BitLaundry - Reading Assignment

Privacy Coins - Ultimate Course
#142

You could match the inputs and outputs sent in case if there is low liquidity. :slight_smile:

#143
  1. They don want anyone to see who recives the coins.
  2. The amount of Bitcoin sent between Alice and Bob, it cannot be hidden by Bitlaundry
  3. To get a good reputation, the service is supposed to be trusted
  4. If they want to steal the coins, there is no registration or contract written between Alice and Bitlaundry.
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#144

  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
    The receiver is hidden for Alice, although seen as the BitLaundry service. The sender is hidden for Bob but also seen as the BitLaundry service.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If there were a limited amount of transactions over time their transactions could be linked. Checking balances and transaction amounts from senders and receivers may link them.

  3. What is BitLaundry’s incentive to be honest?
    By increasing their reputation and keeping the service running they would ultimately get more and more income as fees.

  4. What is BitLaundry’s incentive to be dishonest?
    They could steal a much larger amount of crypto than the fees they’d collect.

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#145
  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 , and for Bob the sender.
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    if Alice sends direct funds to Bob , they could be linked as they share the transaction on the same block. This contains bob public key and alice signature
  3. What is BitLaundry’s incentive to be honest?
    Reputation as more users would come if they are honest
  4. What is BitLaundry’s incentive to be dishonest?
    I dont think they have any as per the previous question. But of course they could get all money and do not return it back to the owner. However this long term it is not a good business.
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#146

1.-For Alice, the receiver, because the inital receiver will be BitLaunday and not Bob’s adddress. For bob, he will not know the public address of Alice.
2.- If BitLaundry system get’s dissembled by a government since BitLaundry know the sender and receiver addresses, with that data, the governement could link Alice and Bob, and then they just need to figure out the real identities of them linking the public addresses to any point in the history where they reveal their real identity (KYC, IP adress, email, etc).
3.- The fees payed by the users.
4.- Maybe a higher payment made by an entity or governeent that wants to know the real links of the people using the mixing service.

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#147

  1. Alice - receiver hidden. Bob - sender hidden.

  2. If the DB link is not deleted.

  3. To build their reputation and grow.

  4. To steal or to sell information.

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#148

1./2. You can see the amount that Alice send to the BitLaundry, but you cannot see who is the final receiver. For Bob you can see the amount received from BitLaundry, but you cannot determine its origin. So BitLaundry tries to break the link between sender and receiver, even though the amount might be used to link them together again.
3. Establishing a trusted business could potentially lead to increased fee income over time.
4. When a bigger transaction comes in, keep the money and run away with it.

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#149
  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
    Receiver and amount.
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If BitLaundry doesn’t delete the transaction to Bob.
  3. What is BitLaundry’s incentive to be honest?
    To get more business.
  4. What is BitLaundry’s incentive to be dishonest?
    None.
#150

They could just go dark when they get high traffic and take the funds with them. :slight_smile:

#151

Agree. They can just steal the money, but, would that be an incentive to be dishonest?, meaning, as soon as they steal it, it would be known throughout the network and put them out of business for being dishonest defeating the purpose of creating BitLaundry as a business for them. Does that make sense?- The problem is that we still would have to trust them, defeating the purpose of being descentralized and trust only the code which blockchain and smart contracts are supposed to provide. Your thoughts and thanks a lot Alko89!

#152

Well its a centralized service so you do have to trust them. I think that is one way to be dishonest gaining trust at first to run away when people start trusting you a bit more. You can always set up the same service with a different name and start again.

#153

  1. Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
    By using BitLaundry, only knows that Alice send coins and Bob recive coins, but there isn’t any correlation between them.

  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    In case of specific amount is sent by Alice and in BitLaundry’s pool are not enough transactions, plus that same amount is recived by Bob; it is possible to correlate. Moreover, if logs are hacked could also be a problem.

