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Researcher Spots a Drug Buy In Bitcoin's Blockchain

timothy posted about a year ago | from the press-one-if-you-have-used-our-system-before dept.

Bitcoin 78

Sparrowvsrevolution writes "It should come as no surprise to Bitcoin users that despite the pseudonymity the cryptocurrency offers, its transactions can be tracked. But University of California at San Diego researcher Sarah Meiklejohn proved that privacy problem more clearly than ever by showing a reporter that she could detect a specific point in Bitcoin's blockchain record of transactions where he had spent Bitcoins in exchange for marijuana on the Silk Road, the most popular online Bitcoin-based black market for drugs. To simulate a law enforcement subpoena, the reporter for Forbes began by giving Meiklejohn a Bitcoin address associated with Forbes' account. But with just that information, Meiklejohn was able to draw on a "clustering" analysis she had performed to identify Silk Road addresses and match them with the one used in the .3 BTC drug buy. She admits that a user who took more efforts to obscure his or her Bitcoin address through a laundering service or other unidentified Bitcoin wallets would be harder to track."

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Hey Bud! (4, Funny)

Sponge Bath (413667) | about a year ago | (#44796151)

All I need are some tasty waves, a cool buzz, anonymous currency and I'm fine. -- Jeff Spicoli

Re:Hey Bud! (4, Funny)

Chrisq (894406) | about a year ago | (#44796171)

let me fix that for you

All I need are some tasty waves, a cool buzz, anonymous currency and I'm fined. -- Jeff Spicoli

Re:Hey Bud! (2)

Jane Q. Public (1010737) | about a year ago | (#44799017)

"All I need are some tasty waves, a cool buzz, anonymous currency and I'm fine. -- Jeff Spicoli"

As the article admits, right at the beginning: an address does not necessarily point to an individual.

This only shows that somebody using that address made that buy. It's evidence, but not very strong evidence.

Example: I run an open guest network. Anybody within a square block or even more could have been using my access point to make those transactions.

Re:Hey Bud! (1)

N3x)( (1722680) | about a year ago | (#44837981)

That's not what address means in a bitcoin context. An address is more like an account, and if random people are using your account then you probably lose your money. The problem lies in proving who has the keys to that specific account and to do that you probably need direct access to the keyowners computer. And the smart ones keep their keys encrypted on offline computers.

But what (-1)

Anonymous Coward | about a year ago | (#44796163)

But what has that got to do with nigg... Oh wait drugs!

this is part of the protocol (4, Insightful)

stewsters (1406737) | about a year ago | (#44796165)

A cryptocurency where everyone has a record of every transaction can be used to find a transaction between twoknown addresses? Is anyone surprised?

obvious to you and me (1)

circletimessquare (444983) | about a year ago | (#44796521)

but you're talking about people who also use tor to hide activity from the government

(if you don't understand the irony, you don't know anything about tor's history and original purpose)

Re:obvious to you and me (0)

Anonymous Coward | about a year ago | (#44807355)

Maybe you could make a movie about hiding zombies. That would be great.

pseudonymous vs. anonymous (5, Insightful)

DrYak (748999) | about a year ago | (#44796679)

Indeed, you're right: lots of idiots seem not to grasp the difference between "Pseudonymous" and "Anonymous".

And don't understand the whole purpose of bitcoin (although it's usually clearly stated on all promotionnal material).

Bitcoin isn't done to be hidden and secret. (Nobody could know about a transaction beyond the two transacting parties). In fact that's the exact opposite: bitcoin are broadcasted widely accross the whole network, so the whole network works as a trusted witness of the transaction and no single malevolent entity could fake or falsify transaction (unless they control at least 51% of the whole network, which is rather difficult due to the computing power deployed by all mining participant).

Bitcoin simply doesn't dirrectly advertise actual full name and identifications for each transaction, bitcoin simply attaches a (still traceable - and thus most importantly for the whole service - still verifiable) public key to each transaction.

Bitcoin is done to be *out-of-reach* / *out-of-control*. Yes, it's not impossible to track down the identities behind a transaction. BUT even if government got the names, it can't go and knock at some banks door with order to freeze accounts. There are no accounts, there are no banks. Nobody can't force anything nor falsify anything (at least not without the necessary 51% control mentionned above. Which is currently even out of reach of the NSA). There's no goverment who could suddenly start manipulating exchange rates/inflation/etc.

Bitcoin has been designed so there's nothing that could be done beyond what the 2 participant of a transaction decide.

Don't use Bitcoin to hide. Use bitcoin to be the only in charge with what happens with your money.

