Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

68% of total Ethereum transaction value controlled by one system

blog.cyber.fund

Post reply on HN
Print view View original

31–40 of 85 posts

Re: 68% of total Ethereum transaction value controlled by one system

#31

Post by the_stc »

aeturnum wrote: post #16
cgb223 wrote: post #9

Earlier quoted context omitted.

But since its still on a permanent immutable blockchain, couldn't someone still trace Bitcoin/Eth transactions with perfect accuracy?

Yes - mostly. The idea behind a mixer is this: 1. Your transaction goes into their address 2. Their address is always transferring money to accounts. 3. Sometime after you pay them, some amount, not quite the same, leaves their address to an address you control, but which has no established connection to you. So an observer can see: 1. That you put money into the mixer. 2. The full list of addresses the mixer payed '…

A well designed mixer would not be so easy to detect. In a perfect world, you'd have matching clients all the time, and the only contamination is the fee being siphoned off. If the fee is managed well it could be very difficult to determine coins that went or came from the mixer.

In reality, you probably need to batch a few customers together: 10 customers putting in 1 BTC, 1 customer putting in 10. But these don't need to be long-lived groups, if the mixer has the volume. So "their address" would only be the same for a few customers. An attacker would need to constantly make transactions to determine the addresses involved.

Most mixers give you completely "clean coins": That is there's no transaction chain from your inputs to your outputs. So they are probably doing some sort of system similar to what I describe.

Re: 68% of total Ethereum transaction value controlled by one system

#32

Post by lawn »

the_stc wrote: post #25
XR0CSWV3h3kZWg wrote: post #8

Earlier quoted context omitted.

zcash, monero and dash are the biggest that have inherent privacy.

ZCash is ideal, theoretically. If they get the performance amped up so that private transactions don't take forever, it could really work cause they could make privacy mandatory. Though a 10% tax of all coins is rather questionable. The CEO of the company did say he felt zcash could be made traceable enough to be uninteresting to money launderers, whatever that means. Sounds like the opposite of fungible. Monero's le…

I should add that Monero doesn't use mixing in the same sense. The ring size works so that you cannot see which of the different choices is the correct output until spent. This is different from having the participants swap coins as you do when mixing. The ring size isn't directly comparable to the number of mixing participants or mixing rounds as the former isn't susceptible to blockchain analysis. You can only make probabilistic guesses or IP tracing.

There is no "official" recommendation of how to securely launder coins in Monero. What you can do is to send the coins to yourself a number of times using the default ringsize or "churning".

Re: 68% of total Ethereum transaction value controlled by one system

#33

Post by dahdum »

dsp1234 wrote: post #27
cgb223 wrote: post #9

Earlier quoted context omitted.

But since its still on a permanent immutable blockchain, couldn't someone still trace Bitcoin/Eth transactions with perfect accuracy?

Let's say you hand me a $100 bill, and that you have marked that bill. I then take that bill to a bank and ask for 3 $20 bills and 4 $10 bills. The bank takes that $100 and puts into the vault, and takes out the bills I asked for out of the vault. Later, someone comes in with $100 worth of bills, and asks for a $100 bill. The bank goes to the vault and gets the marked $100 and gives it to that customer. Tracking the…

You're right, but the article didn't find a mixer. They found the temporary deposit addresses every exchange uses and then wrote a FUD article to drive traffic and awareness of their sketchy ICO.

Re: 68% of total Ethereum transaction value controlled by one system

#34

Post by oldstrangers »

dahdum wrote: post #15

Aren't these the temporary deposit addresses that exchanges give out? You deposit and then they sweep the balance to their hot/cold wallets as necessary? Also the ReplaySafeSplit and related contracts were due to the ETH/ETC split, you had to move your coins to be safe. I see no evidence of a "mixer" being the cause.

This is exactly what it is.

Re: 68% of total Ethereum transaction value controlled by one system

#35

Post by ringaroundthetx »

cgb223 wrote: post #9
seibelj wrote: post #4

It's an ETH mixer, it helps you obfuscate ETH, the same exists in BTC and all other crypto currency systems without inherent privacy.

But since its still on a permanent immutable blockchain, couldn't someone still trace Bitcoin/Eth transactions with perfect accuracy?

You can play blockchain sleuth all you want, but you cannot guarantee that you are following the same owner's transactions.

