You definitely can, but without cooperation of the rest of the network, they will still be able to spend the money. If you could identify where the person re-spent the stolen coins, and found cooperative courts, you could try to go after them that way, but it's an uphill battle.

In Ethereum's DAO hack, tokens were also stolen, but they got lucky and the money wasn't spendable for a while (because of how the transaction/contract was written), so they were actually able to convince the entire network[1] to agree to reverse that theft as part of the protocol and recover the tokens that way.

[1] Minus a fragment that became EthereumClassic.

Think of 'owning' a bitcoin as 'having the ability to spend' this bitcoin.

This ability is guarded by a private key. If this private key is stolen, someone else ALSO has the ability to spend this bitcoin.

Then, if this attacker transfers this bitcoin to another of his own private keys (he 'spends' it), in the blockchain there will be a record, yes. But who owns this new private key is unknown.

Thanks that was very clear. Follow up question. Could criminals use bitcoin as a payment method for ransom ?

yes and they do.

all the ransomware in the news in recent year or two accepted bitcoin payment to decrypt your data.

Yes it is possible to check the history of a Bitcoin and see that it has been stolen. Provided that you take the effort to do that.

This is no different than when a bank is robbed and banknotes are stolen. The bank might have written down the numbers of the banknotes and those can be published. But most shops won't check those when somebody buys something.

With bitcoins, it is easier to track the notes, but it is also easier to get rid of the association if you find someone willing to clean them for you.

Say I steal 10 bitcoins from you. I go to someone who cleans bitcoins for a cost of 10%. I send them 10 bitcoins, and they send 1 bitcoin to 9 different wallets (keeping the 10th as payment). That alone would allow you to still track it. But now add in thousands of other people sending them bitcoins on the same day, and some random pauses as to when they send the bitcoins to other wallets, and you are no longer able to tell which bitcoins in are associated with which bitcoins out.

Now, do you just get businesses to stop doing business with anyone (any wallet) that has ever received bit coins from the mixer? And there are many mixers out there.

And this is still simplified. You can be governments are monitoring and running statistical analysis on those mixers to try to find people laundering bitcoins associated with especially bad things. I'd even guess some of the bitcoin laundering operations are ran by governments in an attempt to better track the flow of bitcoins.

Not doing business with mixers: wow, what an interesting way to stir up trouble! Someone should create a service to distinguish "legit" from "tainted" Bitcoin. Let's see if Gresham's law applies so 1 bitcoin is no longer 1 bitcoin. What would the other exchanges do if one of them started trading these separately?

It's important to distinguish two issues: (1) whether the currency is usable as currency and (2) whether there are forensic clues enabling law enforcement to identify criminals. They're completely separate questions.

The value of a dollar bill is the same whether it was used in a crime. But if it has some ink on it, it might provide evidence that the person holding it robbed a bank. The ink doesn't keep the dollar from being usable.

It has to be this way. Otherwise money simply gets taken out of circulation, and people participating in the economy have to worry about whether money is money.

More: https://www.reddit.com/r/Bitcoin/comments/1qomqt/what_a_land...

> This is no different than when a bank is robbed and banknotes are stolen. The bank might have written down the numbers of the banknotes and those can be published. But most shops won't check those when somebody buys something.

Well it's quite a bit different because everyone has access to the ledger where you can see what "bills" were stolen and can automatically prevent them from being used.

That's not how it works. Individual satoshis do not have a serial number. As soon as it goes through a mixer, you cannot definitively say which are stolen and which are legit.

Bitcoin's blockchain is just a ledger of amounts stored at addresses at points in time.

On a low level there are no "coins", just numeric amounts of smallest units of Bitcoin (satoshis) attached to outputs. Outputs have predicates (scripts) that allow the one who can satisfy the predicate to move amount in the output. Generally it's EC signature requirement but can be more complex. A transaction has also inputs that indicate which output do you want to claim and some data that satisfies the predicate (generally it's also a script but usually only data).

And yes, it's not possible to hide stolen Bitcoin. These addresses will be monitored forever. Think about what would happen if you stole some Bitcoin from the mafia and could not cash it. There are some services that can mix Bitcoin to hide their origin.

The problem is that the individual coins aren't tagged. It's not like cash where you could conceivably note the serial numbers of all the bills that were stolen. You can track the theft and see where the coins got sent, then see where those wallets sent additional coins, etc., but they'll soon get mixed up with legitimate coins (especially if the thief uses a mixer) and you won't be able to know which is which.

It would be possible to fork Bitcoin to reject the transactions used in the theft, thereby restoring the funds. This is what Ethereum did for the DAO hack. But so far, the Bitcoin community hasn't shown a willingness to do this.

Sure, and you can see that it has been stolen.

Yep, the real challenge now is how to spend it all without getting caught!

This is what I don't understand. If you can watch every transaction, is the key to successfully getting away with theft the ability to withdraw funds without being detected?

You can just pass it through mixers to anonymize it.

Input 1,000 different peoples coins, output any one of their coins one at a time. There's no way to know whose coins are coming out the other side.

https://en.wikipedia.org/wiki/Bitcoin_mixer

Something like that yes.

You can try to conceal your coins by sending to many addresses, using mixer services to switch your coins with someone else and then trade them often to other cryptocurrencies which makes them harder to track. I would personally try to trade them for Monero where you basically can't trace your transactions.

Gain access to someone's server, somehow convince it to sign a transaction that sends the BTC your way, done.

And with no way to reverse it there's no way to pull the balance back.