BitLaundry - Reading Assignment

Privacy Coins - Ultimate Course
#42

  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    That Alice is sending funds to Bob. From outside, it looks like Alice is sending the funds to someone and Bob receive funds from a service.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If there would be only a few people, who are using the service, it would be possible to check the output and input transaction of the user. This way it’s possible to compare, who is sending whom, how much.

  3. What is BitLaundry’s incentive to be honest?
    To build a bigger and solid business, so that more people want to use their service, which means the quantity of the fees will increase.

  4. What is BitLaundry’s incentive to be dishonest?
    If the got a huge amount of Bitcoin in a short time, which is impossible to get in fees over a lifetime. So they would be certain, to never see so much money again.

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#43
  1. When Alice uses BitLaundry she removes linkage the Bob that would have otherwise been stored on the blockchain. So this would allow Alice and Bob to keep their financial relationship secret.
  2. Since the blockchain does keep all transaction records using BitLaundry and other mixers will only make it tiresome and difficult for the person investigating your transactions and financial relationships. Eventually you will be able to find the link.
  3. BitLaundry charges a fee as an incentive to be honest.
  4. Greed will drive many people to be dishonest. Having to trust even 1 person is always a risk.
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#44
  1. Their addresses are in this case generated for one time TX.
  2. The system relies on multiple TX over a 30’ windows. If there are no transactions their privacy would be compromised. Additionally the amount of BTC would also be detectable
  3. BitLaundry gets commission for each transaction it executes. A good service increase popularity and therefore commissions.
  4. Incentives to be dishonest would include knowing all TX similarly to a modern centralised exchange and retain funds if a particularly big TX takes place.
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#45
  1. The fact that Alice sent funds to Bob.
  2. Onchain analysis sees an incoming transaction to bitlaundry for x-amount and later an outgoing transaction for the same x-amount from bitlaundry; the addresses are then linked to each other.
  3. Trust in the service can lead to higher transaction volumes, which leads to higher fees.
  4. Fractional Reserve Banking.
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#46
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
  • The BTC address of both sides
  1. Explain a situation where Alice’s and Bob’s privacy could be compromised?
  • Very few people are using BitLaundry
  1. What is BitLaundry’s incentive to be honest?
  • To earn further income
  1. What is BitLaundry’s incentive to be dishonest?
  • Present interest is too high and worth them to take risk.
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#47
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    Alice does not want anyone to know that she send funds to bob.
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If private keys from BitLaundry are revealed to someone, you can track history by transaction amounts.
    3.what is BitLaundry’s incentive to be honest?
    getting 0.5% fee on transaction’s value, get good reputation.
  3. What is BitLaundry’s incentive to be dishonest?
    sell information to chainanalysis company, steal coins and coorperate with governemts
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#48

  1. Someone looking at the transaction that Alice sent cannot tell that the funds were sent to Bob. Likewise, Bob cannot see Alice’s balance when looking at the transaction between Bitlaundry and himself. So the fact that Alice sent funds to Bob is private, and Alices balance in private. (However, deeper analysis might connect Alices inputs to the UTXOs that Bob receives because of matching amounts, depending on how amounts are dealt with by BitLaundry)

  2. If a government put pressure on BitLaundry to surreptitiously keep and hand over logs, the privacy of both Alice and Bob could be compromised. Privacy may equally be lost if, before being deleted, the logs were accessed by a hacker.

  3. If bitLaundry were to remain honest by neither stealing peoples funds nor handing over logs, then people will trust their reputation and their business will continue. Otherwise, if people find out that they are stealing or leaking user information, people will stop using their service and their business will fail.

  4. BitLaundry might be threatened by government or law enforcement to secretly release the logs to them. If they do not they might be faced with prosecution. They might also decide to keep the aggregate of peoples funds if such funds have a particularly large balance at a given moment, and pull an exit scam.

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#49
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?

The same information considered private in a normal Bitcoin transaction is also private when using BitLaundry. As long as the address Alice uses to send BTC and the address Bob uses to receive it are not connected to them as a result of using a centralized exchange or service that has recorded identifiable information, their identity is remains unknown.

BitLaundry essentially pools BTC received from multiple UTXOs in a temporary address and sends it out over a varying span of time to the intended recipient addresses. With a large enough anonymity set, it can obfuscate which UTXOs were sent to which recipient addresses.

Short answer: the intended recipient of the transaction.

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

  • BitLaundry fails to delete database information that records transactions between senders’ addresses and the “burner” addresses used between intended recipient addresses.

  • If the anonymity set BitLaundry has available is too small, and you use it to send yourself BTC, you could receive the same BTC you sent which could help to identify which addresses share a common owner if the addresses have been used for more than one transaction.

  • Someone accesses the logs related to the transaction held in the wallet.dat file.

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

It’s to promote an anonymous means for transacting digital currencies on the blockchain in order to facilitate increased individual financial sovereignty of users who’re attempting to separate from the centrally-controlled traditional financial system.

Also, keep dat bidness runnin’ to collect dem fees.

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

  • To keep all funds sent to the service.

  • To be compliant with regulating authorities in case of legal action/pursuit, they keep records of all transaction data used in their service despite telling users they would not.

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#50

  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    there are no directly connect both address. Alice doesn’t know who is receiver, and Bob doesn’t know to who is sender.
    Alice --> BitLaundry (one-time-address) --> Bob

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    BitLaundry could have both address, BitLaundry could keep transaction history and trace, monitor these address.

