BitLaundry - Reading Assignment

Privacy Coins - Ultimate Course
#242
  1. Receiver
  2. If BitLaundry decides to reveal your private keys or loses your private keys.
  3. Transaction fees.
  4. They get to keep our Bitcoins.
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#243

Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
Bob and Alice did not complete a direct transaction, any observer from outside will see Alice sending to “someone” and Bob receiving from someone else, the link between the two should not be explicit as in a normal transaction.

Explain a situation where Alice’s and Bob’s privacy could be compromised?
If BitLaundry doesn’t erase the data they can still provide the link between Bob and Alice

What is BitLaundry’s incentive to be honest?
Reputation, keep the service running, and getting the fees from the service.

What is BitLaundry’s incentive to be dishonest?
Sell information to other companies like on-chain analysis companies, comply with governments and disappear with the bitcoins

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#244
  1. Information hidden to Alice is the receiver, to Bob the sender.
  2. Their privacy could be compromised:
  • if an exact amount is sent to Bitlaundry from Alice & from there to Bob & it differs from other transactions sent in batches,
  • if the trusted party - Bitlaundry does not delete the database link between the one-time-use address and Bob
  1. Bitlaundry’s incetive to be honest is higly priced at roughly 0.5% of the transaction.
  2. Bitlaundry’s incetive to be dishonest (if they decide to not play by their own rules as a trusted party):
  • they retain the funds customers sent them & do not execute their service properly,
  • do not delete the data that can comporomise customer’s privacy
  • sell data to third parties.
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#245
  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 nothing is hidden. For Bob, information about the sender is hidden.
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If someone hacks BitLaundry and get the linking information Alice_/one-time-use/Bob address. If there is no transaction other than the one from Alice to Bob.
  3. What is BitLaundry’s incentive to be honest?
    Getting the fees from the service.
  4. What is BitLaundry’s incentive to be dishonest?
    Sell information to other parties or disappear with the bitcoins.
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#246
  1. The relationship of transfer of funds between one and the other
  2. If there is a direct tx linking them or no other tx in the group make it the only one in bitlaundry buddle tx
  3. Keep the trust of people so can continuously provide the service for a fee
  4. Steal all the btc that was sended to them for temporal custody and transfer
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#247
  1. No connection between the sender and the receiver.
  2. If Bitlaundry sell information or is hacked.
  3. Reputation, fees keep the service working.
  4. Keep the money, sell information …
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#248

1.) She would hide the sending address. Bob would see the one use sending address but not know who used it.
2.) Both have to trust bitLaundry.
If bitLaundry was compromised, their privacy would be gone
If no one used the service it’s not as private
3.) They provide a Service for a fee. Its their business model to be honest and receive money for it.
4.) They could abuse their position/role easily and steal money. Would be hard for the customer to fight it.

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#249
  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?

Alice “send” address is hidden from Bob because BitLaundry is providing a one-time address. Nothing is hidden for Bob.

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

If volume is low and only Alice and Bob are using the service during the 30 minute timeframe, it will be easy to connect them.

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

The fee for using the using the service is only 0.5%. Also, BitLaundry deletes the database link between the one-time-use address and Bob after the transaction is complete.

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

If no one knows who the creator of BitLaundry is, a large enough transaction could come in where it is to tempting for the creator to pass. Maybe there is something written on the code that if they receive a certain amount BTC, the BTC is sent to the owner of BitLaundry and the owner does a rug pull.

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#250

  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 receiver is hidden and for Bob the send is hidden. It’s likely Bob would know Alice sent the funds though it would be harder for anyone else to know.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    The platform gets hacked while their information is still present

  3. What is BitLaundry’s incentive to be honest?
    Making 0.5% long-term from reputation.

  4. What is BitLaundry’s incentive to be dishonest?
    Taking funds that come through the platform. Or getting paid to give out who used the platform.

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#251
  1. Alice - receiver. Bob - Sender
  2. Bitcoin network still keeps logs (unavoidable without modifying Bitcoin), but it ensures that you never get back your own coins.
    The log situation can be helped by periodically moving your bitcoins and deleting the empty wallet.dat file (this deletes all of your receiving addresses, so be careful).
  3. Reputation, and earning bitcoin from fees, privacy
  4. If they are threatened by the government or any authority with legal actions by not collecting KYC,
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#252
  1. For Alice, receiver is hidden. For Bob sender is hidden.
  2. If someone is able to monitor directly the traffic coming and going to Alice or Bob, they could intercept the information being handed off to BitLaundry. Also, if BitLaundry is surveilled, the information could be obtained. Likewise, if BitLaundry fails to delete the log of the transaction before it can be copied.
  3. If BitLaundry is discovered to be dishonest, the reputation and business of the whole scheme fails.
  4. If the person running BitLaundry is coerced by threats to self or loved ones, either by criminal thugs (kidnapping!) or government agents (jail!), or induced by some greater prospect of reward (bounty?), those trusting BitLaundry could be revealed.
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#253

  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, she only knows Bob’s public address and the amount being sent.
    For Bob, he only knows the amount being sent.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If BitLaundry is hacked, and data leaked, people may be able to link transactions, and the addresses of Alice or Bob could be made public.

