I'm sure I don't understand your use case.

But if you retrying to accumulate great wealth while not being seen as a single entity, it is better if you keep your coins in addresses that don't communicate with each other. Then pay with the account with the balance that is closest to what you want to spend.

I see what you are going for but it is going to be hard to implement. This is because of the graph nature of bitcoin transactions.

Let's start with the premise that you are trying to make this a business. And you are selling these to people who want to do something but don't want to be traced. Often that means they don't want "to get caught", which is the most important threat to you personally I presume.

So you are going to have to assume that one or more of your customers "gets caught" and see how that effects your anonymity.

Say you are selling VM's that contain 50 BTC. Assuming the client VM's are just bitcoin installations + some wallet entries (address=public/private keys) that total 50 BTC. Now if you were to sell something like this. If I bought it, the first thing I would do is think, "Hey, that guy has copies of my private keys. So they are not private at all!" So to be sure my coins didn't disappear, the first thing I'd have to do is send these coins to myself, at a completely new address so you wouldn't have the keys. If the coins weren't correlated before then, they are now.

Now assuming someone gets caught, and they say I bought this VM on the internet from an anonymous seller.

The authorities can now look back at the transaction log. They can see all the keys you included in the VM and any new keys the "caught guy" created. It is trivial to determine the creation timing of each since its stored in the block list. So the authorities can deduce, every out-point that was part of his initial VM. The associated in-points must have belonged to the VM seller (you). So they have the set of your addresses you used to create the VM. They can easily trace to see were other coins from those addresses went. They are almost sure to be VMs as well. If they see a merge structure there, that confirms a VM and gives them more of your addresses.

The more you pass coins around between your accounts, the more addresses they can correlate. The mixing patterns you describe are likely to be very obvious compared to normal transfer patterns in the transaction graph. If you mix coins that will go into VMs with coins that you spend personally, you have even more risk.

The best way for you to avoid having your accounts correlated is to buy coins in the 50 BTC quantities you will sell, and never touch the coins yourself. Just create new addresses for each 50 BTC block and have the seller's transfer the coins there directly. Then you just put each key in a VMs and sell it.

That connects your source and your customer together, but that only potentially gives away other coin addresses from the same seller.

Notice no matter what you do, if one of your customer's get caught the authorities can deduce some account that is your, and the ownership history of every coin. Your anonymity depends on who you sell to, who you buy from and your ability to remain anonymous from both of them.

Yes, you understand the issues I have with the block list now. :-)

For most people it will be "enough privacy" to just use bitcoin as designed. But if you want to say provocative things and remain anonymous while being hunted that makes things much harder.


The trusted account requires lots of users using it regularly for it to have any effect at all. That makes it akin to a bank and checking account. But an automated one that doesn't log checks. I really need to find that link. If six people use the bank they are all suspect. If six thousand use the bank, it provides some obscurity.

But I'd really like to see an implementation with the transactions totally removed from the list. There are a couple of ideas pointing to the plausibility of this. There is a thread called "not a suggestion" that discusses them.

I have already written such a system (Open Transactions: http://github.com/FellowTraveler/Open-Transactions/wiki). As discussed in another thread on this board, my software could be run as a Tor hidden service, and it already allows you to issue Chaum-style ecash backed in whatever reserves you want (including Bitcoin). Bitcoin would be ideal as a form of reserves since it is distributed, counterfeit-proof, and publicly audit-able. Then separate software (such as mine) can add the blinding untraceable layer as a Tor service. My software also makes it trivial to write cheques, send account transfers, withdraw in ecash, trade with any other currency types that are issued, etc.

-Fellow Traveler

I've launched a sender recipient decorrelation (anonymization?) service called bitlaundry: you can get access to it at https://bitlaundry.appspot.com/ or read more about it here at: http://bt.irlbtc.com/view/963.0.

I appreciate all feedback and ideas!

Red, in answer to some of your comments above, now that I've launched -- I agree that more people using such a thing makes it 'normal' and therefore not notable.

However, what I have been considering is whether or not just one person sending transactions through the system would provide similar benefits in this case. My current thinking is that, if someone wanted, they could trace back the block chain and see that most of the BTC came from the same set of blocks; in essence, "no", your final anonymity is only as good as your diversity of bitcoin sources.

Thoughts?

Hi Red,

Well, the way the system works right now is that if you pump in 26, and send to say 10 recipients, they'd all get 2.5 or so; the system could easily randomize the amounts being sent -- that was on my post-launch list to do, and I'm reminded to implement that.

I also think that I will likely try and send these through mt.gox on their way out -- at that point, we'd be seeing some significant volume for other purposes.