151–156 of 156 posts
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Well aren't you an opportunistic prick.
This comment breaks the HN guidelines. Please (re)-read them and post civilly and substantively—or not at all—from now on. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newswelcome.html
And the user I was commenting to has removed their comment making it look even worse.
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This comment breaks the HN guidelines. Please (re)-read them and post civilly and substantively—or not at all—from now on. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newswelcome.html
True, I do apologize but seeing such evil makes me mad. And the user I was commenting to has removed their comment making it look even worse.
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The block-chain is a centralized record of all transactions ever. Just because there are many, many copies of it doesn't negate this. A digital cash system with 20 independent banks and offline transactions could arguably be more decentralized.
It's not centralized though. Each node is independently building and verifying the entire record, based on no criteria other than (a) prefer the longest chain and (b) use blocks you get over the P2P network from other nodes. You are using the word "centralized" incorrectly, or at the very least, in a way that is inconsistent with the way that everyone else in the space uses it. A semantic argument over a word doesn't…
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No, you're not describing something like A (typical tumbling) is risky, and B (paid back by miners) is better but with somewhat more risk. A is I give you a million dollars, you give me the deed on your house. There is risk, there is trust involved, but we both are peers and bare equivalent risk. B is I give a small portion of a million dollars to hundreds or thousands of people and ask that they pay a new account so…
I think you are misunderstanding how mining pools work. It's only the pool operator that needs to know the valuable fee transaction in order to launder Bitcoin via block rewards. The individual miners that are in the pool are just hashing over a hash of the merkle root of all of the transactions that the pool has selected, along with several other fields. More details here: https://en.bitcoin.it/wiki/Block_hashing_al…
What I am saying, however, is that one wouldn't.
It does not make any sense economically or in terms of risk of arrest.
Either you have pissed off miners ("Hey! What happen to all the money from that fee?"), or they are all collaborating which means "grand conspiracy".
Without the miners participation you have an easy to trace transaction chain that goes like this: bad guys, suspicions fee transaction, pool operator, new address. Trivial to trace.
In point of fact the fees in this case went to every participating miner. All conceivable cases that lead to any definition of tumbling requires that the actual funds are sent to all the miners. The event horizon argument which is the basis of the article is simply wrong. You seem to agree since you don't make a case for that.
Simply put: the fee is just as traceable as any transaction.
The best that could be done to balance the economic motivations and risk in your scenario is to generate pre-signed multi party transactions in advance of the initial fee payment for every minor, perhaps they only become valid once the fee is paid (one of the inputs to the transaction), and only at some point in the future (to obscure the direct relationship). In this case you'd have at least one new transaction from every participating miner creating a large number of outputs that become difficult to trace. Though it is still only one round of tumbling, and so compromising even a single participant would be enough to trace at least the value of that one participants laundering contribution directly to the source.
Even that solution requires a set of completely traceable colluding participants namely the entire set of miners who should have been paid the fees but aren't. And each of them would have to express there intent to collude via the pre-signed transaction in advance of receiving any benefit.
So at absolute best you have a poor quality, high risk, error prone, tumbling / mining service.
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OK but you know the account that got the "laundered" money. So whatever you were going to do with the BTC before laundering (like cash them in), you still can't do. The previous identity flows. I think the article is simply wrong.
No you don't know where the laundered money ends up. See my other longer comment in this thread, but the gist of it is that the pool will use the transaction fee to pay their mining rewards out of, and pay out rewards from previous blocks to a series of separate virgin addresses controlled by the original party in a way that looks indistinguishable from mining reward payouts. I will grant you that the article didn't…
Running some numbers, it looks like about 98% of Bitcoin's hashrate seems to be held in the top 10 mining pools; assuming this isn't a common service provided by those top pools then a mining pool which launders too will have, say, 1% of the network hashrate at most. That's actually a nice place to be in; it means you get a payout roughly every 1000 minutes of 25 BTC (~$400) plus what looks like typically 1500 transactions or so paying you about a nickel apiece -- so let's optimistically say you get a payout of $600 total every 16 hours, or $900/day. Maybe you can keep plausible deniability going even when 25% of your revenues come from laundering transactions, so that means they can launder about $300/day. That's not too bad, about $100k/year, but it's not a massive chunk of the money laundering happening worldwide either, which usually is quoted in at least terms of billions of dollars -- so 4-5 orders of magnitude larger. Even considering how much the network as a whole could maybe launder if they were crazy about it (100x more participation in laundering, 10x more revenues from laundering transactions) you're still only 1-10% of total global money laundering by this mechanism before you have no presumption of "most of this money is clean so the laundered money is properly hidden."
So e.g. if you wanted to launder $1m within a year using our example pool then you'd have to pay in $2700/day and the legitimate transactions of the pool would only be 900/3600 = 25%; I'm not claiming that this is insecure -- but rather that a normal tumbling system could do this too, purchasing 25% of the money-to-be-laundered from a BitCoin exchange, gradually paying out over a year, and reselling the surplus 25% back on the exchange, for no real difference in security (but potential gains in speed and volume). If you charge a 10% laundering fee then this is an investment of $250k to gain $350k over the course of 550 installments in the year, so if I'm doing the math right that's a return rate of 0.13094%/installment or a nominal rate of 72%/year -- plenty enough to cover whatever risks there are in the currency, inflation, opportunity cost, etc. So it wouldn't be prohibitively much to ask the laundering network to invest, if I'm doing these numbers right.
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I might be wrong, but I feel you gave a lower-level (more detailed) description of "the idea here is that you instead privately give the transaction to only your favoured miner".
The comment I replied to said several things that are wrong. I understand that it was attempting to give a higher-level overview, but it did so in a way that made things inaccurate. Let me break it down. > Ordinarily transactions are broadcasted to the entire network for anyone to process. Process is sort of inaccurate here (it implies mining). Transactions are broadcast across the network in a P2P manner amongst all…