paper than we are. [1]https://www.metzdowd.com/pipermail/cryptography/2008-October/014810.html https://www.metzdowd.com/pipermail/cryptography/2008-October...
- hiq 4y ago
  > It doesn't help that, as the article states, Satoshi even said, "Participants can be anonymous" Am I nitpicking if I say that's actually true? Anonymous means "not identified by name; of unknown identity". Disguised people can also be anonymous. The fine print is that your disguise won't help you much when you go visit your family and you're subject to gait profiling.
- jacquesm 4y ago
  What interests me is that so many people discuss the same thing and still seem to come away with entirely different takes. You can be anonymous if you deal with BTC exclusively just as though you would with cash. But, and this is a very big but: if you use the same addresses repeatedly or if the addresses that you use can be linked and your identity can be tied to one of the addresses then all of your linked transactions are now no longer anonymous. So you're anonymous right up to the point that you aren't, and then it works retroactively on anything that can be tied to that same identity. Cash doesn't really have that property, and is therefore more anonymous than BTC, anonymity is in principle a boolean but there appear to be grades of anonymity when you start looking at it more closely. Anonymity as in 'the state of knowledge about an individual' vs 'anonymity, the level of anonymity that an individual can expect as the use of a particular method of payment' are two different concepts that we lump together as though they are the same thing.
Spooky23 4y ago
Factually inaccurate nonsense is a big part of the whole Crypto ecosystem. Many people held the opinion that these transactions were anonymous or quasi anonymous. The dumber among them are in prison.
- vmception 4y ago
  yeah even my accomplished professional colleagues will randomly (but predictably) make a quip about not reporting taxes just because they opened a Coinbase account, or finally moved a token onchain once. I don't think thats a crypto specific perspective, as there is this super large population in this country (USA) that only has the experience of their employer taking a big chunk of their money for the whole year and giving it to the government automatically, so a lot (most?) of that population thinks that any situation where they have something valuable on their own has no way of being known about for taxes. Crypto amplifies that myth to those people, when its just a total misunderstanding about how taxes and tax reporting works, and how the blockchain works, and what organizations already exist to specialize in watching the blockchain as well as trades at exchanges.
Tangokat 4y ago
The whole article is about A LOT of people thinking Bitcoin was untraceable. They staked their entire lives on it.
lordnacho 4y ago
It's non-trivial to go from a list of transactions to having a nicely indexed DB with convenient tools for investigating. It's correct that you can trace transactions through the blockchain, but in practice you need something like Reactor to be built and maintained. It's not going to be obvious to police, because the skill is a specialized thing in the domain of coders, and those coders have to have a reason to look at blockchain.
- robbedpeter 4y ago
  The police department will ask IT, they will Google it, and tell the cops to use one of the various commercial options used to deanonymize wallets and transaction trails. A credit card payment or trial sign-up later and if the service is any good, they'll have what they need. I'd put anything available to the general public in the "trivial" camp, even if the underlying tech is fantastically complex or difficult.
  - lordnacho 4y ago
    Can't say it's trivial if they actually needed a guy from the firm to work with them on this? I mean sure if there's some self service website then yeah. Keep in mind this is back in 2017 though, a lot of stuff has matured since.
wnevets 4y ago
> Who thought this? A lot of people I've talked (face to face) about crypto with
cyral 4y ago
Why does that make this article terrible? The criminals involved believed that Bitcoin was untraceable, as does your every day non-technical person, and the article explains how that isn't the case.
- civilized 4y ago
  Because software engineers are the main characters of the universe and everything must be written from their perspective.
hedora 4y ago
Everyone knows Bitcoin is for [catching] criminals. Some people missed one word in that sentence. :-)
TechBro8615 4y ago
It’s an ad [0] for Chainalysis. [0] https://www.paulgraham.com/submarine.html https://www.paulgraham.com/submarine.html
duxup 4y ago
> Who thought this? Everyone using it for criminal activity, and that’s a lot of people for whom it has been true.

by shiado 4y ago

kache_ 4y ago

If only there was a way to avoid bitcoins traceability problem? https://bitcointalk.org/index.php?topic=770.msg9074#msg9074 https://bitcointalk.org/index.php?topic=770.msg9074#msg9074 Ah, from satoshi himself! Group signatures. I wonder if someone implemented a protocol that does this? https://en.wikipedia.org/wiki/CryptoNote https://en.wikipedia.org/wiki/CryptoNote Aha!

yjftsjthsd-h 4y ago
Is that widely used? There's a world of difference between "theoretically possible" and "commonly used", and I'm not familiar enough to know which this is.
- kache_ 4y ago
  monero implements the cryptonote protocol (with some additional innovations of its own) and as far as I can tell, it's pretty widely used https://bitinfocharts.com/comparison/monero-transactions.html#log&7y https://bitinfocharts.com/comparison/monero-transactions.htm...

skilled 4y ago

Surprised it took you that long. I was done at “they couldn’t have been more wrong”.

