On Mon, Jul 23, 2012 at 9:38 AM, ZeroState.net <info@zerostate.net> wrote:

Sounds interesting to me.

I was hanging out in the liminal space between jellyfish and cypherpunks, and we were talking about Bitcoins and how traceable they were given how complete the public transaction ledger has to be. We also discussed the research that's already been done on it (http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.ht...). Bitcoins can be divided up down to eight decimal places. Bitcoin addresses can be programmatically generated and used. Bitcoin clients can interact over IRC (though this is deprecated) and over the Tor network more or less automagically. Bitcoin clients can be interacted with by other programs to accept arbitrary commands (including sending fractions of Bitcoins elsewhere). There are also several Bitcoin tumblers out there already. My scenario was this: I want to launder a single Bitcoin so as to make it as difficult to trace back through the public ledger as possible. I am willing to sacrifice up to one quarter of its value (b 0.25) for this purpose but would prefer to not do so if I could get away with it. I have access to sufficient machines (virtual and otherwise) to run multiple Bitcoin clients and multiple custom-written agents that interact with them to carry out various tasks. I'm willing to accept up to a week of latency for each sub-bitcoin bundle. I am the C&C for this operation, though I use software I wrote myself to make it easier to manage everything. Now going into list mode to make it easier to lay out and comment on: I generate a new Bitcoin address for my b 1.0. I pseudo-randomly split my Bitcoin into thousands of sub-bitcoins valued between 0.00000001 and 0.0000001 but which total back up to b 1.0. I do this with some software I wrote that automates the process. I could probably do this with Python. On each of my servers I programmatically generate a pseudo-random number of single-use Bitcoin addresses. Let's say several hundred each though I might only use a small fraction of them. Afterward, all of them will be discarded. The temporary laundering wallet begins to distribute those thousands of sub-bitcoins between all of my confederate single-use Bitcoin addresses. The latency between each transaction is variable; to be practial, not more than a day, though it would be possible to take even longer. Some of those confederate addresses transfer sub-bitcoins to other single-use confederate addresses. Some accumulate a few sub-bitcoins (let's say b 0.00000006). Some of those confederate addresses transfer their aggregate sub-bitcoins to other confederate addresses (b 0.00000006). Some split those sub-bitcoins up into other denominations (b 0.00000001) (b 0.00000002) (b 0.00000002) (b 0.00000001) and transfer them to other confederate addresses. Some of those confederate addresses send their sub-bitcoins to some of the public tumblers, which eventually send them on to other confederate addresses. Here, value can be sacrificed to make it more difficult to trace where they go. Possibly, some of those confederate addresses accumulate sub-bitcoin bundles and purchase digital goods rather than re-sending them (like VM time, MP3s, or porn). Possibly, some of the addresses that digital goods are purchased from are mine anyway, which gives a convenient excuse for their dropping out of circulation for a while. This goes on for days. Eventually, as many sub-bitcoin bundles as possible (which themselves have been split and recombined and traded over and over) trickle back into a set of single-use Bitcoin addresses which I set up that collectively hold much of the value of my original b 1.0. The first thing that comes to mind is that this stunt would bloat the public ledger to an amazing size due to all of the addresses and transactions. That would honk a lot of people straight off. It could also potentially DoS the Bitcoin network by running up all of the disk space their public ledgers and debug.log files are kept on. The second thing that comes to mind is that the blockchain watchers (and there are apparently a lot of them - case in point, the discovery not too long ago of the address that controlled over a half-million bitcoins) will no doubtedly notice these shenagains and make a big deal of it. That would draw attention to my operation and would no doubt cause crowdsourced investigation, intelligence gathering, and analysis. Third, because all of these transactions would be in the public ledger they could eventually be mapped and traced back. I don't know if there would be any way of tracing all of these thousands of Bitcoin addresses back to a single individual or group; if at the end all of the fractional Bitcoins would back up in the same address they certainly would be. I'd be trying to mitigate that by using separate machines that interact with one another through a variety of communications channels. I'd also be trying to avoid that by maximizing rather than minimizing network latency ala anonymous e-mail remailers. This might wind up requiring prohibitive amounts of time. The downside to payment would be driving the seller the Bitcoins are being transferred to nuts. "I need you to be patient because I'm going to send you several thousand sub-bitcoin bundles between 0.0000001 and 0.0000010 in value each from several thousand burner addresses..." That would be like paying for dinner with buckets full of pennies, and at a minimum would be grounds for receiving an atomic wedgie. -- The Doctor [412/724/301/703] [ZS] https://drwho.virtadpt.net/ "I am everywhere." -- You received this message because you are subscribed to the Google Groups "ZS-P2P" group. To post to this group, send email to zs-p2p@googlegroups.com. To unsubscribe from this group, send email to zs-p2p+unsubscribe@googlegroups.com. For more options, visit https://groups.google.com/groups/opt_out. ----- End forwarded message ----- -- Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org ______________________________________________________________ ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org 8B29F6BE: 099D 78BA 2FD3 B014 B08A 7779 75B0 2443 8B29 F6BE