Re:pseudonymous vs. anonymous (1)

Anonymous Coward | about a year ago | (#44798461)

There is the rub: FinCEN knows who is using the currency at all times by the way things are broadcast. Right now, not many people are having doors kicked down, but in theory, it is good enough proof to start arrests, or at the minimum start investigations.

So far, other than the "ooo, cool" aspect, I've not seen anything that makes BitCoin better than just using PayPal. BitCoins have major swings in value [1], there is no anonymity involved, and using BitCoins is like firing a signal flare to any LEO down to the country dogcatcher that one is doing something suspicious.

Of course, in the US, there is the IRS, and eventually they are going to step in, just like they did when people started bartering, or when Beenz and Flooz were trying to take off.

Instead, what I would love to see in an Internet currency is a Chaumian currency (truly anonymous with blinding factors.) It also has issues that BitCoin does [2]. However, years down the line, one doesn't get their door kicked in and have to answer to some transaction done in the past.

[1]: This is great because people can manipulate this -- cash out one's coins, attack an exchange, causing the value to drop through the floor, cash in at a low price, wait until BitCoins are worth something again, repeat. There is no regulation, so a medium sized criminal organization could, (pardon the pun) make out like bandits with this method.

[2]: The age old issue of double-spending. Spend a unit of currency at an offline place, then spend the same unit at one place online. When the offline place goes to reconcile with exchanges, they are SOL.

Re:pseudonymous vs. anonymous (1)

Archangel Michael (180766) | about a year ago | (#44799911)

Pseudonyms are easy to create.

Anonymous is hard to maintain.

They are not equivalent, nor are they related. However, people believe that because Pseudonyms are easy to create that it permits a certain level of Anonymity. However anyone confusing the two needs to be educated.

For BitCoins to be useful, anonymously, one would have to use one time wallets, with random disposable public IP addresses, with coins that have been washed in a public coin laundry. All of this is neither easy nor convenient, but it is possible to remain "anonymous".

Re:pseudonymous vs. anonymous (2)

Vintermann (400722) | about a year ago | (#44800243)

it is possible to remain "anonymous".

Not if you buy anything meaningful. If both parties in a trade are fully anonymous, and there is no intermediary, trust cannot exist. Either the buyer can avoid paying for the goods, or the seller can avoid actually delivering them.

(If I recall correctly, there may be some extremely few information goods which can be securely sold in this manner, namely proofs of hard mathematical statements. Then you can mess around with blind signatures and zero-knowledge proofs. But the most advanced people have managed to get out of that is decentralized mixing services [bitcoin.it] , which is essentially what zerocoin is. Mixing services are economically unsound, so this won't have any impact.)

Now, if you conduct multiple trades there can be some limited trust (if we overlook the question of why anyone should trust you the very first time). But at that point, you've abandoned anonymity and settled for pseudonymity.

Re:pseudonymous vs. anonymous (0)

Anonymous Coward | about a year ago | (#44800067)

There are lots and lots of bitcoin users who think they can stay anonymous despite

1. Buying bitcoin at public exchanges, where the coin they buy is nicely linked to their bank account and identity
2. Then going on to use that coin to have drugs shipped to their address.

If only one of these was true, you could perhaps count on some plausible deniability:

1. "No, I don't have those coins anymore so I don't need to pay asset tax on them... I gave them to account LQ3B36Yv2rBTxdgAdYpU2UcEZsaNwXeATk. Uh, that's a friend. Actually I don't know who it is."
2. "I didn't order those drugs! Some asshole must have done it in my name to get me in trouble!"

But when both are true, you're in trouble.

Re:pseudonymous vs. anonymous (0)

Anonymous Coward | about a year ago | (#44803537)

Bitcoin is done to be *out-of-reach* / *out-of-control*.

Unfortunately all bitcoin transactions are done by network connected endpoints that can be reached and controlled. There's nothing to stop a government agency or criminal with a zero-day from taking over those endpoints and monitoring/creating/deleting/hiding any active bitcoin transaction they like. Harder to hide archived transactions but still possible on the machines that have been compromised.

Requires hacking vs. (1)

DrYak (748999) | about a year ago | (#44806073)

There's nothing to stop a government agency or criminal with a zero-day from taking over those endpoints and monitoring/creating/deleting/hiding any active bitcoin transaction they like.

The fundamental difference between decentralized crypto-currencies like bitcoin and absolutely every other form of currency, is the absence of central control.
Yes the could hack into your computer. But that would *require* hacking into the computer (which nonetheless would also be pretty much illegal under lots of jurisdiction in the absence of a whole mandate paperwork. And even if the likes NSA and co might still be doing it, there are still going for trouble once exposed).
Whereas dollars, euros, yens, swiss francs, etc. and credit cards, debit accounts, etc. can be directly manipulated at the bank level without your involvement, in a completely legal and normal way.

