BitLaundry - Reading Assignment

Privacy Coins - Ultimate Course
#222
  1. Information on the timing of amount sent to Bob is hidden for Alice. Sender information is hidden for Bob.
  2. If BitLaundry system is hacked and the send information is captured before the payment goes out.
  3. The service fee (0.5% per transaction + 0.01% per recipient) provides incentive for BitLaundry to be honest.
  4. As BitLaundry deletes send information after the payment sent out, it could steal the senders’ fund and run away.
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#223
  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob? The senders information would be hidden, as for Bob it will show he got paid.
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    The amount Alice sends out to bitlaundry would be the same amount as Bob receives.
  3. What is BitLaundry’s incentive to be honest?
    They want to privatize peoples transactions so there can be more privacy for the users.
  4. What is BitLaundry’s incentive to be dishonest?
    They can take the bitcoin since they are in charge of the private keys sent to them.
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#224

  • Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
    The sender (Alice) gets hidden as Bob will receive the funds from BitLaundry.

  • Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If BitLaundry only uses one address, it could be checked if input values are equal to outputs plus service fees, in that way linking sender with receiver.

  • What is BitLaundry’s incentive to be honest?
    Growing the business, getting the users trust by helping them protect their privacy and with that making more money in the long term.

  • What is BitLaundry’s incentive to be dishonest?
    Stealing the user funds, making short-term gains.

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#225

1.- Both dont explicitly see who sent/received coins, no linkage or anything.

2.- The amount of bitcoin could give a clue on who these people are.

3.- To make the project grow.

4.- They can easily steal coins.

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#226
  1. Alice hides the recipient, Bob’s deposit is anonymous. It would be difficult to use the transaction amount to link the two since the amount is not exact (fees are collected) and mixed with many other transactions.
  2. The transaction amounts with the fixed fees could be used to link Alice with Bob
  3. collecting fees would make it viable for BitLaundry
  4. since nothing is kept after the transaction, they could not send the bitcoins a percentage of the time and keep for themselves
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#227
  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about Bob?
    No information is hidden from Alice. She knows her address (sender), she knows Bob’s address (receiver), she knows the amount. For Bob, he knows his address (receiver), he knows the amount, but he doesn’t know Alice’s address (sender).
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    They might have linked their addresses in the past, or do so in the future, and then it might be obvious that Alice sent funds to Bob. Or if Alice sends a really strange amount, then it would be obvious when Bob receives the same amount.
  3. What is BitLaundry’s incentive to be honest?
    By being honest they can keep their customers and keep making money from their business.
  4. What is BitLaundry’s incentive to be dishonest?
    They could easily just steal a lot of funds.
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#228

Alice gets a one-time address to use for Bob
Alice send can be tracked to BitLaundry
Bob cannot see Alices address

Data leak from BitLaundry proir to file deletion

Incentive: Reputation and financial reward

Greed

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#229

  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
    From my understanding, none is hidden from Alice since she is the sender, sends the amount to BitLaundry (receiver), with the ultimate recipient address (Bob). Bob doesn’t “see” Alice’s address. However Alice and Bobs public addresses are decoupled from each other in the blockchain. BitLaundry obscures the transmission process using time intervals during which it randomly sends out the transaction which may or may not be Alice’s.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    It would be clear that BitLaundry was used by both parties. If there is a known time correlation between Alice’s “send” and Bob’s receive

  3. What is BitLaundry’s incentive to be honest?
    It charges a % fee in BTC for the service

  4. What is BitLaundry’s incentive to be dishonest?
    If it receives significant amounts of BTC and financially worth more to simply steal it in a final act, analogous to a rug pull.
    Being paid to produce the logs of data (which is supposed to be deleted)
    It’s a centralized trust based service (unlike a smart contract version of BitLaundry)

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#230
  1. The information hidden for Alice is that she is the sender of the funds as Bob is not well liked. The receiver (i.e. Bob) and the amount sent is not hidden but is being sent at a random time from a one-time-use BitLaundry address rather than Alice’s address so she cannot be linked to Bob. BitLaundry then deletes the database link between the-one-time-use address and Bob.
  2. If through traffic in BitLaundry is very low and Alice’s payment is therefore sent about 30 minutes later, it may be possible due to the low number of transactions to track the payment back to Alice with some degree of certainty.
  3. BitLaundry’s incentive to be honest is to extract fees on a regular basis for their services and once their honesty is established the rising number of users will lead to an increase in these fees.
  4. However, the incentive for BitLaundry to be dishonest is huge once it has built up a good reputation with many users. Then the developers would in all likelihood wait until they hold a substantial amount of Bitcoin and pull an Exit Scam (“Rug Pull”). Where they drain the application of all funds send them through many crypto mixing and washing exchanges and disappear with a fortune in Bitcoin. Greed is a fundamental part of human nature once the reward is great enough.
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#231
  1. The sender is hidden, because BitLaundry acts as a liaison between Alice and Bob. The amount that Bob received is public, it just becomes impossible to know who sent it as many people send money to BitLaundry, and then BitLaundry divides that money among all the receivers.
  2. This can happen when the amount that Alice sends to BitLaundry and the amount Bob receives are crosschecked. This way, the sender can be identified.
  3. Keeping up reputation so business can continue.
  4. If a very large transaction has been sent through BitLaundry, it would be much more profitable to take the money instead of keeping the business running.
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#232

Neither partys’ addresses are exposed through the use of a Bitlaundry one-time address.

