HN Gopher Feed (2017-09-25) - page 1 of 10 ___________________________________________________________________
68% of total Ethereum transaction value controlled by one system
110 points by bmj1
https://blog.cyber.fund/huge-ethereum-mixer-6cf98680ee6c___________________________________________________________________
45h34jh53k4j - 2 hours ago
Oh no! The emperor's has no clothes!
Animats - 1 hours ago
This mixing ramped up around the same time as the price did.
Etherium was around $8 at the beginning of 2017, where it had been
for years. By midyear it was in the $300-$400 range.Is this mixing
somehow involved with a scheme to pump the price?
Taniwha - 20 minutes ago
Doesn't this screw up people's taxes, making them liable for
realised capital gains, and also making them completely screwed
if the value of the currency goes back down again
Slartie - 1 hours ago
I would say the relationship is this one:First, Ethereum was
found to be the perfect Ponzi scheme platform by dubious ?ICO?
initiators.Then, early investors made a huge bunch of money on
these ICOs.Then the price skyrocketed, as more people wanted some
of that easy ICO money.This in turn made the mixing services
insanely popular, as all of those ICOs had to cash out, and
knowing that their business was of dubious nature, many decided
to obfuscate the target addresses of their ether via mixers to
protect either OTC buyers or their personal accounts on exchanges
from being linked with the ICO addresses.
NwmG - 1 hours ago
I would say it is not actually a mixer. The point you are making
actually points more towards them being temp addresses for
exchanges. More people entering the market on exchanges, higher
volume in exchanges, higher volume in this tempwallet "mixer"
alexjray - 27 minutes ago
?Ethereum transactions? and ?quantity of ETH transacted? are two
very different things. This title (and article) is deceiving.Please
see Vitalik Buterin response to this before
reading.https://medium.com/@VitalikButerin/i-think-this-article-
real...
dahdum - 1 hours ago
Aren't these the temporary deposit addresses that exchanges give
out? You deposit and then they sweep the balance to their hot/cold
wallets as necessary?Also the ReplaySafeSplit and related contracts
were due to the ETH/ETC split, you had to move your coins to be
safe.I see no evidence of a "mixer" being the cause.
oldstrangers - 1 hours ago
This is exactly what it is.
Nition - 1 hours ago
I was wondering that too. I know at least some exchanges (maybe
even all the major ones?) use temporary addresses like that. I
wonder when they started doing that. There's the huge spike in
"mixer" activity from March this year onward, but that's also
when Ethereum gained a lot of value. Maybe it's just a lot more
trading started happening on the exchanges?
dahdum - 1 hours ago
They have as long as I can remember, but the volume has
skyrocketed over the past year along with more exchanges.I
don't understand how the author could group all temporary
addresses, see the top inputs/outputs as all exchanges, and
then claim some nefarious mixer was responsible.
darawk - 1 hours ago
That was my first thought. Everything they describe sounds
exactly like temporary exchange deposit addresses. And the
transaction volume associated with them sounds about like what
i'd expect.
NwmG - 1 hours ago
Yeah, this was my thought as well. 67% of all ETH transaction
volume in a mixer seems pretty high, particularly when you
consider the volume traded on each of the exchanges
XR0CSWV3h3kZWg - 1 hours ago
The article doesn't seem to support the claim.
ChrisClark - 1 hours ago
Good to clarify, it's actually 68% of the value, the amount
transferred. They are only about 10% of the number of
transactions.
shemnon42 - 2 hours ago
Is the story that 68% of the traffic is naked laundering or that
68% of the traffic is people buying into ICO that are not already
enfranchised in ethereum?
[deleted]
mesozoic - 1 hours ago
Could be laundering but even with that you wouldn't want all of
the source currency to be illegitimate so only a fraction of it
would be. So it would probably cover both cases.