Take the "wallet" metaphore:
- with bitcoins, the only way to do anything would be to steal your wallet. It works as if you had gold coins / precious stones in your wallet.
- with anything else: your card could get blocked *by the credit card company*, your accounts linked to your debit card could be *frozen by the banks*, and the whole value of the bills and coins could get (and in fact are regularly victims of) inflation, devaluation, and other forms of currency manipulation by the central bank (which start printing more bills to get itself out of debt, and similar). All this happens without the wallet ever leaving your possession. All this happening completely outside your scope. At the banks and credit card companies and government. Not because someone illegally broke into something or stole something. Just because that's the way these currencies are organised (with central authorities responsible for them).

That's the fundamental difference.
- classical currencies and transaction are controller by single central authorities. which have complete control over it *by design*. There's always someone responsible for any step.
- distributed crypto-currencies aren't controlled by anyone in particular. the responsibilities are distributed over the whole network. No one has officially any say about it.

Re:this is part of the protocol (1)

DerekLyons (302214) | about a year ago | (#44797725)

A cryptocurency where everyone has a record of every transaction can be used to find a transaction between twoknown addresses? Is anyone surprised?

As always, there's a difference between something being theoretically possible - and proving that it is in fact possible.

Re:this is part of the protocol (2)

sociocapitalist (2471722) | about a year ago | (#44798423)

A cryptocurency where everyone has a record of every transaction can be used to find a transaction between twoknown addresses? Is anyone surprised?

" the reporter for Forbes began by giving Meiklejohn a Bitcoin address associated with Forbes' account. But with just that information, Meiklejohn was able to draw on a "clustering" analysis she had performed to identify Silk Road addresses"

They had only the buyer's bitcoin address. The rest was extrapolated.

This eliminates privacy for any transactions made from a bitcoin account funded via a normal (ie government monitored) bank account, which is one of the main reasons to use bitcoins to start with.

Re:this is part of the protocol (2)

Vintermann (400722) | about a year ago | (#44800327)

Still, they only proved that Forbes had bought something at Silk Road. There are legal things being sold on silkroad too, and anyway the law is not indifferent to whether you bought cocaine or contraband.

The point at which Forbes would get in trouble, was when law enforcement matched a known purchase on silk road to a shipment to a known address. Bear in mind, they could be on watch for a mysterious package in the mail to Forbes, based on nothing more than what the researched uncovered in this case.

huh? (3, Insightful)

Anonymous Coward | about a year ago | (#44796217)

He knew the exact time he made the transaction. He knew the amount. He knew other details.

So, really, wtf?

I am not going to read the article. This is some sort of fear mongering.

Re:huh? (3, Interesting)

Trax3001BBS (2368736) | about a year ago | (#44796431)

He knew the exact time he made the transaction. He knew the amount. He knew other details.

So, really, wtf?

I am not going to read the article. This is some sort of fear mongering.

Ya stupid article (I didn't read it either). They purchase something safe like marijuana then have the balls to say they purchased drugs.
Buy some Adderall I've seen lots of that for sale on the silk road.

Re:huh? (3, Informative)

plover (150551) | about a year ago | (#44796531)

RTFS. The researcher didn't know any of those details. She was given only a Btc address, and she discovered the rest. The reporter who made the buy was able to confirm that she correctly identified those facts. ( I assume it was a test buy, and the materials turned over to the proper authorities.)

I don't know if her methods would stand up in a courtroom. They would, however, be enough to put John Law on someone's trail, and possibly enough to seek a warrant.

Re:huh? (0)

Anonymous Coward | about a year ago | (#44796623)

RTFS. The researcher didn't know any of those details. She was given only a Btc address, and she discovered the rest. The reporter who made the buy was able to confirm that she correctly identified those facts. ( I assume it was a test buy, and the materials turned over to the proper authorities.)

The materials were not turned over to authorities, but were thoroughly destroyed. I believe the method used was "a series of small fires".

Re:huh? (1)

plover (150551) | about a year ago | (#44796647)

RTFS. The researcher didn't know any of those details. She was given only a Btc address, and she discovered the rest. The reporter who made the buy was able to confirm that she correctly identified those facts. ( I assume it was a test buy, and the materials turned over to the proper authorities.)

The materials were not turned over to authorities, but were thoroughly destroyed. I believe the method used was "a series of small fires".

A "controlled burn", no doubt. :-)

Re:huh? (1)

dindi (78034) | about a year ago | (#44797019)

No, I think they might have ben vaporized with an electronic device ...

Re:huh? (1)

FacePlant (19134) | about a year ago | (#44799015)

I lost an entire box of cigars to fire that way.

