Silk Road forums
Discussion => Security => Topic started by: antigrid on July 02, 2012, 05:31 am
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I have been reading a lot about BTC and it is still very unclear to me whether or not additional steps must be taken in between funding BTC and transferring to an SR account to prevent tracing back to original source of funding. I understand SR has a coin tumbler, is this enough? I have read some things about block chain analysis and I am confused as to how and if it can be traced and how to prevent. Do I need to send to a BTC wallet before sending to SR or can it go directly from first funding source to SR? Do I need to have it exchanged through another currency first , bitcoin laundry, etc? Keep in mind I am asking this for sellers, not buyers.
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I have been reading a lot about BTC and it is still very unclear to me whether or not additional steps must be taken in between funding BTC and transferring to an SR account to prevent tracing back to original source of funding. I understand SR has a coin tumbler, is this enough? I have read some things about block chain analysis and I am confused as to how and if it can be traced and how to prevent. Do I need to send to a BTC wallet before sending to SR or can it go directly from first funding source to SR? Do I need to have it exchanged through another currency first , bitcoin laundry, etc? Keep in mind I am asking this for sellers, not buyers.
Hi Antigrid, how's it going?
This is a question I get asked very often as a Bitcoin trader.
The short answer is that it depends on how you obtained your Bitcoins.
For instance my business allows people to buy Bitcoins for cash in the mail. Even I don't know the real identity of my customers so there's no possibility of the original purchase being traced back to them. As such there's no reason in theory why the Bitcoins cannot be sent directly from their exchange to a customer's SR wallet. In practice I send the coins through SR's coin mixer before sending them on to the customer but that's for my own protection, not theirs.
If however you use a funding source that is traceable e.g transfer to MtGox via Dwolla, SEPA bank account transfer to Intersango etc. then anyone with access to the exchange's records will be able to determine the first wallet address to which your coins were sent and then each wallet address thereafter.
The best way to illustrate this is to copy (Ctrl + C) your current wallet address and go to www.blockchain.info, which is an online representation of the Bitcoin block chain. Paste your wallet address into the search bar at the top right and click go.
You'll see every transaction sent to or from that wallet address. You'll also see the addresses of wallets from which you've received money / to which you've had money sent. You can copy these and trace the transfer of coins as many times as you like using this same method.
As such, there's not much benefit in sending your coins to another wallet before sending them to Silk Road if you've bought your Bitcoins using a traceable method -you can trace the passage of the coins across the block chain over two or two dozen wallets.
You can hugely increase your anonymity by making use of a coin mixing service like Bitcoinfog (http://fogcore5n3ov3tui.onion/). Not only does Bitcoinfog swap your coins with those of other users to prevent the kind of analysis I outlined above, it can also allow you to withdraw cash over a longer period of time such as three days in random amounts making the coins much more difficult to trace.
Of course you can avoid these kind of problems altogether by bearing in mind that the only safe ways to obtain Bitcoins is to buy them with cash or in exchange for goods/services e.g moneypaks.
Do let me know if you have any more questions.
V.