  3. What is BitLaundry’s incentive to be honest?
    By creating credibility and reputation, more fees will be collected.

  4. What is BitLaundry’s incentive to be dishonest?
    Stealing people’s info and sell it.

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#154
  1. Bob can’t see from the transaction that Alice sent BTC to him. Alice don’t have to send money straight to Bob.
  2. a. if the transaction would be forwarded right away
    b. if this transaction would be the only transaction sent out from BitLaundry at the same time
  3. a fee of apx. 0.5% of the transaction and future business
  4. the whole amount of the transaction…
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#155

Alice uses BitLaundry to send funds to Bob. What information is hidden for Alice: sender, receiver or amount? How about for Bob?
With the one time use address and the deletion at the end, for Alice the receiver (Bob) is hidden.
For Bob the sender is BitLaundry, and as such Alice is hidden from the chain.

Explain a situation where Alice’s and Bob’s privacy could be compromised?
If BitLaundry was compromissed, mainly in that 30min window.

What is BitLaundry’s incentive to be honest?
Repeat business, large profits. Keeping the clients happy would be important, due to the nature of the business.

What is BitLaundry’s incentive to be dishonest?
Not wanting to be hounded by regulators and SWAT teams, gaol terms, taxes and fines. It would also be difficult for customers to claw back their coins, and impossible to report, due to the fact you used the service not to be ID’ed in the first place.

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#156
  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’s transaction, the true receiver of the bitcoin is hidden. For Bob, the true sender of the bitcoin is hidden.
  2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
    If Alice sent a very specific amount of bitcoin and no one else in bitlaundry’s
  3. What is BitLaundry’s incentive to be honest?
    If it is not honest, it’s business is essentially over.
  4. What is BitLaundry’s incentive to be dishonest?
    A lot of money can be run off with at that moment of dishonesty.
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#157
  1. Alice wants to send a transaction to Bob without being directly linked to him. This is ensured by obscuring the addresses from each other.
  2. When only Alice sends a transaction to Bob via Bitlaundry, there is no decorrelation possible. In other words less transactions to Bitlaundry, means less decorrelation.
  3. Getting customers to use their service.
  4. The company is a custodian of the funds, so there are financial reasons to be dishonest.
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#158

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 information is hidden so no one can tell who she is sending funds to except for BitLaundry. For Bob, no one can tell who sent the funds to him so the sender information is hidden.

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

Alice and Bob’s information could be compromised in an instance of BitLaundry being hacked.

What is BitLaundry’s incentive to be honest?

BitLaundry’s incentive to be honest is to keep a good reputation to grow its user base since it would be profiting from the fees.

What is BitLaundry’s incentive to be dishonest?

BitLaundry could keep all of the bitcoin.

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#159

  1. In this instance, what would be hidden is the receiver of Alice’s funds.

  2. The privacy could be compromized if someone could view the internal logs of the laundry service.

  3. The incentive to be honest would be to gain more users.

  4. The incentive to be dishonest would be to exit with lots of stolen bitcoin.

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#160

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, Bob’s real public address for which he will be receiving is hidden from her. Meanwhile for Bob, Alice’s real public address in which he received funds is also hidden.

2. If they were the only ones to exchange funds in the last 30 minutes then it would be easier to acknowledge the sender and receiver of the funds.

Also, within the window of 30 minutes from the moment the one-time link is exposed up until it gets deleted, a person can monitor block explorer and notice Alice’s real public address and amount sent to the one-time link.

Shortly after the funds have been sent to Bob, the person can compare the amount that was sent to Bob via the one-time link and compare it with the amount Alice sent to the one-time link. They can then via linking acknowledge the real receiver public address of the funds, making it obvious that Alice was the one to send funds to Bob. However, this task would become more difficult in the case where there are multiple similar amounts being transferred via that same one-time address. Even then, if anyone close enough to Alice and Bob knew their real public address then it would become obvious that Alice sent funds to Bob.

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

BitLaundry’s incentive can be a small commission fee from the amounts transacted as part of providing a more anonymous service for people to send and receive funds.

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

They can take all the funds if the smart-contract code does not mandate that the funds necessarily get sent to the receivers.

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#161
  1. For Alice is the receiver, for Bob is the sender;
  2. If bitlaundry is hacked they will have all the data to track down the information;
  3. The bitlaundry incentive is get a fee for every transaction that people want to make it more private;
  4. The bitlaundry incentive to be dishonest is the reason for people use this service could be related to some secrets and could be very tempting to sell this information to third parties.
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