51
The short answer is no. The long answer is split into three parts, each headed by a bold word.
I will talk about the existing privacy tools in Bitcoin.
I will talk about some pie-in-the-sky theoretical crypto which would achieve full anonymity (but which can't be done feasibly today).
I will talk about CryptoNote, its limitations, and feasible ways around ...
40
As I understand it, the "stealth address" is intended to address a very specific problem. If you wish to solicit payments from the public, say by posting a donation address on your website, then everyone can see on the block chain that all those payments went to you, and perhaps try to track how you spend them.
With a stealth address, you ask payers to ...
19
Short answer: yes, it will be anonymous
Long answer:
The following applies to all Cryptonote based coins, unless stated otherwise:
On the blockchain, all addresses are one time addresses. In Bitcoin, you are exhorted to not reuse addresses, but Monero enforces this. Every new transaction causes a new one time address to be generated, in such a way that ...
17
If your business partner knows your address, they can learn the transaction history and balance of that address. Often it is possible to guess or deduce that other addresses also belong to you, but this requires a bit more effort and is less reliable. However, this certainly doesn't translate to your complete wallet's balance and activity to be known.
This ...
15
If I'm sending someone my wallet-address, am I making my account balance visible to him?
Yes.
all transactions are public, means if I know the wallet address, I
can reconstruct the current account balance
Yes. All transactions of that address are in the blockchain, so they're public.
Owners of bitcoin addresses are not explicitly identified, but all ...
13
You can trace the coin back to its origin, the question is whether that information is meaningful.
Say I steal 50 bitcoin. I can pass them around between several different Bitcoin accounts, all mine, and you can trace them. The problem is, you don't know whether any of those transactions are real.
Say Jack has 50 bitcoins that come from a block reward and ...
12
That is accurate. Let me start explaining how Bitcoins work from the beginning:
Bitcoins are first created when they are mined by solving a block. The first transaction in the block is basically you saying "I'm giving myself 50 Bitcoins to my address A" (plus transaction fees from the block).
When you want to spend Bitcoins, you have to point to one or more ...
12
It is possible to trace Bitcoins all the way back to the blocks they were mined, although it might be a hard task. Similarly, one can also trace them back to any withdrawal from MtGox, as long as we know which transaction to look for. No matter how many times you send them from one address to another, it is still possible to trace them back to that ...
12
Alice wants to transfer 1 BTC from address A to address B
Bob wants to transfer 1 BTC from address C to address D
CoinJoin gives them a way to combine their transfers into a single transaction that has two inputs (A and C) and two outputs (B and D). Someone observing the blockchain no longer knows which one of the outputs is Alice's and which one is Bob's. ...
11
It inevitably leaks information, but Bloom filters have a (controllable) false-positive rate. So a wallet client that is very concerned with privacy could make the false positive rate high enough so it becomes hard to distinguish which transactions the client was interested in.
11
First of, I am a Monero core developer. I'll try to remain as factual and objective as possible, though.
Now, for the simple answer: use Monero
And for the longer answer: read Andrew Poelstra's very informative reply.
I would also add the following:
Zero-Knowledge Proof has several of fundamental issues that may not even be fixable (from the less ...
11
When Bitcoin was invented, Blockchain analysis was not as advanced as it was today and pseudonymous transactions were believed to be closer to anonymous than they are with Bitcoin today. Under the current Bitcoin system, privacy can be greatly improved by avoiding fiat entry/exit ramps connected to your identity and by avoiding reusing BTC addresses.
Yes ...
10
The only one I'm currently aware of is "Bitcoin Laundry" operated by Mike Gogulski. They charge a 4.555% commission rate and do little more than accept a payment then re-send a payment. There is also (according to the Wiki) that the service is only lightly used and might not be adequate to provide any real anonymity. You might be better sending then ...
10
I don't think the scenario is realistic because it would only punish innocent people. By the time coins could be marked as tainted, they would already be in the hands of innocent people. Governments don't do similar things with other currencies. For example, if you deposit dollar bills in a bank that turn out to have been stolen, the government could charge ...
10
This page on the bitcoin wiki explains the exact procedure for generating and using a stealth address. It's not very user friendly at this point in time and is considered experimental.
Simply:
Receiver generates a an address and a private secret and then sends
this address to someone who he wants payment from.
Sender uses the address and a "nonce"...