Aaronstotle 4y ago

Because of BTC's prominence on darknet markets, people who hadn't heard of it naively assumed it wasn't traceable. It's reasonable to assume that if you were purchasing illicit substances online, that the currency wouldn't be traceable, when it reality it was because no one really cared at the time for this new bitcoin thing. Keep in mind how most people don't read documentation for anything, let alone a whitepaper

werber 4y ago
I probably am not alone, but if I hadn't wasted money on drugs a decade ago and had just kept the bitcoin I would be a rich person. No one I know read a white paper back then, we just found the Wild West, snorted, shot and popped it up
- ogma 4y ago
xiphias2 4y ago
I thought that all darknets moved away from BTC to more private digital currencies after they realized how easy it is to trace. I think Lex Friedman did interview with a drug dealer and he told this as well. At the same time I don't use Monero for example as I'm not a drug dealer and they are using really complex cryptography for me to verify and trust.
- Aaronstotle 4y ago
  That seems largely correct, Monero came out in 2014, so I think it was a combination of law enforcement becoming more familiar with how to track BTC payments and markets realizing there's a better alternative. I think the fact that the U.S. Government put out a bounty for cracking Monero shows that it's working fairly well so far
  - anonporridge 4y ago
    The thing about monero, is that even if it is impossible to track today, all the transactions are still in the public blockchain, even if heavily obfuscated. It is quite possible that it eventually will be cracked and all historical transactions deobfuscated. Then it becomes as simple to track things down as bitcoin is today. If this ever happens, it could lead to a massive wave of crime resolution on par with what happened when DNA testing became cheap and ubiquitous. Because of this, when it comes to significant organized crime, physical cash and seedy banks like Chase and Deustche Bank are still king. Bitcoin is for people who don't mind living in the light.

Auracle 4y ago

I don’t understand why these types of markets don’t only take Monero. Privacy is the whole point of that coin, no?

vmception 4y ago
They do now. Governments know they have to act very decisively on these kinds of markets and activities because each time they act it galvanizes everyone to implement the more resilient technology. This is the antifragile nature that some proponents acknowledge and like. Before there is proof of a state action, forums go back and forth ad nauseum on what level of work and inconvenience is necessary. After there is proof of a state action, they just go ahead and implement the multisig escrow (making sure consumers and merchants can get their money even if the government seizes the servers, greatly increasing the costs for the government while lowering the bounty collected) privacy enhanced coins (like Monero), contribute to UI/UX improvements for making Monero easier to use, etc If you look at these darknet busts, the level of effort and coordination has gone up by orders of magnitude over the last decade while the amounts seized have gone down.
- voldacar 4y ago
  What are the biggest and most reputable darknet markets currently? Do they still get taken down frequently? My understanding is that it's easy for state-level actors to unmask hidden service IPs through traffic correlation attacks
  - vmception 4y ago
    Not sure, the way I would find out is open Tor browser and go to dark.fail and then switch to the onion service version of the site (the browser might prompt you, but there should be one on dark.fail to copy and paste) Then just use that site like normal and it will have a list of popular onion services like the New York Times and Dread and also including darknet markets (DNMs) and their mirrors, and the liveness of those URLs Then I would go on Dread (if its up) and see what people are saying about any particular DNM, else I would find the darknet market subreddit to see if there is anything there, else find articles about current top markets. some last for so long and are still lasting that they're pretty reliable, so I would probably skip all this if I've still got credentials to one thats still up. its a hassle to sign up to some markets and some more secure ones so it thwarts my curiosity for just browsing those sites I'm fine with Tor browser, but if you actually want to buy things or download things or communicate with a vendor I would say stick with Whonix (or Tails if thats fine for you) because you need other apps and having Tor for all connections and other anonyming techniques at all times is better. (if you are going to a site with more objectionable content for even viewing, don't use Tor browser either. dark.fail doesn't list those)