Re:huh? (4, Informative)

fastest fascist (1086001) | about a year ago | (#44797111)

All the researcher discovered was that the writer had sent funds to Silk Road. The article specifically points out they couldn't tell what, if anything, the bitcoins were used to buy. The headline is sensationalist, to say the least.

Re: huh? (0)

Anonymous Coward | about a year ago | (#44798041)

yeah but hiding the fact that you spent the money is the whole point of bitcoin ffs.

Re: huh? (0)

Anonymous Coward | about a year ago | (#44798667)

yeah but hiding the fact that you spent the money is the whole point of bitcoin ffs.

To be pedantic: it's the whole point of Silk Road, not bitcoin.

Re:huh? (1)

Vintermann (400722) | about a year ago | (#44800437)

No, but if the researcher had been law enforcement rather than a mere graph-savvy computer scientist, they could find out. They would just monitor Forbes' mailbox (and maybe other likely delivery spots). Since they would know the Silk Road purchase happened as soon as it happened, they could be confident that something would drop into that mailbox.

Re:huh? (1)

fastest fascist (1086001) | about a year ago | (#44800891)

That would be a guess. All LE, or anyone without inside access to Silk Road, could see is the funds going to the Silk Road wallet. Beyond that, there's no way to tell AFAIK. If the sender buys something, they could do it immediately, or not. They could wait months, with the coins there on their SR account. They might not even buy anything, they might just be using SR as a mixer service and withdraw to a different address to break the connection between themselves and their bitcoins.

Re:huh? (1)

gl4ss (559668) | about a year ago | (#44797781)

..was the bitcoin account used for anything else, really?

there was direct transaction to a known drugs seller account on the chain and this is the news?

it would be a bit more impressive if would work out who bought drugs from looking at the drug sellers bitcoin history(and somehow identifying who the wallets belong to and where the drugs were sent to..).

Re:huh? (1)

K. S. Kyosuke (729550) | about a year ago | (#44796625)

He knew the exact time he made the transaction. He knew the amount. He knew other details.

Interesting, but what are you talking about? Of course he knew; he was the uncovered buyer, after all. The point was that someone else found out.

Re:huh? (1)

magarity (164372) | about a year ago | (#44801635)

He knew the exact time he made the transaction. He knew the amount. He knew other details.

Umm, no, this was a marijuana transaction. He knew kinda around when he bought it and sorta how much he paid and that's about it.

Anyway, what's the bother with the Bitcoin and Silk Road hassle? Move to Colorado and you can just plunk down cash in a store.

If you want drugs... (1)

hessian (467078) | about a year ago | (#44796219)

Lobby your representatives to make them legal in your state.

Re:If you want drugs... (5, Insightful)

Thanshin (1188877) | about a year ago | (#44796235)

Lobby your representatives to make them legal in your state.

If you have the money required to have a representative, you don't need to follow such small laws.

Re:If you want drugs... (4, Informative)

dkleinsc (563838) | about a year ago | (#44796765)

Alternately, if allowed by your state, start organizing citizens to put together a ballot initiative. If the folks in Washington state can do it, so can you.

In Washington, it actually led to an extremely high voter turnout (pun fully intended). Apparently that's the kind of thing that leads people to actually care about politics.

Re:If you want drugs... (1)

plover (150551) | about a year ago | (#44797079)

In Washington, it actually led to an extremely high voter turnout (pun fully intended). Apparently that's the kind of thing that leads people to actually care about politics.

It only means they cared about politics exactly once. Now that they've passed it ... uhh ... they, um, are going to ... dude, do you have any more of those Fritos? I mean they are sooo good.

What do you mean we were supposed to vote yesterday?

Re:If you want drugs... (1)

dadelbunts (1727498) | about a year ago | (#44798951)

Just like Carl Sagan amirite.

Re:If you want drugs... (0)

Anonymous Coward | about a year ago | (#44797065)

Already legal here, hey rest of the US: Catch up!

Prisoner's dillemma (0)

Anonymous Coward | about a year ago | (#44798765)

Lobby your representatives to make them legal in your state.

The problem with this method is that the voter writing the letter receives very little benefit relative to their effort expended. By simply avoiding the law completely, the customer receives the full benefit of no drug laws without having to bother with an obsolete system.

We'll take away your power first; you can update your laws afterwards. You had your chance.

Woah Dude (0)

Anonymous Coward | about a year ago | (#44796259)

I just had a "Woah Dude" meme reaction a second ago... What if all the fuss about bitcoin is to make you think the government doesn't really like it so you in opposition do, and as a result play right into their hands with tracking these things..