Re: 68% of total Ethereum transaction value controlled by one system

#37

Post by Alex3917 »

shemnon42 wrote: post #3

Is the story that 68% of the traffic is naked laundering or that 68% of the traffic is people buying into ICO that are not already enfranchised in ethereum?

It's not laundering, it's spoofing by some of the earliest Ethereum holders who are trading with themselves on the exchanges to create the appearance of volume and liquidity to drive up the value of their coins.

Re: 68% of total Ethereum transaction value controlled by one system

#38

Post by the_stc »

lawn wrote: post #32
the_stc wrote: post #25

Earlier quoted context omitted.

ZCash is ideal, theoretically. If they get the performance amped up so that private transactions don't take forever, it could really work cause they could make privacy mandatory. Though a 10% tax of all coins is rather questionable. The CEO of the company did say he felt zcash could be made traceable enough to be uninteresting to money launderers, whatever that means. Sounds like the opposite of fungible. Monero's le…

I should add that Monero doesn't use mixing in the same sense. The ring size works so that you cannot see which of the different choices is the correct output until spent. This is different from having the participants swap coins as you do when mixing. The ring size isn't directly comparable to the number of mixing participants or mixing rounds as the former isn't susceptible to blockchain analysis. You can only make…

Sending coins to yourself, aka churning, might not work so well after all, according to the latest MRL report. They say:

" We at the Lab previously thought that one possible solution to knacc's described attack would be churning, where one sends funds to oneself multiple times before using at a merchant. Unfortunately, this leads to chains of self-referential transactions, which leave an undesirable and identifiable statistical signal. "

Now the follow-up I've gotten says that this just means you can't churn too quickly. There is still no analysis of how often to churn, how long you need to wait, and on and on, until you're safe. The Monero wallets offer no way to manage your inputs either, so if you ever re-use a wallet (exchange->WalletA->WalletB a couple times) you'll leave even more of an trace.

So the number one idea that springs to mind, Exchange->Monero->Exchange, might be a worst-case scenario where you can easily be linked with a high probability. Especially when the approximate input time is known.

For instance, if you know a target exchanged Bitcoin in a certain transaction, you can simply trace all possible chains from that output and see when one hits an exchange, prioritizing shortest first: if an exchange output goes right back to an exchange, that's probably enough to get a warrant or targeted investigation.

Furthermore, an attacker could make a bunch of transactions so other transactions use known inputs, reducing effective ringsize even more. This wouldn't be very expensive at current volumes.

Even still, Monero still seems far ahead of competition. My biggest concern is that they don't put any sort of disclaimers, and incorrectly state it's untraceable. This will get people into trouble. The Tor Project does a far better job of being clear with the risks and shortcomings. The Monero community, mostly, seems to just advertise as if everything was solved. That plus the ridiculously low ring sizes feel rather irresponsible.

Re: 68% of total Ethereum transaction value controlled by one system

#39

Post by jacquesm »

the_stc wrote: post #31
aeturnum wrote: post #16

Earlier quoted context omitted.

Yes - mostly. The idea behind a mixer is this: 1. Your transaction goes into their address 2. Their address is always transferring money to accounts. 3. Sometime after you pay them, some amount, not quite the same, leaves their address to an address you control, but which has no established connection to you. So an observer can see: 1. That you put money into the mixer. 2. The full list of addresses the mixer payed '…

A well designed mixer would not be so easy to detect. In a perfect world, you'd have matching clients all the time, and the only contamination is the fee being siphoned off. If the fee is managed well it could be very difficult to determine coins that went or came from the mixer. In reality, you probably need to batch a few customers together: 10 customers putting in 1 BTC, 1 customer putting in 10. But these don't n…

The proper term for this kind of activity is money laundering.

Re: 68% of total Ethereum transaction value controlled by one system

#40

Post by cslarson »

Alex3917 wrote: post #37
shemnon42 wrote: post #3

Is the story that 68% of the traffic is naked laundering or that 68% of the traffic is people buying into ICO that are not already enfranchised in ethereum?

It's not laundering, it's spoofing by some of the earliest Ethereum holders who are trading with themselves on the exchanges to create the appearance of volume and liquidity to drive up the value of their coins.

Oh right.
Post reply on HN