BitLaundry - Reading Assignment

Privacy Coins - Ultimate Course
#62
  1. Alice will no longer be sending coins directly to Bob so there will be no direct link between the two.
  2. If the intermediate gets (bit laundry provider) gets compromised and the data base where the relationship between bob and Alice is revealed before it gets deleted.
  3. Especially in a new business you are only as good as your reputation, if they scam they are gone.
  4. they are the intermediate and as such they could assume that people using them have something to hide… why else use them… so they could skim money off the top and assume that nobody would say anything.
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#63

#1 - Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
The BTC balance of the other

#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?
Protection of private data

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#64
  1. Transaction tracking link between original public keys.
  2. Transaction input and output amount match incase of one or very less number of matching transactions at a specific period of time. If database isn’t deleted or is compromised.
  3. Transaction fees.
  4. Accumulation of large amount of bitcoins at any point in time.
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#65

For Alice no one knows who she sent bitcoin to, and for Bob no one knows who sent him bitcoin. Their addresses will not be linked together.

It could be compromised if there are not other transactions from BitLaundry going out, as well as if people connect the amount sent by Alice and received by Bob. If they didn’t use this service they could also have their privacy compromised.

They are getting paid to be honest and to keep anonymity. This will keep a customer influx for the service.

BitLaundry owns the bitcoin if you send them, and if they don’t want to send them out, they have just pocketed a lot of money.

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#66

  1. When Alice uses BitLaundry to send funds to Bob the information that is kept more private is the direct link between Alice and Bob. The use of the one time address supplied by BitLaundry makes an investigator have to dig more for the information.

  2. Alice and Bob’s privacy could be compromised if there are not enough tx’s going through their 30 min. time frame to camouflage their tx. Investigators could detect unusual amounts being transferred. If there is only one 97.98 btc input and one 97.98 output in the 30 min. time frame of Alice’s tx it could be associated. Also if there are patterns in terms of amounts, times, dates etc. It could draw attention.

  3. BitLaundry’s incentive to be honest is the revenue generated by the service.

  4. BitLaundry’s incentive to be dishonest would be if huge amounts were being put through, so huge that it made financial sense (just the math) that could be and incentive. Also, because the owner is known, that makes him an attack vector for government agents etc. to pressure. An antonymous protocol would be safer in that regard.

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#67
  1. Bob’s public key
  2. when Alice can have an access to one-time-use wallet address that the database link will be deleted after.
  3. 0.5% per transaction pay services
  4. the minimum transaction fee is less than the transaction value
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#68

  1. Doing this way there is no DIRECT link between Alice and Bobs addresses.

  2. BitLaundry could publish this information or their transaction could be the only one BitLaundry does in that 30 minute interval.

  3. They get transaction fee (and therefore an income producing business) and it needs to be built on trust. Once that is broken that would be the demise of their business and demise of their income.

  4. Perhaps where a big amount of BTC is transferred to them, they could be tempted to keep it or forward it to themselves, if the temptation is big enough.

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#69

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

The receiver of the funds that Alice sent is obfuscated.

The source of the funds Bob received is obfuscated.

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

Knowing that 5% is deducted it may be possible to determine sender and receiver by matching the input amount (minus 5%) with the output amount.

What is BitLaundry’s incentive to be honest?

Their service will continue to operate building trust with it’s users.

What is BitLaundry’s incentive to be dishonest?

Given a day where the size of total transactions exceeds normal revenues by several orders of magnitude, it may be deemed more profitable to keep the funds and close the project (basically take the money and run)

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#70

  1. People know Alice sent funds to BitLaundry, and they know that Bob received funds from BitLaundry, but Alice and Bob are not linked.

  2. If there were no other transactions on BitLaundry in the half hour between Alice sending funds and Bob receiving them, then it would be obvious to all, who sent the funds to Bob.

  3. Reputation in order to continue earning fees

  4. A very large transaction could be too much temptation

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#71

1.The specific information that is ‘private’ for Alice and Bob is; a) The exact time of their transaction, b) Who Alice sent BTC to, c) Who Bob received BTC from, and d) The link between them.

2.Alice and Bob’s privacy could be compromised when the service is very quiet and few transactions are taking place. This is because very little mixing of transactions can be done. Also, if a payment doesn’t arrive and there is a query, an investigation may have to take place to determine “what funds went where”. State interference or hacking could also compromise privacy. Additionally, if someone knew the fees applicable to the transactions they could determine which inputs to the pool went to which destinations by matching the amounts.

3.BitLaundry’s incentive to be honest is to be able to build a good reputation, thereby encouraging more people to use the service and so increasing anonymity.

4.BitLaundry’s incentive to be dishonest is the fact that they may be able to make more money by stealing the funds of users who wish to remain anonymous, than they can by charging fees for carrying out the service.

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#72

  1. Private is a connection between Alice and Bob. It is known that Alice sent coins as well as its known that Bob later received coins. Still there is no evidence that Alice sent those coins to Bob.

