BitLaundry - Reading Assignment

Privacy Coins - Ultimate Course
#22
  1. Alice doesn’t know bob’s private key she only has his public key and Bob Doesn’t know alice’s private key and public key.
  2. Their privacy can be compromised if BitLaundry are selling information of transactions that can lead to finding ip’s or Bitlaundry are getting hacked / forced to to give information to an entity.
  3. If Bitlaundry want’s to continue and earn 0.5% from each transaction they will stay honest.
  4. They always have the option to steal customers funds and exit scam.
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#23
  1. UTXO
  2. Alice transactions to Bobs can be compromised threw a link of UTXO.
  3. Privacy and incentive
  4. Organised crime money laundering and never to do the transfer.
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#24
  1. The direct transaction between Alice and Bob. And Bob does not know Alice real adress.
  2. If Bitlaundry sell information…
  3. To get a good reputation, the service is supposed to be trusted. Money
  4. Money
#25
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
  3. What is BitLaundry’s incentive to be honest?
  4. What is BitLaundry’s incentive to be dishonest?

1a. When Alice uses BitLaundry to send Bob funds the “One-time Use” address will remain private for both parties as any connection is destroyed afterwards. It allows Alice to cut ties with the destination address while it allows Bob to receive payment without scrutiny.

2a. If BitLaundry’s database were to be hacked and copied before deletion you could then link the transactions. you could also have a situation of low volume making the payments obvious.

3a. Their incentive is profit. by completing the task correctly they gain valuable trust in their service and hopefully will intern lead to returning customers and possible word of mouth advertising.

4a. Local Laws, Retaliation, A one time exit scam.

#26
  1. Alice sends money to Bob is private, from public perspective Alice sends some money to somebody “shady” and Bob receives money from someone who doesn’t want to reveal on the chain.
  2. The amount of money sent by Alice and received by Bob.
  3. Takes a cut
  4. sell information or take the money and leave
#27

  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    The public addresses, the time sent and received

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If BitLaundry actually records the specific transactions in its central server (otherwise how can it know which addresses are linked) and ends up being dodgy. Also If BitLaundry is required to acquire KYC info from its customers.

  3. What is BitLaundry’s incentive to be honest?
    Desire to build a profitable and sustainable business essentially performing a basic service which can get really competitive really quickly.

  4. What is BitLaundry’s incentive to be dishonest?
    Potential profiteering off of customer transaction data; to align with regulators, to run away with customer funds after establishing trust

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#28

  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    Alice UTXOS is not linked with Bob.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If Bob is has a suspicious bussinessr but also have a legit bussiness and Alice send him btc for the legit bussiness she might be asociated with the bad bussiness if Bob gets caugt by law.

  3. What is BitLaundry’s incentive to be honest?
    The fees

  4. What is BitLaundry’s incentive to be dishonest?
    BitLaundry might keep the btc and not send it to the receiver.

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#29

  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    Recipient of Alice and sender to Bob are private.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If someone hacks BitLaundry and get the information gets leaked that Alice sent money to Bob.
    If there is no transaction other than the one from Alice to Bob.

  3. What is BitLaundry’s incentive to be honest?
    The incentive is the 0.5% fee for each transaction.

  4. What is BitLaundry’s incentive to be dishonest?
    BitLaundry could disappear with the money.

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#30

1- Their Bitcoin Addresses aren’t directly linked and Bob will not know Alice’s public address. Alice will have Bob’s public key to give it to BitLaundry.

2- If bitlaundry shares their information.

3- Word of mouth is key, a good reputation is essential.

4- Sell information to chainanalysis companies, collaborate with goverments and steal funds

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#31

  1. The ‘private’ information is the direct correlation between Alice and Bob.

  2. Alice and Bob’s privacy could be compromised if someone followed the transaction amounts while knowing of services such as BitLaundry. The snooping person could take into account the fees associated with the service. Or, the service can simply get hacked.

  3. BitLaundry’s incentive to be honest consists of maintaining a good reputation for users to use their service.

  4. BitLaundry’s incentive to be dishonest lies with greed and theft, where transactions are sent to their own wallets instead of the intended recipients.