  3. What is BitLaundry’s incentive to be honest?
    Get reasonable rewards, transparency, and verifiable by sender and receiver

  4. What is BitLaundry’s incentive to be dishonest?
    cheating both sending and receiving sides to get coins, provider transaction info to some else to get benefits

1 Like
#51
  • For Alice, she remains anonymous, as one time address is deleted. For Bob, he receives the bitcoin but as far as he can see it will be from BitLaundry’s.
  • As a one time thing, it could work…but if it is done several times it could potentially lead to Alice and Bob. Also, if the one transaction is done from point A to point B and then point C in a short period of time you could trace it. Or someone has already an idea of what’s happening and they are already on to you, they could be checking in real time before anything gets deleted…I think.
    3 & 4 * The small fee…but Nothing really…they could just be playing you and say I charge you .5 but they keep everything…it is not trustless
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#52

  1. The transaction from Alice to bob

  2. The utxos linking alice to bob could be compromised and this would compromise their privacy

  3. They charge a transaction fee per transaction

  4. Nobody can track the transaction should they decide to be dishonest

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#53
  1. The sender and recipient addresses remain private. Thanks to BitLaundry, there is no connection between sender and recipient.
  2. If you don’t use a platform like BitLaundry, someone could track your transaction and find out who you are, as a result they could track all your other transactions.
  3. First of all he would have an incentive to be honest because in doing so more and more people would speak well of that service. And then because they would continue to earn money thanks to the fees.
  4. It could steal all the money from people who rely on it or sell information for money.
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#54

  1. Alice don´t want to provide information about the receiver of her money (in this case Bob). When she uses BitLaundry the information to whom the money flow is hidden (private) because it is not send directly to Bobs address. That being said, the information about the sender of the money in case of Bob is private as well as the information who receives the money from Alice.

  2. I could imagine there are two ways of getting the privacy compromise. If I understand it correctly, there is some third party (a central server) which can be hacked and reveal information of the transaction. Another problem could be the timespan of 30 minutes as well as the volume inside this timespan. When there is only one transaction within 30 minutes it can be clearly seen who the money is going. Another problem is also the amount. When there is only one transaction with your amount of BTC in a small timespan then you can also conclude who belongs to this transaction.

  3. BitLaundry making money with every transaction through charging a small fee. Because of only earning through a transaction the financial incentive is to have a lot of transactions and consequently earn more money.

  4. When they are dishonest and not trustworthy anymore people will not use their service anymore which results in less transactions and consequently earn less or no money anymore.

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#55

Q1: Alice and Bobs address is kept safe thru the use of Bitlaundry.

Q2: Gov. agencies spying on services such as these as well as if in a 30 min window Alice is the only person making TXs during that time it would not be hard to see she made those TXs.

Q3:They get a good percentage in return for their services. People want to remain anonymous and with Bitlaundry’s help they can so it would be mutually beneficial for both parties to use this platform.

Q4: if a huge TX amount came along the website could potentially just run with the funds and bye bye Bitlaundry.

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#56

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

Alice’s input Tx and signature along with Bob’s public key(address) is what is obviously obfuscated. There is also the amount that Alice is sending and her IP address.
Sender receiver decorrelation.

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

If BitLaundry is raided by authorities, or a malicious internal employee archives debug logs, logins, other account information, IP addresses and stored send information, Alice’s and Bob’s privacy would be violated.

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

BitLaundry charges half a percent of the total transaction, thus they are profiting a good amount. They would probably not want to spoil a good thing.

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

If a transaction comes through valuing close to a million or more BTC, they may close shop and run off with the funds.

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#57
  1. Their identity is private for both of them.
  2. If the historical log cannot be delete it from database.
  3. Better fee % to make sure the coins are not traceable.
  4. Low fees for the risk to take may end up leaving a money laundry trail and result in coin lost.
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#58
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    Their public bitcoin address is not exposed
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    When they send money it can be identified that it was send and received at the same time. One could guess that it’s Alice and Bob doing the transaction.
  3. What is BitLaundry’s incentive to be honest?
    Reputation
  4. What is BitLaundry’s incentive to be dishonest?
    They could benefit large amounts of bitcoin.
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#59

  1. The specific information that is private for Alice and Bob is that Alice and Bob know each other.

  2. Alice and Bobs privacy could be compromised of the transaction was sent out immediately once Alice has made the transaction with BitLaundry

  3. BitLaundry’s incentive to be honest is that they shall receive a percentage of the transaction and that was expected to raise to 1 BTC.

  4. BitLaundry’s incentive to be dishonest is they they can run away with all of the BTC and never be seen again.

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#60

  1. The information that is private for Alice and Bob is that Alice sent money to Bob, so it is not exposed that they are connected.

  2. Alice’s and Bob’s privacy could be compromised if there are not enough people using BitLaundry, so Bob ends up with most or all of Alice’s coins.

  3. BitLaundry’s incentive to be honest is to continue receiving the fees from all of the transactions using it.

  4. BitLaundry’s incentive to be dishonest is that if enough people are using it they could exit scam and take all of the bitcoin.

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#61
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?

Proof of transaction itself is private because there is no direct link between Alice and Bob’s address. Alice uses onetime address to send bitcoin to BitLaundry and BitLaundry sends that amount from combination of different UTXOs to Bob in 30 minute random intervals. BitLaundry didn’t keep login or other account information, did not track IP addresses, and it only stored send information until a payment was confirmed to be successful.

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

If there is small number of service users and if the amount that Alice sent to one time address is unique, it can easily be linked to the same amount that Bob received from the service.

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

The more people are using the service the higher revenue will be collected in transaction fees for using the service.

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

There are no laws protecting users from losing their bitcoin by using this service.

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