  3. What is BitLaundry’s incentive to be honest?
    Reputation, as it is a company which survives by taking a cut of all transactions made.

  4. What is BitLaundry’s incentive to be dishonest?
    BitLaundry could take funds from the users depositing. Or sell information they know to others.

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#254
  1. It just makes any observer see BitLaundry as the receiver of Alice’s funds and the sender of Bob’s funds… they both know who they transacted with, but everyone else does not.
  2. If the anonymity set is too small, it could be a problem
  3. People would stop using it
  4. it is possible to just code it to keep the funds & BTC is a bearer instrument.
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#255
  1. Bob’s address for Alice and for Bob it’s Alice’s Address
  2. If Bitlaundry is hacked or if there is a info leak from Bitlaundry’s side.
  3. It’s simple, People will stop using Bitlaundry and Bitlaundry will stop making money.
  4. If Bitlaundry cauld be forced to disclose it’s user’s info by govt agencies or Bitlaundry is incentivized to sell it’s user’s info for a large sum of money.
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#256 
Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
That they did a transaction directly, any observer from outside will see Alice sending to “someone” and Bob receiving from “otherone”.

Explain a situation where Alice’s and Bob’s privacy could be compromised?
If private keys (or wallet.dat) from BitLaundry are revealed to someone, you can track history by transaction ammounts.

What is BitLaundry’s incentive to be honest?
Reputation, keep the service running.

What is BitLaundry’s incentive to be dishonest?
Sell information to chainanalysis companies, cooperate with goverments and save taxes or steal a good ammount of coins and disapear.
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#257
  1. 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 public address and the amount she want to sent.
  • Bob only knows the amount Alice wants to send to Bob. Alice’s signature remains hidden as BitLaundry steps into the transaction and disrupts the chain.
  1. Explain a situation where Alice’s and Bob’s privacy could be compromised?
  • If BitLaundry is hacked and someone can intercept the transaction traffic in real time, Alice and Bob can be linked to each other.
  1. What is BitLaundry’s incentive to be honest?
  • BitLaundry need to cover its operational costs, so the more participants to the blockchain choose the platform to keep their privacy, the more income is generated by the transaction prices. I.e. reputation ist the most important incentive for BitLaundry to be honest.
  1. What is BitLaundry’s incentive to be dishonest?
  • BitLaundry could take funds from users which send bitcoins to the service. However, within short time, users will inform each other that the service is malicious and BitLaundry will loose its customers.
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#258

  1. Alice’s purpose for using BitLaundry was to hide the recipient of the transaction. For Bob, the address of the sender Alice, was not disclosed.

  2. If BitLaundry retained any information belonging to Alice or Bob and they were subject to a hack, or if Bitlaundry were inclined to use an individual’s information for mischievous purposes.

  3. Financial gain. This is a paid service.

  4. BitLaundry could retain funds sent to them, abuse personal data held through blackmail or selling information to other dishonest parties.

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#259
  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?

As Alice doesn’t want to be linked to Bob, she sends her BTC to an address on BitLaundry. Alice knows the sender (herself), receiver (Bob) and amount (her SATs).
Bob does know that Alice is sending him some SATs but he doesn’t know her addresses (sender) as the SATs are sent from a public address belonging to BitLaundry.

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

If BitLaundry gets hacked all TXs would be visible and the link between Alice & Bob could be possible.

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

BitLaundry charges a fee on each TX. By being dishonest, people would stop using it.

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

BitLaundry could keep funds or blackmail users with leaking TXs data.

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#260
  1. For Alice it is hidden the receiver address and for Bob it is hidden the sender address.
  2. If they were the only two clients of Bitlaundry.
  3. BitLaundry’s incentive is to get more clients and therefore get more fees for the TXs…
  4. Maybe to keep the Bitcoins sent to their address
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#261

  1. No one can trace Alice with Bob and Bob cant be traced to Alice

  2. Privacy can be compromised if the service was dishonest.

  3. Fees are the incentive to keep bit laundry honest.

  4. Bribe or theft is the incentive to be dishonest.

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