> But if I was a local drug kingpin in Baltimore, or a corrupt mid-level CCP official, or a Cypriot corporate money launderer, then Bitcoin deanonymization is probably a small risk in the scheme of things. Certainly orders of magnitude less risk than using the traditional banking system.
... for now.
The thing is, 2-3 tx/sec is basically snail mail. That's such a small number of transactions that there's not even a forest to hide within.
As the analytics tools improve the de-anonymization will be faster and more automatic, and that "tens of millions" figure will dwindle down to pennies. State actors can easily combine that data with actual fiat, and you'll be in court before you know it.
The problem is you're committing a ledger of your criminal activity to the cloud forever, and CCing your attorney general, smirking that they'll never figure it out. Of course they will. Either they'll figure it out or ban it. Or both.
It bears repeating explicitly I think: you're not working against today's analysis tools, you're working against whatever analysis tools exist far into the future, since everything is recorded for eternity.
From what I've seen, success in this industry is predicated upon planning, caution, and constantly thinking of ways that people are going to screw you over.
If your first thought when making decisions was "what won't send me to prison" you probably wouldn't be engaging in criminal enterprise in the first place.
Most people who break the law do so because they either don't consider the consequences or accept the rewards as justifying the risks. And plenty of criminals go to prison because they judged wrong. That those who are successful for long periods of time buck this trend is just survivor bias.
Well, it's true that the official manual contains mostly short-term, actionable recommendations, but some of them do have the goal of avoiding long-term consequences.
These can be changed and you can be charged under other crimes which may have different statue of limitations. When the government decides they want you in prison, it doesn't particularly care how it does so. Tax evasion, drug trafficking, funding terrorism, CSA changes, weapons smuggling, or RICO or country equivalent, they'll use which ever seems easiest to get you.
For a buyer, this isn't as big of a deal because you won't have that level of target on your back, but for anyone running a marketplace I don't think statute of limitations will protect you once they figure out who you are.
Even in the ancient Silk Road you could sell contraband effectively using internal, offchain transactions only. The customers pay using offchain transactions using the market, and the vendor can cash out via some trader in the same market.
Basically, if you dont want to deal with the onchain transactions, you could sell the risk of that to someone else and only deal in internal offchain transactions. Dont know if this actually happens though.
Are you sure you understand the content of the link you shared? It’s talking about a hypothetical legal framework, not actually concretely descrambling the input and outputs of a mixer service.
It doesn't matter how good your technical solution is if the law says that the scrambling doesn't matter.
The threat being considered in this thread is a future crackdown on bitcoin and how the blockchain may be used against bitcoin owners. Legal threats seem very relevant.
I don't think people appreciate the fact that government agencies have the cheat codes to the server of life.
While some will try to do everything the legal way, the the wily people who believe they are getting away on some kind of technicality sometimes find themselves charged with a different crime, or maybe just unlucky after a pre-dawn police raid or traffic stop goes south.
So let's say your name is Paul. In this scenario, I steal your bitcoin. I go over to a gold seller named Peter and use your bitcoin to buy gold. You report your bitcoin stolen. The guy who sold me gold owes you bitcoin, but I don't. Effectively I have simply robbed Peter.
Nah in the real world code isn't law. They'll do what they do with stolen cash. They confiscate it, and create a liability on the person who gave it to you. Or squeeze you both.
My read on the article is that they're considering two different frameworks: one where everything that comes out of the mixer is considered fractionally dirty based on the inputs. Or, randomly picking an output and tainting it 100% under the "FIFO" method.
The idea isn't necessarily to de-anonymize the transactions here but to disincentivize people from using mixers. Either a haircut kills a portion of your value, or you lose it all, the idea is you won't do that again.
That doesn't change that legally it still kills all your money, and creates a liability on the person who put in the dirty money. If you figure out who they are it's all you, you're welcome to sue them. If not, you've learned a hard lesson.
Again, the whole problem is that the bad actor can pass off their stolen bitcoin before anyone knows its tainted. So it doesn't matter if you didn't use a mixer, if that bitcoin ever went through a mixer it could potentially be a live hand grenade. People could just mix large numbers of bitcoin periodically so everything is suspect.
You're not solving the problem, you are just introducing new problems that affect other people in the hopes that the entire system becomes unworkable.
In much the same sense that you could abandon your house when you have termites: you're not solving the problem, you're just avoiding it in an incredibly inefficient manner.
Still if you are a corrupt mid-level CCP official you can just say send a bitcoin to account xyz and there's no way of knowing who owns that unless the money is transferred out to something identifiable. It's like Satoshi's bitcoins. There they are on the chain but you can't tell who controls them from that.
The Lightning Network literally exchanges Bitcoin transactions that are withheld from being broadcasted on-chain until channel closure. Bitcoins exchanged via the Lightning Network are just Bitcoins. Saying they are a different kind of "IOU" or token is a lie often employed by alt-coiners trying to push a "Layer 1-only"-Bitcoin fork (e.g. BSV).
The security in the Lightning Network doesn't come from settling on-chain after a transaction happened but from signing over all your money in a Lightning Network channel to the other party should somebody catch you cheating.
The real lie is saying that LN transactions are "just Bitcoins".
They are unconfirmed transactions and there are many ways of losing your funds compared to confirmed ones. Such as having your harddrive corrupted and your node trying to propagate an old state.
Unconfirmed Bitcoin transactions are still Bitcoin transactions, with the advantage that on the Lightning Network you have a built-in protection against doublespends in contrast to accepting 0-conf tx.
You are correct that funds in a Lightning Network wallet are at higher risks than those in a cold wallet, but this applies to all "hot" crypto wallets. Most LN wallets supports "Static Channel Backups" which you only create and store once after setting up a channel. In case your phone goes up in flames, you can use it to safely close your channels and receive your balance.
Nobody is going to accept this as payment for something illicit. They know you've seen the private key. They have no reason not to assume you have something set up to sweep the wallet as soon as they accept the "payment."
“Opendime is a small USB stick that allows you to spend Bitcoin like a dollar bill. Pass it along multiple times. Connect to any USB to check balance. Unseal anytime to spend online. Trust no one.”
... for now.
The thing is, 2-3 tx/sec is basically snail mail. That's such a small number of transactions that there's not even a forest to hide within.
As the analytics tools improve the de-anonymization will be faster and more automatic, and that "tens of millions" figure will dwindle down to pennies. State actors can easily combine that data with actual fiat, and you'll be in court before you know it.
The problem is you're committing a ledger of your criminal activity to the cloud forever, and CCing your attorney general, smirking that they'll never figure it out. Of course they will. Either they'll figure it out or ban it. Or both.