Quote from: pine on May 11, 2012, 10:30 amQuote from: flicky42 on May 11, 2012, 05:38 amOk I have a tough time understanding this shit so I'll just ask questions.The encrypted messages through a bank really sounds interesting however for the bank to survive wouldn't they need some sort of commission on transactions or percentage of deposits and withdrawals? Now wouldn't that percentage be an easy way to deduce how much money was transferred?Asking questions is fine, I think many people are afraid of going out on a limb or problem complexity, but that's how we all learn is it not? Imperfect pine is imperfect too, people shouldn't assume because I make a detailed statement that this implies it's gospel.In any case I guess traffic analysis would be possible under any schema even if you couldn't prove Alice transferred X coins to Bob or that Alice swopped X coins with Bob. I think it's conceptually easy to avoid though.For example if you take a fixed fee per transaction, or if you take a relative percentage from the entire pool of coins being mixed i.e. everybody throws in their money, and you take x% off the top, then the only information available to garner from the bitcoin 'checking account' the bank is using to store their fee income is the number of transactions or the volume over time. I think Bitcoin Fog for example, uses different randomly chosen fees between 1% and 3% to avoid traffic analysis. You could make it very complex indeed, but I don't think it's necessary if you address the second problem I'm bringing up:A different problem, is the limited scope of the mixer's domain/territory. Sure it mixes up stuff within its power to do so. However, seems to me that traffic analysis could differentiate between different kinds of bitcoin network activity because the mixer doesn't mix coins from across the entire network. Different types of activity should show up like shoals of fish. If you see frenetic activity in one part of the network, but not in another part, then there is a reason for it. A reason I say, but it's a helluva stretch to claim you know the reason for it. I mean, I am certain that you can't even do that with regular credit which is perfectly identifiable and traceable. Still, it's a concern. Sure you could simulate the normal pattern and level of activity within your B$ mixer, but I'm not sure you've solved the problem. Ideas? Where are you bitcoin geeks? :PHi Pine,This is an excellent article thank you!As I understand you are absolutely right in saying BitcoinFog charges a random amount of commission between 1 - 3% to obfuscate tracing. From reading the information on the site they are perfectly candid about the fact that this in itself does little to increase the anonymity of transactions as if LEO know that Alice has placed 100 BTC into the Fog and Bob has withdrawn between 97 and 99 BTC, as the article says it would be fairly easy to detect.For this reason Bitcoinfog at least offers users the option to withdraw money in random amounts over a certain period of time. Users are also encouraged to "tumble" their coins through the Fog more than once. The longer you leave your BTC in the Fog and the more frequently you tumble them the greater your degree of protection however this costs both time and money.As you say, this also does little to get around the second hurdle which is that of the fact that the mixing of Bitcoins is limited to those within the mixer's own pool. As you say I am not aware of any technical means by which this could be proven through block chain analysis but I think it would have to be a truly colossal sum of money to raise any eyebrows.I have a small amount of experience from the other side of the fence with money laundering through my job and would say the above concerns are secondary to legitimising the funds obtained from cashing out Bitcoins in any case. Within the network, a vendor's BTC profits are no good to them in themselves - even if they used their own SR to buy a large amount of gold bullion for instance, this would do nothing to assure the suspicious people of the IRS as to the provenance of his or her income.V.