http://bitcoin.org/bitcoin.pdf
Bitcoin transactions turned out to be a great deal less private than that, because separate transactions from the same wallet can be linked via the change outputs (unlike separate trades on a ticker tape).
Anonymity and protection from the Big Bad Government were definitely talking points used by many cryptocurrency enthusiasts. "It can't be banned and can't be seized", rings a bell? Except of course if the Big Bad Government comes knocking at your door and tells you to hand your wallet over "or else".
This part is sort of true. A government can ban fiat <-> BTC conversion but there isn't really a way to stop people from providing services in exchange for BTC.
Bitcoin is more anonymous than a bank transaction. If I buy something with a credit card, they have my credit card number that is easily linked to me. With Bitcoin it is less easy. Unfortunately with Bitcoin once you have been 'revealed' then your transaction 'graph' is then revealed in the public, whereas the credit card doesn't have that problem.
It depends who you want to be anonymous from. Governments can easily get bank transactions, and also they can investigate bitcoin-based crime and then just trace the public ledger.
Businesses will not easily get bank transactions or map general bitcoin addresses to people, but if you use a credit card you tend to have to give them a lot of other matching information such as your name and address, whereas with bitcoin you don't need to give them anything. Assuming there is no delivery involved it can be pretty anonymous. But again if they did happen to pattern match (maybe they have another customer who you have dealt with too) they could join some dots.
But to be safe it's best to assume Bitcoin is not anonymous and that anyone can find out eventually where you have spent your money.
I never trusted the mixers personally. But it was a hot debate item a few years back whether or not law enforcement could track transactions through a mixer.
Its always been my firm belief that a mixer was just automated money laundering and probably puts you up for legal scrutiny as well. But we'll see how the FBI decides to handle those...
The idea that your transactions are mixed up and impossible to track doesn't matter so much if they just assume everybody who uses a mixer is a criminal.
You aren't tracking coins with the ledger, only totals. So address A can have 10 btc, tumbler adds 5 to A, then A transfers 5 to B, 5 to C. If C is an exchange, does it consider that A is still holding 5 tumbled coins? Or does it say B has the tumbled coins? Or does it reject A's offer of 5? Feel free to shift values such as A having 100 BTC, receiving 0.01 tumbled BTC, & wanting to send 1 BTC to exchange
Also hard to track something like A sending tumbled coins to B, which triggers the owner of B to have C send non tumbled coins to D. You can even have this service offered at an exchange rate, so D receives less than B did
A harder solution only allows them to withdraw up to the number of coins you can verify were not tumbled. So if some malicious tumbler deposits 0.000001 coin in your wallet you can convert all but 0.000001 of your wallet's value at an exchange.
Also, there are other ways of coorelating transactions such as tracking BTC -> XMR amounts and soon-thereafter XMR -> BTC amounts (minus fees)
Why use monero unless you wanted to hide your transactions? Hiding your transactions is literally illegal in the USA (its called money laundering).
Presumably, the FBI will be able to automatically determine if your BTC came from a Monero exchange.
As for the fbi consdering monero a "money laundering scheme" in the future. They can outlaw it, I guess, but it's like trying to outlaw video and music piracy, it's hard to do in practice.
How does "bisq" provide anonymity to its users? If you're trading BTC, your wallets are still being connected to each other and provably written into the blockchain for all of eternity. Same with Ethereum and other "mainstream" cryptocoins.
If the FBI only cares about "anonymous" coins, like Monero, and ONLY targets those, then all payment processors would "taint" Monero wallets (or any BTC coins which ever touched a Monero-related wallet), and refuse to process them.
Its really not that hard for Monero (or any other minority-coin) to be shut out of the payment processor market and relegated to black-market goods.
What is the purpose of mixing the coins? You only help criminals. Gray-market goods (ex: legal pornography) are already solved by the traditional BTC network without anonymity.
Between KYC (Know your Customer) and other such laws in the USA, it is clear to me that anonymizing your transactions is very much frowned upon by the powers that be. If anything, fully transparent and trackable BTC "in the open" has numerous advantages with regards to being a "good citizen".