Alex3917 - 1 hours ago
It's not laundering, it's spoofing by some of the earliest
Ethereum holders who are trading with themselves on the exchanges
to create the appearance of volume and liquidity to drive up the
value of their coins.
cslarson - 34 minutes ago
Oh right.
charlesdm - 16 minutes ago
Can't be all spoofing though? That seems a lot / too much?
seibelj - 2 hours ago
It's an ETH mixer, it helps you obfuscate ETH, the same exists in
BTC and all other crypto currency systems without inherent privacy.
k__ - 1 hours ago
Could you elaborate? (I'm a n00b)Are there alternatives to BTC
and ETH that have inherent privacy?How do Feds not crack down on
these "mixers"?
uncoder0 - 1 hours ago
There are other coins focused on privacy Monero is my favorite
privacy focused crypto at the moment.
dijit - 1 hours ago
RE: your question about inherent privacy, there is Monero (XMR)
and ZCash which implement transactional privacy in different
ways.In my opinion XMR/Monero are the only implementation to do
it all the way through, so it's what I prefer but as with all
things, you should research what the differences are and which
is better for you. ZCash has a higher value per coin right now
and is probably more accepted than XMR/Monero.
the_stc - 1 hours ago
Except no large systems support receiving shielded zcash
transactions because of the CPU and RAM involved. They
recently made some improvements, but it still takes many
seconds of solid CPU time. Maybe in the future it'll be fast
enough to be practical and they can make it the default.
XR0CSWV3h3kZWg - 1 hours ago
zcash, monero and dash are the biggest that have inherent
privacy.
the_stc - 1 hours ago
ZCash is ideal, theoretically. If they get the performance
amped up so that private transactions don't take forever, it
could really work cause they could make privacy mandatory.
Though a 10% tax of all coins is rather questionable. The CEO
of the company did say he felt zcash could be made traceable
enough to be uninteresting to money launderers, whatever that
means. Sounds like the opposite of fungible.Monero's less
theoretically secure, and indeed, there's no info on how to
safely "launder" coins through Monero. Ringsize is very
small, at 5. But it seems to be a proper community effort and
probably the best contender right now.Dash is mired in
mishaps, from its inception and instamine as Darkcoin. A
single user or group of users hold magical keys that can undo
24 hours of blocks. They have centralized nodes and the
mixing scheme isn't even theoretically secure.
lawn - 1 hours ago
I should add that Monero doesn't use mixing in the same
sense. The ring size works so that you cannot see which of
the different choices is the correct output until spent.
This is different from having the participants swap coins
as you do when mixing. The ring size isn't directly
comparable to the number of mixing participants or mixing
rounds as the former isn't susceptible to blockchain
analysis. You can only make probabilistic guesses or IP
tracing.There is no "official" recommendation of how to
securely launder coins in Monero. What you can do is to
send the coins to yourself a number of times using the
default ringsize or "churning".
the_stc - 56 minutes ago
Sending coins to yourself, aka churning, might not work
so well after all, according to the latest MRL report.
They say:" We at the Lab previously thought that one
possible solution to knacc's described attack would be
churning, where one sends funds to oneself multiple times
before using at a merchant. Unfortunately, this leads to
chains of self-referential transactions, which leave an
undesirable and identifiable statistical signal. "Now the
follow-up I've gotten says that this just means you can't
churn too quickly. There is still no analysis of how
often to churn, how long you need to wait, and on and on,
until you're safe. The Monero wallets offer no way to
manage your inputs either, so if you ever re-use a wallet
(exchange->WalletA->WalletB a couple times) you'll leave
even more of an trace.So the number one idea that springs
to mind, Exchange->Monero->Exchange, might be a worst-
case scenario where you can easily be linked with a high
probability. Especially when the approximate input time
is known.For instance, if you know a target exchanged
Bitcoin in a certain transaction, you can simply trace
all possible chains from that output and see when one
hits an exchange, prioritizing shortest first: if an
exchange output goes right back to an exchange, that's
probably enough to get a warrant or targeted
investigation.Furthermore, an attacker could make a bunch
of transactions so other transactions use known inputs,
reducing effective ringsize even more. This wouldn't be
very expensive at current volumes.Even still, Monero
still seems far ahead of competition. My biggest concern
is that they don't put any sort of disclaimers, and
incorrectly state it's untraceable. This will get people
into trouble. The Tor Project does a far better job of
being clear with the risks and shortcomings. The Monero
community, mostly, seems to just advertise as if
everything was solved. That plus the ridiculously low
ring sizes feel rather irresponsible.
cgb223 - 1 hours ago
But since its still on a permanent immutable blockchain, couldn't
someone still trace Bitcoin/Eth transactions with perfect
accuracy?
grey-area - 1 hours ago
Yes
mesozoic - 1 hours ago
Sort of. It seems to me though that once you've missed coins
from many sources in various ways 90+ times then the coins are
distributed in parts to many end recipients its then very hard
to to say if some fraction of a coin came had any one source.