New addresses (4, Interesting)

vvaduva (859950) | about a year ago | (#44796285)

Just generate a new address whenever you buy illegal things if that's what you are into, or have several wallets that you rotate between to perform your transactions. If you reuse an address over and over again, of course you can be tracked. The safety factor is directly proportional with your ability to understand how this works and how you can be tracked

Re:New addresses (2)

Racemaniac (1099281) | about a year ago | (#44796489)

That sounds terrible... if this would become mainstream, that would mean that for 95% of the population using bitcoins safely would be too hard.
If the system is so unsafe and easily to track if you use it normally, then i don't see where the anonymous claims of bitcoin come from.
And if you have to create new wallets all the time to be really safe & not trackable, why the hell did they call it a wallet? a wallet is the thing you keep unchanged for years in real life, not something you throw away every day to keep your payments anonymous -_-

Re:New addresses (1)

Anonymous Coward | about a year ago | (#44796657)

That sounds terrible... why the hell did they call it a wallet?

then rename it to "receipt" (something you throw away regularly), automate the process of generating new ones, and forget about it. Silly attachments to antiquated concepts is the whole problem we're trying to solve here. Let's not get all, "they called it a wallet--it must behave exactly like a wallet!"

Anonymity (2)

DrYak (748999) | about a year ago | (#44796949)

If the system is so unsafe and easily to track if you use it normally, then i don't see where the anonymous claims of bitcoin come from.

Actual bitcoin proponent never claimed that it was ANONYMOUS (That would imply a hidden identity). They only mentioned that it is PSEUDONYMOUS. There are clear identities: they are not your actual name, but mainly your public keys. These keys are still traceable and thus - and that's the most important part for the whole service to work as intended - also still verifiable by anyone in the network. Anyone can verify any transaction because all public key and transaction are broadcasted on purpose to the whole network: so malevolent entity could try to falsify or influence or force any transaction. The majority of the network has to check and agree the transaction. A malevolent agent would need to control at least than 51% to outvote and falsify transaction history (which, given how much power is already deployed every where by bitcoin miner, is nearly impossible even to entity like the NSA)

The only claims actually made about bitcoin by people who understand them is that THEY ARE NOT CONTROLLABLE. No government could do anythin about them. There is no bank with account that could be closed. There is no central bank that could start manipulating currency and inflation by printing more bills. ABSOLUTELY NO CONTROL on the network.
The bank concept is distributed over the whole network. There's no Credit Card which could refuse your transaction. There's no PayPal which could block your account pending "further random verification process". There's no law enforcement who could decide that your assets must be frozen. There's no government going bankrupt and disturbing monetary equilibrium. Nothing. Exercising any form of control or forgery would require breaking this 51% limit mentioned above, which is beyond the reach of any entity.

You don't use Bitcoins to be hidden. You use Bitcoin so you and the other guy at the other end of the transaction are the only people in charge with what happens with your transaction, and the whole network is your witness observing, checking and confirming that exactly that took place.

Bitcoin, thanks to its hashcash mechanism, brings a way in which transaction securely takes place, why no single entity could ever be in control.

(Also by the way using multiple "accounts" *IS* the normal way and is actually trivial to do from bitcoin software)

And if you have to create new wallets all the time to be really safe & not trackable, why the hell did they call it a wallet?

Just for lack of a better word. It's the closest thing that would map a concept to what is actually happening.

Technically, they are collection of a big number of randomly generated keys holding BTC (=accounts) each collection protected by a password that you need to open (=wallet) before signing transactions and broadcasting it to the whole network.

Re:Anonymity (1)

JesseMcDonald (536341) | about a year ago | (#44797639)

A malevolent agent would need to control at least than 51% to outvote and falsify transaction history ...

Note that "falsify" in this context is still limited to blocking or reversing existing (valid) transactions. A person with 51% of the hashing power of the entire network could spend bitcoins from his own accounts multiple times, or allow someone else to do the same, or prevent someone (or everyone) else from spending their bitcoins. He still wouldn't be able to spend anyone else's bitcoins without their private key, no matter how much of the mining he controls. The winning miner chooses the transactions which go into the next block, but the block itself is still subject to certain rules, including the rule that the transactions must have valid signatures. A block which will only be accepted by your own mining nodes isn't of much use to anyone.

Alternate history (1)

DrYak (748999) | about a year ago | (#44799047)

Well actually you could do worse.
If you had almost unlimited computing power, you could generate your own private keys and actually rewrite a "different" bitcoin transaction history. If you control enough hashing power AND bitcoin nodes, you could actually present your version of bitcoin history as the official one and the current one would like a fork attempt.

In theory.
In practice you would probably require a magic virus which turns the whole internet into a giant botnet to pull this stunt.