And there are legitimate reasons to use monero and bitcoin. Sending money to family in countries such as china, iran, and venezuela is one. Another use is legitimiate "adult entertainment" sites where people don't want their sexual fetishes appearing on a credit card or ending up on a blockchain somewhere where the public can see.
Have you ever actually purchased adult entertainment on a credit card? They are inconspicuous companies that don't exactly flag what fetish you're into. At worst, you get a cover-company that doesn't actually match up to the website name. I dare say that this is a solved problem in the credit-card world.
Worst case scenario: buy Visa / AmEX gift-cards with cash and use that to fund your porn-stash. If you really have someone watching over your credit-card statements that you're worried about. There are very simple means of avoiding the problem in the traditional credit-card world. If credit-cards are available, then no form of cryptocoin is necessary for any kind of anonymity or protection.
> And there are legitimate reasons to use monero and bitcoin. Sending money to family in countries such as china, iran, and venezuela is one.
No, at best, that's a reason to use BTC. No reason to use Monero yet. And furthermore, using BTC to avoid local currency laws is going to probably put you up to scrutiny by the local authorities.
I don't think the US cares about sending money abroad... but China probably cares if you're avoiding their Yuan -> USD restrictions or creating a secondary market to trade Yuan / USD.
When I read stories about "people getting caught using bitcoin", I am baffled as to why they don't do this.
should have used monero
There is a reason that many darknet markets have it as an option and some use it exclusively
Gotta say though, this is one of the few times I'm glad to see someone too stupid to use proper anonymization tools.
There already have been indictments that happened to involve finding a Monero wallet on a seized computer and the state was unable to discern any information about the current balance or transactions accompanying it
Again this would be another culprit busted because of their known bitcoin transactions, and the other wallets were just found alongside. So it doesn't prove or disprove that starting with a Monero transaction would net results, but it provides an ongoing and improving degree of confidence.
Of course it remains to be seen if it really works if some three-letter organization really wants to figure out who you are.
There have been academic 'attacks' on the monero cryptocurrency, but nothing usable in the real world.
As an individual, I can't stop the NSA if they are genuinely out to get me. All I can do is increase the cost enough that random bureaucrats have to get up from their computer, sign a form, and expend some money to do so.
So in its current state, ISPs would only know what someone has launched a Monero wallet at some point in time. Using Monero is completely benign.
In its also current but also upcoming state, Monero clients automatically connect to TOR or I2P. So a Monero node would not know your IP address and an ISP therefore would not either.
Monero exchanges are merely Monero clients, and a Monero client knows its own address, and it knows the address the sender told it to send to which would be the receiver. But neither of these addresses are ever seen on the blockchain, and the receiver's Monero client does not know which address sent to it.
Since the receiver's client doesn't reveal which address sent to it, and there is no passive blockchain sleuthing possible, and the nodes don't see any of this either, there is very little the FBI could do if users are following best practices which are the default behaviors of this network.
Non-default behavior would be users that rely on exchanges exclusively: they send their 2 Monero from one exchange to another exchange. Exchange 1 is an account that belongs to the user, and it knows the address of Exchange 2. Exchange 2 is an account that belongs to the user, and it only has the same balance and transaction id as Exchange 1's send. The FBI happened to have subpoena'd both exchanges and found the same transaction id. Improbable now, but it could happen anytime in the future.
When the user adds their own Monero client into the mix (exchange 1 - client - exchange 2, + time + different amounts), this gets exponentially more difficult as you already need access to the user, the subpoena, and their Monero client. There are many barriers to getting that, especially in the face of benign economic activity, and the blockchain itself doesn't help.
You also aren't supposed to re-use addresses. This is true for Bitcoin and all cryptocurrencies. It means that an exchange wouldn't even know if you were sending to yourself, one of your other wallets, to a vendor to pay someone, or what. With Monero none of those recipients know who sent to them.
This is a hacker site. Is the most important point in the article that the Feds traced Bitcoin transactions to nab criminals, or that extensive child-porn rings exist? Only one of those is hacker-newsworthy.