jjulius 4y ago

>This article is terrible honestly. Statements like "tracing a cryptocurrency that once seemed untraceable". Excuse me what? Who thought this? Idiots at three letter agencies? Pedophiles and drug dealers? There's often a disconnect on HN between what HN users collectively know by virtue of this being their field of trade, and what the average non-tech person is aware of. It's this latter group of people that, by and large, as Bitcoin started to become popular, were under the impression that it was anonymous. Edit: It doesn't help that, as the article states, Satoshi even said, "Participants can be anonymous," back in 2008[1]. To your point, he did say this as he linked to the white paper you mentioned, but average users are less likely to read the white paper than we are. [1]https://www.metzdowd.com/pipermail/cryptography/2008-October/014810.html https://www.metzdowd.com/pipermail/cryptography/2008-October...

hiq 4y ago
> It doesn't help that, as the article states, Satoshi even said, "Participants can be anonymous" Am I nitpicking if I say that's actually true? Anonymous means "not identified by name; of unknown identity". Disguised people can also be anonymous. The fine print is that your disguise won't help you much when you go visit your family and you're subject to gait profiling.
jacquesm 4y ago
What interests me is that so many people discuss the same thing and still seem to come away with entirely different takes. You can be anonymous if you deal with BTC exclusively just as though you would with cash. But, and this is a very big but: if you use the same addresses repeatedly or if the addresses that you use can be linked and your identity can be tied to one of the addresses then all of your linked transactions are now no longer anonymous. So you're anonymous right up to the point that you aren't, and then it works retroactively on anything that can be tied to that same identity. Cash doesn't really have that property, and is therefore more anonymous than BTC, anonymity is in principle a boolean but there appear to be grades of anonymity when you start looking at it more closely. Anonymity as in 'the state of knowledge about an individual' vs 'anonymity, the level of anonymity that an individual can expect as the use of a particular method of payment' are two different concepts that we lump together as though they are the same thing.

Spooky23 4y ago

Factually inaccurate nonsense is a big part of the whole Crypto ecosystem. Many people held the opinion that these transactions were anonymous or quasi anonymous. The dumber among them are in prison.

vmception 4y ago
yeah even my accomplished professional colleagues will randomly (but predictably) make a quip about not reporting taxes just because they opened a Coinbase account, or finally moved a token onchain once. I don't think thats a crypto specific perspective, as there is this super large population in this country (USA) that only has the experience of their employer taking a big chunk of their money for the whole year and giving it to the government automatically, so a lot (most?) of that population thinks that any situation where they have something valuable on their own has no way of being known about for taxes. Crypto amplifies that myth to those people, when its just a total misunderstanding about how taxes and tax reporting works, and how the blockchain works, and what organizations already exist to specialize in watching the blockchain as well as trades at exchanges.

Tangokat 4y ago

The whole article is about A LOT of people thinking Bitcoin was untraceable. They staked their entire lives on it.

lordnacho 4y ago

It's non-trivial to go from a list of transactions to having a nicely indexed DB with convenient tools for investigating. It's correct that you can trace transactions through the blockchain, but in practice you need something like Reactor to be built and maintained. It's not going to be obvious to police, because the skill is a specialized thing in the domain of coders, and those coders have to have a reason to look at blockchain.

robbedpeter 4y ago
The police department will ask IT, they will Google it, and tell the cops to use one of the various commercial options used to deanonymize wallets and transaction trails. A credit card payment or trial sign-up later and if the service is any good, they'll have what they need. I'd put anything available to the general public in the "trivial" camp, even if the underlying tech is fantastically complex or difficult.
- lordnacho 4y ago
  Can't say it's trivial if they actually needed a guy from the firm to work with them on this? I mean sure if there's some self service website then yeah. Keep in mind this is back in 2017 though, a lot of stuff has matured since.

wnevets 4y ago

> Who thought this? A lot of people I've talked (face to face) about crypto with

cyral 4y ago

Why does that make this article terrible? The criminals involved believed that Bitcoin was untraceable, as does your every day non-technical person, and the article explains how that isn't the case.

civilized 4y ago
Because software engineers are the main characters of the universe and everything must be written from their perspective.

hedora 4y ago

Everyone knows Bitcoin is for [catching] criminals. Some people missed one word in that sentence. :-)

TechBro8615 4y ago

It’s an ad [0] for Chainalysis. [0] https://www.paulgraham.com/submarine.html https://www.paulgraham.com/submarine.html

duxup 4y ago

> Who thought this? Everyone using it for criminal activity, and that’s a lot of people for whom it has been true.