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#32
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    • Their bitcoin addresses
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    • If the amount of bitcoin sent to bob matched the amount allice sent to the service + fees, it can be linked to eachother, with certainty increasing towards a shorter timeframe.
  3. What is BitLaundry’s incentive to be honest?
    • A fee is payed to the service by the sender
  4. What is BitLaundry’s incentive to be dishonest?
    • Not delete the database but sell the information to someone bidding more than the sender is paying for the service and its secrecy.
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#33

1- Alice`s address is not used at all, a bit laundry’s address is used instead to send BTC to bob and the output goes out to bob scrumbled within a bunch of other random transactions shifting the time. So there is not a direct link between Bob an Alice.

2- In a regular BTC transaction where Alice sends assets to bob, if the public keys of anyone of them could be attributable to the identity of the person then that could be a prove of an actual transaction happening between them.

3- The fee they charge.

4- They are dealing with sensible information that could potentially be of interest for someone else that could be able to pay a lot, or a government who can request it by the force of law-

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#34
  1. publickey of Alice and Bob and amount of bitcoin to be send
  2. if BitLaundry’s is taken by authorities in the 30 minutes while a db link exists between both in sw
  3. to profit from service provided fee and that many other customers will come and use it
  4. when big chunk of bitcoin value is send over there they might as well think about to keep it for their own
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#35

Bob’s and Alice’s address are not linked, because there is no direct transfer between them.

If there is no other transaction at that time, it is clear that Alice send the money to Bob. Also, Bitlaundry could be lying about deleting the link between the one-time-address and bob’s address. One has to trust them!

They want to build a good reputation and gain more customers (collect more fees).

They could be bribed by governments or criminals. Or, if a big transaction is made, the could just keep the money for themselves and say “ooops, there was a technical glitch. sorry about that.”

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#36

1, It’s difficult for outside observers to link this payment between them, since they are using an intermediate step in between.
2, The infomration can leak if Bitloundry’s wallet is compromised or Bitloundry is not honest.
3, To build reputation and continue to make money running the service.
4, The can take the money and run, if the amount the receive is high enough, and think they will make more by taking it than by continuing the service. The can make money by secretly selling this infomraiton to third parties.

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#37
  1. Public addresses.
  2. If in a 30 minutes time period only alice is using bitlaundry ´service.
  3. Build on reputation/credibility.
  4. To sneak data to government/states, and/or steal your funds.
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#38
  1. Bob’s address is not revealed to Alice, and vise-versa.
  2. Based on the timeframe and quantity of a transaction, it may be deduced as to what went where. Also, logs are kept that could be requested by a government organization or hacked.
  3. The operation is highly lucrative to risk losing the business.
  4. They have the information a government may request, and the temptation of a huge transaction would be hard to turn down when it couldn’t easily be traced as to what happened.
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#39
  1. The “private” information is that there was a transaction between Alice and Bob.
  2. BitLaundry’s database is exposed or a lack of other users could show a correlation between them.
  3. The transactions fees received from providing a trustworthy service.
  4. The money being transferred could be much greater than the fees they otherwise received or it could be profitable for them to blackmail or expose information about transactions.
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#40
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?

The second leg of the transaction, from bitlaundry to Bob, is somewhat private in the sense that it is one of a bundle of transactions. Also, Bob doesn’t get to see Alice’s public keys.

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

If the pool of inputs and outputs contain unique transaction values, one could make an educated guess as to the initiator and recipient. Also, if the BitLaundry database is compromised, the additional privacy layer is negated.

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

Transaction fees and reputation. Tx pool size must be small enough to disincentivize sweeping several hours worth of Tx and ‘disappearing’.

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

$$$ See above

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#41
1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?

Alice does not send directly to Bob so the transaction link between them is obfuscated.

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

However mixed the transaction history is, if BitLaundry sent a single transaction to Bob where the amount matched the value sent by Alice it would be a lot easier to derive who the true sender was.

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

Staying honest means collecting the transaction fees and earning trust from users. This would increase the usage and earn them more fees.

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

The service is custodial, they get sent BTC and have full control over those funds. If they wanted to be dishonest they could just keep the funds and not send it to the intended receiver.

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