  2. If Alice send some specific amount like 1.2981943 BTC then it would be easy to identify that this particular amount was sent later to Bob (minus some fee). If service does not delete log of Alice activity when she has entered Bob’s address in the form, then service may reveal and link Alice and Bob later or some hacker can get access to those logs.

  3. BitLaundry has a fee that Alice need to pay to send coins to Bob via BitLaundry. If service is honest - more users trust it, more fees are paid to the service.

  4. If there is a large amount of coins to be send at the moment, then service owner may decide to exit scum with those coins, especially when amount is much larger than he ever will be able to collect with fees.

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#73

  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
    The system functions as a cloud middleman. People can see Alice sending a payment to BitLaundry, but after that it is obfuscated by only sending transactions or payouts every 30 minutes - in this case to Bob.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    There is a potential for the amounts to be traced between all of the parties. This works like coin-join similarly that the hiding element works better at large scale.

  3. What is BitLaundry’s incentive to be honest?
    As a middle layer, people would not use the service if there were issues. (especially if he went ahead at the 1BTC per launder! whew!)

  4. What is BitLaundry’s incentive to be dishonest?
    Potentially if they log the transaction data, they could be bribed to release the information, although unlikely.

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#74
  1. The link between sender and recipient is more private.
  2. If Alice sends a very unique amount of BTC and 30 minutes later BitLaundry sends that same specific amount to Bob. This is especially revealing if nobody else sends a somewhat similar amount in that same 30 minute window.
  3. BitLaundry is a company that is functioning as a middleman. As such their whole business model is based on trust which is the opposite of the original block chain idea of trust less transactions. Their business will stop working once users stop trusting them.
  4. If there was ever a very large amount of BTC sent to BitLaundry, they could just decide to walk away with it and quit their business.
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#75
  1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?

The origin address (link to Alice public key).

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

The IP address and time stamp are still public (via public blockchain, network provider) and can be correlated to the transaction value of the transfer between Alice & Bob.

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

Throught the transactions fees.

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

By selling on chain transactions.

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#76

BitLaundryFinal
BitLaundryFinal894×770 107 KB

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#77

1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
The person to whom Alice wants to send the money will be private; in this case Bob, since the transactions will be mixed up in a pool of other transactions and then finally sent to Bob.

2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
If there are not enough transactions in the pool, then it would not be difficult to link Bob and Alice. Additionally, if their algorithm isn’t actually random, you could work out the pattern and put the pieces together. Finally, if BitLaundtry is hacked or the information is seized and they haven’t deleted the logs it could compromise privacy.

3. What is BitLaundry’s incentive to be honest?
Build their reputation and ultimately result in more customers and more revenue.

4. What is BitLaundry’s incentive to be dishonest?
Either they receive a transaction which is incredibly high and are incentives to keep it outweigh the fees that they hope to collect, or, they will be forced by law enforcement.

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#78
  1. The BTC addresses aren’t linked to each other.
  2. The public keys might be compromised if no other transactions take place over a period of time.
  3. Honesty builds reputation.
  4. If the amount of BTC is ‘life changing’ there might be an incentive to steal it.
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#79

  1. Alice and Bob are not linked to eachother. nobody knows where Alice send BTC and from whom Bob received.

  2. BitLaundry has a few users for the moment, so if no other transactions happened in the 30’ window except from Alice’s and Bob’s, their privacy could be compromised.

  3. The incentive to be honest is credibility and reputation, which are crucial for them to attract new clients so the can gain much more fees.

  4. Maybe a very large amount of a BTC transaction can be a serious reason to be dishonest, also they could be bribed by a corporation or a government or inlegal criminals to give privacy away.

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#80
  • Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
  1. The link of the one time address between the sender and receiver is dropped/“deleted”
  • Explain a situation where Alice’s and Bob’s privacy could be compromised?
  1. A. BitLaundry could get hacked and hidden info exposed.
    B. A Government could order BitLaundry to surrender all chain data.
    C. A Studious observer could piece the information together using a block explorer totaling amounts sent and received.
  • What is BitLaundry’s incentive to be honest?
  1. The continuation of use and possible mass adoption to collect fees.
  • What is BitLaundry’s incentive to be dishonest?
  1. A. Privately sell your on chain “deleted” data to interested parties like governments and tax authorities.

B. Steal Large tx’s amounts of bitcoin and claim the service was hacked.

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#81

Alice uses BitLaundry to send funds to Bob. What information is hidden from Alice: sender, receiver or quantity? How about for Bob?
Both Alice and Bob are hidden the address from where the BTC were sent.

Explain a situation where Alice and Bob’s privacy could be compromised?
That in the mix of segments the address to deposit the BTC is changed to that of the attacker or an address of the owner of BiLaundry and keep all the Funds.

What is BitLaundry’s incentive to be honest?
Continue with service active

What is BitLaundry’s incentive to be dishonest?
Sell information to other entities for more BTC or fiat money

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