Bitcoins Are Not Anonymous, They Are Traceable

[engine]

I'm one of those that used to think that bitcoins were untraceable. It seems, with the evidence in this case, the prosecutors proved otherwise.

I would imagine, with any currency, there's a certain amount of obfuscation that can be achieved, but it's more likely the problem is whether there's the will in the destination jurisdiction that makes the difference. No will, no way!

If anyone still believes that bitcoin is magically anonymous internet money, the US government just offered what may be the clearest demonstration yet that it’s not. A former federal agent has shown in a courtroom that he traced hundreds of thousands of bitcoins from the Silk Road anonymous marketplace for drugs directly to the personal computer of Ross Ulbricht, the 30-year-old accused of running that contraband bazaar.

In Ulbricht’s trial Thursday, former FBI special agent Ilhwan Yum described how he traced 3,760 bitcoin transactions over 12 months ending in late August 2013 from servers seized in the Silk Road investigation to Ross Ulbricht’s Samsung 700z laptop, which the FBI seized at the time of his arrest in October of that year. In all, he followed more than 700,000 bitcoins along the public ledger of bitcoin transactions, known as the blockchain, from the marketplace to what seemed to be Ulbricht’s personal wallets. Based on exchange rates at the time of each transaction, Yum calculated that the transferred coins were worth a total of $13.4 million.Bitcoins Are Not Anonymous, They Are Traceable [wired.com]

[Tonearm]

Bitcoin provides "pseudo-anonymity". The ledger which records every bitcoin transaction is very much public. Anyone can look at the ledger and easily see every transaction into and out of any address/account. And that's not hacking, that functionality makes up the core of the protocol. If someone can tie your identity to your bitcoin address/account, then they will know your transaction history. Also, you can create as many bitcoin addresses/accounts as you like.

[piatkow]

The journalist is writing a story not a text book so I suppose that some lapses should be excused. What isn't clear is:

1. Did they, suspecting Ulbricht, seize computers at both ends of the chain and match transactions
or
2. Seize the servers and discover the link to Ulbricht?

I assume that it was case (1) which would be hellishly difficult to hide.
To me "anonymity" would mean setting things up so that the authorities couldn't identify the other end of a transaction by checking only from the Silk Road end.

[Tonearm]

That's what Tor is for but it is apparently not perfect.