10
Let's assume you're the outside observer. You see 1 BTC go from aaa to bbb, then from bbb to ccc, then from ccc to ddd, and them from ddd to zzz (zzz being associated with service Z). Can you see how easy it is to figure out that addresses aaa, bbb, ccc, and ddd belong to the same person?
It doesn't even get much better if you split the money to different ...
9
Knowing the Wikileaks donation address, one knows every address
that contributed to them.
Knowing a given address we are interested in, we can try tracing the coins back to when they were created (which can be harder if they
were mined by a large pool, in that case you'd probably get a lot of
origin blocks).
Given an address we know when it received coins ...
9
As a peer:
You can derive the approximate location (GeoIP for IPv4, latencies and allocations for IPv6) unless the node is operating as a hidden service.
You can query the node for it's version number.
You can query the node for current date and time.
You can query some of the nodes recent connections with the addr host discovery mechanism, giving you ...
9
TCP and other stream based protocols do not have a 1-to-1 correlation of application level messages and IP packets. If you call send() 3 times, it might result in sending a single IP packet over the wire (eg, due to Nagle's algorithm which is enabled by default), it might get sent individually as 3 packets, as you would expect from a packet oriented protocol ...
8
There are ways to acquire and use Bitcoins anonymously. This article for example states:
install Tor and use it for all subsequent browsing steps
visit Instawallet to anonymously create a Bitcoin wallet
List $100 cash for sale on Silk Road Market
Mail the cash through any US Postal Service drop box
When the Silk Road bitcoin payment arrives, ...
8
Bitcoins are somewhat fungible, but not completely. It's like a family tree. You can't say "this bitcoin was at location Y 2 years ago" any more than you can say "Person X was 1000 years ago person Y". But you can say "This Bitcoin can be traced back to this transaction from 2 years ago" just like you can say "Person Y who lived 1000 years ago is an ancestor ...
8
All you need to do is send your bitcoins to MtGox and withdraw them to a new address. MtGox processes so many bitcoin deposits and withdrawals that you've very unlikely to get the same coins back, and so nobody (other than MtGox and anyone with access to their database) would be able to tie your deposit together with your withdrawal. Alternatively, make 2 ...
8
For privacy, Bitcoin relies on "pseudonymity", which means that the only way people can choose not to disclose their identity, is by making it hard to link addresses to people/businesses/....
Publishing an address publicly obviously makes you give up that privacy, but that's not a problem. everyone is free to choose so of course. The problem is that it also ...
8
There's a bigger attack surface for someone that wants to doxx you. They only need to link a single transaction to your real life person to know all the transactions you've participated in. A single payment to newegg, for instance, will identify you across all transactions.
Very few transactions are completely anonymous. But yes, if they're all completely ...
8
I'm pretty sure that all crypto payment processors that deal with fiat <-> cryptocurrency exchanges are doing AML/KYC routines including chain analysis. That's not only true for BitPay and Coinbase but Circle et al. too. As soon as you're trying to move value between crypto and fiat you're going to have to deal with different levels of privacy invasions ...
8
A deanonymizing dust attack works by sending dust to large amounts of addresses. The assumption is that when people send transactions/perform consolidations in the future, dust from multiple addresses will be grouped into a single transaction, thus revealing many addresses controlled by a single entity, since the dust would be swept in a single tx.
(this ...
7
Blockchain.info has recently started up a dedicated mixing service.
Send Anonymously with Blockchain
As they were offering bonus payouts at the start I sent money via the service and it was quickly forwarded to the correct account.
To confirm how they mix the coins and the amount of taint remaining you can check the source code on github.
Source code
7
The only reason why it is recommended to use a different address for every transaction, is for increased anonymity - it makes it more difficult to trace, and next to impossible to prove, that the recipient of transaction A is the same person as the recipient of transaction B.
If you publish an address to receive payments online, and keep it static, everyone ...
7
The other answers are correct, in that a mixed wallet can be used to hide tainted coins. However they miss an important point: the operator of the wallet service does have the knowledge required to trace the outbound transaction back to the original input coins, because both flows have to be associated with the wallet's internal representation of a customer ...
7
More accurately, the pseudonyms most commonly used are addresses, which are derived from public keys (not the longer public keys themselves).
In order for Bitcoin's idea to work, you must have coins that can only be spent by the owner of a given private key. This means that whatever you send to must be tied, in some way, to a public key.
Using arbitrary ...
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