Re:Alternate history (1)

JesseMcDonald (536341) | about a year ago | (#44799887)

Looking back I see that I wasn't entirely clear. I did actually mean to include this possibility; a 51% attack can result in supposedly settled transactions being reversed, along with transactions which have not yet made it into a block.

Any miner can choose which block to base their new block on; it doesn't have to be the latest one in the dominant blockchain. However, honest nodes will prefer the branch of the blockchain with the highest total difficulty, so by choosing an older block you're starting at a disadvantage. The effort required to revert the blockchain to an earlier point goes up exponentially based on the number of blocks you're trying to replace; at 51% you essentially have a 50/50 chance of being in charge of the next block, so the effort required would scale with approximately 2^n, where n is the number of blocks. The task becomes easier as you control more of the network; at 100% you would require "only" the same effort as it took to produce those blocks in the first place (plus one additional block to break the tie).

Re:Anonymity (0)

Anonymous Coward | about a year ago | (#44797883)

Actual bitcoin proponent never claimed that it was ANONYMOUS

I'm pretty sure some bitcoin proponents have claimed that, unless you want to get into No True Scotsman arguments.

Maths (1)

DrYak (748999) | about a year ago | (#44799037)

I'm pretty sure some bitcoin proponents have claimed that, unless you want to get into No True Scotsman arguments.

We're not speaking ethics or moral or other complex softscience.
It's math and crypto. Either you do understand bitcoin and your opinion matters.
Or you're clueless and could as well be claiming that bitcoin were invented by aliens as a complex plot to hypnotise the president of the wolrd into making homosexuality mandatory.

I am simply saying that nobody who did actually understand how bitcoin work could even honestly claim that bitcoin guarantee true anonymity.

Anonymity was probably claimed by the same kind of miner who constantly ask "will this be better at mining bitcoin than a GPU" whenever some manufacturer release a CPU with a little bit more cores (HINT: no, it doesn't. Bitcoin mining is computation-bound. Ultra massive SIMD like GPU are order of magnitude better than CPU at doing simple repetitive computation. No matter if Xeon Phi has 32 instead of 8 cores. FPGA could be even better. ASICs are the theoretical best. The more silicon you dedicate at the specific task you seek to optimise, the better) or constantly ask for an Scrypt FPGA or ASIC for Litecoins (No, it won't work. Scrypt is memory-bound. Currently GPU are the best option. Not due to computationnal power, but due to massive memory bandwidth. Yes, custom circuitry could go theoretically faster, but FPGA and ASIC aren't the answer. Not because Litecoin is "magically anti-FPGA". But simply because we need to optimise for memory bandwidth).
The same people will probably pretend that bitcoin are magically anonymous, or that bitcoin magically protect them from taxes.

Re:Anonymity (0)

Anonymous Coward | about a year ago | (#44800191)

It would be a bit more anonymous if you are using a bitcoin kiosk (see "Bitcoin Kiosks Coming To 5 Canadian Cities") and they do not require user info. That is assuming that there are no video cameras in the area.

Re:New addresses (1)

rmstar (114746) | about a year ago | (#44797107)

That sounds terrible... if this would become mainstream, that would mean that for 95% of the population using bitcoins safely would be too hard.

We live in a world were for 99.9% of the population, using bitcoins at all is too much of a hassle compared to whatever benefit is supposed to come from it. Me, for example. I just don't have a use case for those things.

Also, for 95.5% bitcoins are too difficult to use anyway.

Re:New addresses (0)

Anonymous Coward | about a year ago | (#44801301)

By the time 95% of the population is using Bitcoin, they won't even be running a full client themselves. The majority of people will be making off-chain transactions with Chaumian digital cash which is backed by Bitcoin, featuring strong anonymity and better scalability.

Either that or we'll have a usable Zerocoin implementation with infinite blockchain compression, but those requires crypto that hasn't been invented yet.

TL;DR: This is part of the reason most people don't use Bitcoin, it's not mature yet.

Monney trail (1)

DrYak (748999) | about a year ago | (#44796741)

Yeah and how would the money arrive in that separate address/wallet to be spent on drugs?

Unless you only generate the bitcoins you spend purely by mining (in which case you must have very strong and thus expensive processing/hashing power) at some point bitcoin money needs to be transfered to this wallet before being spent on banned goods.

By using a separate address/wallet (which is nonetheless a good *security* advice, only not an efficient advice to *hide identity*) you only add just on extra step of the chain that an investigator has to trace. As any inverstigator needs the capability to follow steps in the chain ANYWAY in order to investigate bitcoin transaction, you only added a tinybit more work.