Linking could trace through the amounts sent back to the owners.

BitLaundry would want repeat business.

BitLaundry could be a fly-by-night company and keep the BTC.

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#233

Alice knows Bobs Pub address, but Bob doesn’t know Alices Pub address. Direct Tx are not visible.

All Txs are linked to Bitlaundry. so if someone can hack BitLaundry, or when they are the only participating customers and no other Tx comes after them. No masking your Pub address is a compromising factor.

Reputation to stay in business, and fees.

With a large enough client, BitLaundry might get greedy and do something shady and we all lose bitlaudry and this whale their BTC

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#234

Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?

Alice knows Bob’s address which she provide to BitLaundry. Bob doesn’t get to see Alice’s address as a ‘one-time’ address is used by BitLaundry to send the funds to Bob.

Explain a situation where Alice’s and Bob’s privacy could be compromised?

If BitLaundry server gets hacked.

What is BitLaundry’s incentive to be honest?

Reputation

What is BitLaundry’s incentive to be dishonest?

Financial gain

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#235

  1. Alice the sender is sending BTC to BitLaundry and not directly to Bob so it looks like Bob the receiver is getting BTC from Alice.

  2. If BitLaundry only has Alice and Bob’s transaction at one time it would be easy to link.

  3. BitLaundry’s incentive, to be honest, is for their reputation in order to continue operations.

  4. If they get a lot of volume they could walk away with people’s money.

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#236
  1. Because BL is between A en B, A doesn’t know B public address, and B doesn’t know A private address.
    2.The amount makes a connexion between B and A and although linking A to B is difficult but not impossible ( all tx are logged)
  2. To make a profit out of this service.
  3. No one will use it ever.
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#237

1 Alice and bobs address’s are kept private

2 There are links that can be followed backwards linking the 2 address’s compromising both
Bitlaundry could get hacked and governments could force the company to hand over data

3 the money they receive form fees

4 they could steal or syphon off some of your assets or sell your data

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#238

  1. Nobody can tell to whom Alice sent funds to and nor would they know who sent funds to Bob by looking at blockchain explorers.

  2. Transactions are still public and are within a 10-day setting so it is still possible to compromise privacy with careful tracking.

  3. BitLaundry’s incentive is a 0.49% base fee that it charges for each outgoing transaction.

  4. BitLaundry could easily send funds to the owner/controller of BitLaundry when there are a lot of funds involved.

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#239
  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?

For Alice the information that is hidden is the receiver address. For Bob it is the sender address.

  1. Explain a situation where Alice’s and Bob’s privacy could be compromised?

Probably by seeing the amount that Alice sent and Bob received you can still link both addresses. This is solved by the sender being able to schedule different payments over several days.

Another way it could be compromised is due to the fact that it is a centralized service that could be hacked, and the information could be unintentionally shared, or intentionally shared in exchange of something back.

  1. What is BitLaundry’s incentive to be honest?

The continuation of the business, considering the fees taken from every transaction.

  1. What is BitLaundry’s incentive to be dishonest?

It is a custodial way to perform a transaction, so the incentive is to stop sending Bitcoins to addresses at some point and keep the Bitcoins it holds at a given point in time.

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#240

  1. Alice uses BitLaundry to send funds to Bob. For her, information about the receiver is hidden. For Bob, information about the sender is hidden.

  2. Alice’s and Bob’s privacy could be compromised if the money sent by BitLaundry was sent to hackers who could steal their personal information or even the money that Alice sent to Bob.

  3. BitLaundry’s incentive to be honest is to delete the one-time-use address and the receiver of the money.

  4. BitLaundry’s incentive to be dishonest is to send out money to many other people rather than the original receiver.

Now what I’m about to share doesn’t have anything to do with this subject of discussion, but I couldn’t find a better discussion forum to use.

After watching the Linking UTXOs video, I listened to the attached podcast. Listening to it while reading the transcript brought me back to a microeconomics college course I took last spring. In my microecon course, I listened to a podcast about countries switching to cashless societies. Whether or not a country should get rid of coins or paper bills is a very controversial topic of discussion. However, several countries are already going cashless, and it probably all began with Satoshi Nakamoto’s development of Bitcoin back in 2009. We all like our privacy, especially when it comes to our money. Bitcoin, along with other cryptocurrencies, have their benefits; but they also have their drawbacks.

Here’s the link to the podcast if you’d like to check it out for yourself: https://unchainedpodcast.com/alex-gladstein-on-a-world-without-bitcoin/

It’s also in the description for the Linking UTXOs video.

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#241
  1. Their BTC address
  2. If BitLaundry’s website was raided by some government agency.
  3. They get a cut of 0.5% of the transaction fees.
  4. Stealing BTC
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