Y is the author of a book I can very greatly recommend, with the fascinating title Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency. As I dug into this cypherpunk world, around 2010 and 2011, I came upon this thing that seemed to be a new phenomenon in that world of online anonymity - which was Bitcoin. I wrote, I think, the first print magazine piece about Bitcoin for Forbes magazine in 2011. I interviewed one of the first Bitcoin developers, Gavin Andresen, for that piece. Gavin and many others at the time were describing Bitcoin as a kind-of anonymous digital cash for the internet. You could actually use this new invention, Bitcoin, to put unmarked bills in a briefcase, basically, and send it across the internet to anyone in the world. What I didn't foresee is that, ten years later or so, it would be by then apparent that Bitcoin is actually the *opposite* of anonymous. I began, at the same time, to see that this one company, Chainalysis, a blockchain-analysis Bitcoin cryptocurrency tracing firm, was being venked in one US Department of Justice announcement after another in all of these major busts. They had started actually tracing Bitcoins years earlier, and had used this incredibly powerful investigative technique to go on this spree of one massive cybercriminal bust after another. Because the whole idea, at least of the Bitcoin blockchain, is that it is, by design, entirely and utterly public and irrevocable. This idea that it's *possible* to trade anonymously with Bitcoin - I think was taken by very many people to mean that it is fundamentally anonymous and ever-untraceable. Y. I sometimes look back on my 2011 self, and in that piece for Forbes, I *did* write that Bitcoin was potentially untraceable. The whole idea of Bitcoin is that there's a blockchain that records every transaction. Then I remind myself that even Satoshi Nakamoto, the mysterious creator of Bitcoin, in their first email to a cryptography mailing list introducing the idea of Bitcoin. That was a feature of Bitcoin as Satoshi described it. So I think there's always been this idea that Bitcoin, if it's not anonymous, at least is pseudonymous, that you can hide behind the pseudonym of your Bitcoin address, and that if you can't figure out somebody's address, you can't figure out their transactions. So that is the story, I think, of how Bitcoin's anonymity turned out to be the opposite. DUCK. Andy, do you think, perhaps that there's nothing wrong with Satoshi Nakamoto saying, "You *can* be anonymous when you use Bitcoin?". The original idea of Bitcoin didn't include exchanges, did it? So there wouldn't be any exchanges that would take a copy of your driving licence if Bitcoin were used in its original sort of cypherpunk way, as far as I can see. It's all incredibly complex economics; Bitcoin was brilliant enough as it is. I do think that it's more than just, "You *can* be anonymous with Bitcoin if you're careful, but most people are not careful." It turns out, I think, that the possibility, no matter how smart you are, of using Bitcoin anonymously is vanishingly small. Now, all of these law enforcement agencies that have professional Bitcoin tracers - their savvy, their know-how in doing this, is just growing by leaps and bounds. That is, in part, because very few people have that other-worldly restraint that Satoshi had to amass a million Bitcoins and then never spend them or move them. Self-styled "Crocodile of Wall Street" arrested with husband over Bitcoin megaheist. It was more than $3 billions' worth of Bitcoins that they had, but couldn't cash out. As I document in the book actually, one of these happened after the book, but the IRS criminal investigators, who are the main subjects of this book, have now pulled off the first, second, and third-biggest seizures of money in American criminal justice history, by following cryptocurrency and seizing Bitcoins. This individual had stolen 70,000 Bitcoins, and was busted, and basically gave them back sort-of in return for getting let off. If we look forward a few years, now that Bitcoin's what, in the last year, it's gone down to about a third of its value; Ether is down to about a third; Monero is about half. Y. Yes, probably - Bitcoin had just broken through $1000, if I remember. This person sat on these 70,000 Bitcoins for seven years, ultimately. Even without trying to get it out, IRS criminal investigators found it through other means, including the seizure of the BTC-e exchange, which was a kind-of money-laundering, criminal Bitcoin exchange. He seems to have taken 50,000 Bitcoins from the Silk Road, probably around the same time, and then held onto them for even longer. Y. He was a Bitcoin billionaire, and now is facing criminal charges and never got to even spend his loot. Perhaps this trap persists that even coins that are designed to outstrip Bitcoin in terms of their anonymity are not all they're cracked up to be. Thinking of cryptocurrency tokens like Monero, which as you say, is meant to be more privacy focused than Bitcoin because it inherently, if you like, joins transactions together. The book begins with this "Mea culpa" that ten years ago I believed exactly the wrong thing about Bitcoin. People will still be using cryptocurrency thinking that they have outsmarted the tracers. The book is called "Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency."
This Cyber News was published on nakedsecurity.sophos.com. Publication date: Tue, 07 Feb 2023 17:59:02 +0000