If you need actual anonymity, you need one of the various whirlpool implementations which actually are nothing more than a practical implementation of the bitcoin-equivalent of money laundering (mixing it in a such way that track is lost about which money came from where)-

Do the old school way (1)

ub3r n3u7r4l1st (1388939) | about a year ago | (#44797353)

take advantage of all these gambling sites, especially those with Texas Hold'em.

Re:Do the old school way (1)

TheRealMindChild (743925) | about a year ago | (#44797697)

All bitcoin gambling I know of sends the bitcoins back to the address that deposited them in the first place

Re:Do the old school way (1)

ub3r n3u7r4l1st (1388939) | about a year ago | (#44798243)

www.satoshimines.com

Re:Do the old school way (0)

Anonymous Coward | about a year ago | (#44815693)

bitcoinkamikaze.com

Re:New addresses (1)

sociocapitalist (2471722) | about a year ago | (#44798455)

Just generate a new address whenever you buy illegal things if that's what you are into, or have several wallets that you rotate between to perform your transactions. If you reuse an address over and over again, of course you can be tracked. The safety factor is directly proportional with your ability to understand how this works and how you can be tracked

The weakness isn't the bitcoin address as such - it's being able to link that bitcoin address to the buyer. You could have any number of bitcoin addresses but if they're all (or partly) tied back to you...via your bank accounts for example, then you're just as fucked.

Re:New addresses (1)

vvaduva (859950) | about a year ago | (#44799625)

You are mitigating risk, you are not eliminating it. You can go to the absurd extreme or do less, like running your wallet through TOR for example. The idea here is to minimize your exposure...but the very act of using Bitcoin is risky, so you have to make choices based on risk factors.

Re:New addresses (1)

sociocapitalist (2471722) | about a year ago | (#44806297)

You are mitigating risk, you are not eliminating it. You can go to the absurd extreme or do less, like running your wallet through TOR for example. The idea here is to minimize your exposure...but the very act of using Bitcoin is risky, so you have to make choices based on risk factors.

Obviously but...how does that contradict what I stated ?

Money and drugs (2)

jrumney (197329) | about a year ago | (#44796479)

What would be more interesting is to take a big enough sample so that the proportion of bitcoins that can be traced to drug purchases can be determined. Is it higher or lower than the proportion of US dollar bills [cnn.com] with traces of cocaine on them?

Re:Money and drugs (1)

Ralph Wiggam (22354) | about a year ago | (#44801479)

That article has nothing to do with the percentage of bills used to buy drugs.

Why? (-1)

Anonymous Coward | about a year ago | (#44796481)

Why would you do this? You're not helping...

Sarah Meiklejohn is not a researcher of any sort. Sarah Meiklejohn is a narc.

You're still not helping anyone or anything.

Re: Why? (2, Insightful)

Anonymous Coward | about a year ago | (#44796601)

Idiot. I'd rather someone points out the mistaken assumptions *publicly* than have people live in ignorance. She didn't create the problem, she's just pointing it out. This is straight up full disclosure security. If you have a problem with that, then you haven't been paying attention to security for the past decade.

wake me up when someone is actually arrested (-1)

Anonymous Coward | about a year ago | (#44796711)

or bitcoin based evidence is presented at a trial

until then articles like this are all FUD

sellers might have trouble if the feds get bored, but no state or local agency is going to bother wasting resources trawling bitcoin blockchains to find people in their jurisdiction

a bitcoin buyer will never be the lowest hanging fruit

Idiot? (0)

DogDude (805747) | about a year ago | (#44796733)

What kind of idiot buys drugs over the Internet? That is truly, profoundly, deeply stupid. What kind of sad, pathetic shut-in can't just hand money to an actual human being?

Re:Idiot? (0)

Anonymous Coward | about a year ago | (#44796839)

Because everyone just happens to know people who deal drugs, right? Are online black markets cutting into your sales, or why do you feel so strongly about this?

Re:Idiot? (1)

kaizendojo (956951) | about a year ago | (#44797971)

If they had their shit together enough to go out and deal with reality and other humans, they wouldn't need drugs in the first place. But in all seriousness, these are the same idiots that have drugs mailed or FedEx'ed to them and think that they are going to get away with it.

Re:Idiot? (0)

Anonymous Coward | about a year ago | (#44799713)

> But in all seriousness, these are the same idiots that have drugs mailed or FedEx'ed to them and think that they are going to get away with it.

Because they do "get away with it" as you say, but I wouldn't call living as a free man "getting away" with anything. It implies there was something wrong with what they're doing, and there isn't.

You might be the idiot here.

Re:Idiot? (1)

neminem (561346) | about a year ago | (#44798537)

Because first you need to know one.

I mean, I wouldn't buy clearly illegal things over the internet, especially from total strangers, because it seems like the potential for getting caught would be pretty high. But I also wouldn't buy these specific illegal things from people I do know, even if I wanted them, because I don't *know* any. And it's not like you can just walk out in the street and yell "hey, anyone know any dealers of illegal narcotics?!", and expect to get any responses other than, if you're lucky, bafflement, or if you're unlucky, cops. :p

Re:Idiot? (1)

Scarletdown (886459) | about a year ago | (#44804411)

What kind of idiot buys drugs over the Internet? That is truly, profoundly, deeply stupid. What kind of sad, pathetic shut-in can't just hand money to an actual human being?

Yeah. Better to buy your weed locally and support your local off the grid economy.

Harder to track? (1, Interesting)

dindi (78034) | about a year ago | (#44797003)

So, you use TOR (I know, NSA yada-yada, just use the latest source and compile yourself ) over a VPN you bought with bitcoins anonymously, with a freshly opened google/yahoo/riseup/whatever account for the store/market/service...

You use your gaming machine to run for a few days to generate the 0.3 BTC/LTC/whatever coin. You run your miner over tor/vpn/i2p through a service that doesn't need a signup.

You create a new wallet and you make one transaction.. over VPN (or VPNs and TOR and/or i2p)

They will see the transaction, but the user will be untraceable..... you can create a new wallet for every buy so a new send address is guaranteed, just move the blockchain (8 gigs) over or mount them over a share.....

No link to financial info, no link to real identity, no link to IP address of physical location. No previous transaction to look at...

Of course, if you are ordering drugs to your home address, then why even bother doing the above... if you just want to buy something privately (e.g. digital goods or services) then you are pretty safe (and paranoid following the above)...

It is like the "NSA can copy your phone contents" .. well, maybe you are using the wrong phone.... email ? probably you shouldn't use gmail/yahoo with your creditcard info and home address there... oh, and force your retarded friends and relatives to install GPG ... how about that for a start :O

Easy solution: (0)

Anonymous Coward | about a year ago | (#44800439)

Legalize marijuana and no one is breaking the law anymore.

Randian BitCoin acolytes (0)

Anonymous Coward | about a year ago | (#44800835)

When the Randian BitCoin acolytes bring up their internet funbux in nearly every article that involves the transfer of money, the rest of us are entitled to bring up how wrong they are in BitCoin threads.

BTC is not a currency. It is a series of individuals and parties that purchase BTC (using fiat, government backed currencies) to serve as a ticket, that allows a second individual or party to trade that ticket in for their fiat, government backed currency of choice. It's basically like getting a Best Buy gift card for Christmas and using it to buy an Amazon gift card at your nearest Best Buy. The only advantage it has over services like PayPal is that it's anonymous (as long as you shuffle your coins around enough to obfuscate the blockchain should your desired exchange ever be forced by law to disclose your transaction history.) That's why BTC's main uses are to buy illegal narcotics, child pornography, and other illicit items without much chance of being traced. Nobody gets their paycheck in BTC. Nobody pays for raw materials in BTC, uses BTC to cover manufacturing costs, or sells any item that wasn't previously paid for with a fiat currency. It's like company scrip with no company to back it and no commissary to spend it in, just a bunch of dudes who trade it around with each other like Magic cards.

The reasons why internet funbux haven't gained more traction are essential parts of a legitimate online payment system. Vendors can't verify that you own those BTCs, only that you have access to a private wallet key. Users can't apply chargebacks, giving vendors no real incentive to be 100% honest, which has surfaced countless times with BTC businesses. (Just look at bitcointalk, the stories of getting ripped off are endless.) Vendors and customers can't rely on the value of BTC to remain stable because the volume being traded is so low that any sudden influx of trades could decimate the exchange rate before the second party gets a chance to convert it back into a practical, useful fiat currency. Vendors and customers also can't rely on their holdings in exchanges being safe in any fashion, since exchanges are hacked all the time, losing tens to hundreds of thousands of dollars "worth" of people's funbux. The most stable exchange is an Ex-pat living in Japan running his exchange on top of what used to be a way to trade Magic the Gathering cards, which I guess makes sense given my last paragraph.

Bitcoin still safe for smart people... Film at 11! (0)

Anonymous Coward | about a year ago | (#44801525)

Sensationalist article for sure. Must be a slow news day.

Bitcoin is perfectly safe and discrete when the proper precautions are taken. The fact that the reporter was a typical idiot user should have been pointed out... but then there would be no story. *sigh*

Silk Road? I think the whole concept is awesome... being able to buy what you want without standing next to someone with a gun. PRICELESS!!

Better play it soft. (0)

Anonymous Coward | about a year ago | (#44804083)

For added safety, best to make the transaction in incognito mode.

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