If I were designing a way to launder cryptocoins that may or
may not have a questionable source I think this is pretty much
what I'd come up with.
ringaroundthetx - 1 hours ago
You can play blockchain sleuth all you want, but you cannot
guarantee that you are following the same owner's transactions.
aeturnum - 1 hours ago
Yes - mostly. The idea behind a mixer is this:1. Your
transaction goes into their address2. Their address is always
transferring money to accounts.3. Sometime after you pay them,
some amount, not quite the same, leaves their address to an
address you control, but which has no established connection to
you.So an observer can see:1. That you put money into the
mixer.2. The full list of addresses the mixer payed 'out' to
(very long).Which allows them to say if an address has "mixed"
money but not to determine which account is connected to which
person. If you're careful and you don't transfer any coins to
addresses linked to your 'real world' persona, it becomes
difficult to trace the account containing the 'mixed' coins to
you (though trivial to identify it as coming from the mixer).
the_stc - 1 hours ago
A well designed mixer would not be so easy to detect. In a
perfect world, you'd have matching clients all the time, and
the only contamination is the fee being siphoned off. If the
fee is managed well it could be very difficult to determine
coins that went or came from the mixer.In reality, you
probably need to batch a few customers together: 10 customers
putting in 1 BTC, 1 customer putting in 10. But these don't
need to be long-lived groups, if the mixer has the volume. So
"their address" would only be the same for a few customers.
An attacker would need to constantly make transactions to
determine the addresses involved.Most mixers give you
completely "clean coins": That is there's no transaction
chain from your inputs to your outputs. So they are probably
doing some sort of system similar to what I describe.
jacquesm - 34 minutes ago
The proper term for this kind of activity is money
laundering.
Karunamon - 1 hours ago
Kinda, the problem is once you've moved through a couple
wallets (many wallets, in the case of the mixing services), it
becomes very hard to tell the difference between one person
moving their coins around, and one person paying another
person. A --> B A --> B --> C --> ...--> Z Pretend
you know who A is already. Who are B through X? Is the person
in control of A also in control of Z? Or any of the other
wallets? These are answers the blockchain doesn't give you.
imaginenore - 1 hours ago
No. If wallets A and B send 1ETH each to Z, and then Z sends
1ETH to X and 1ETH to Y, you already can't tell whose money is
where.
salgernon - 32 minutes ago
Wouldn't an interested party just assume A and B are both
guilty and given the current taste for asset forfeiture laws,
require proof of the origination of the funds? At one point
does it not become possible to "capture" people this way? 10k
wallets? 100k? I may be too simple to understand the math
here, but in the end you've got people with guns to deal
with.
lawn - 1 hours ago
Yes. Here's a paper claiming to trace through various mixing
services.https://arxiv.org/pdf/1709.02489.pdf
dsp1234 - 1 hours ago
Let's say you hand me a $100 bill, and that you have marked
that bill. I then take that bill to a bank and ask for 3 $20
bills and 4 $10 bills. The bank takes that $100 and puts into
the vault, and takes out the bills I asked for out of the
vault. Later, someone comes in with $100 worth of bills, and
asks for a $100 bill. The bank goes to the vault and gets the
marked $100 and gives it to that customer.Tracking the bill
doesn't help, because as soon as it's in the bank, what happens
to it (and how it's exchanged), is hidden from you. Mixers
work the same way.
dahdum - 1 hours ago
You're right, but the article didn't find a mixer. They found
the temporary deposit addresses every exchange uses and then
wrote a FUD article to drive traffic and awareness of their
sketchy ICO.
ve55 - 1 hours ago
Why is the link at the top of this article ('cyber?Fund') to
https://cyber.fund/system/Paragon, a page for 'Paragon', a very
shifty high-budget ICO?Given the other things Paragon has paid big
bucks for (anything you can imagine, from paying Youtubers 5
figures per video to get their subscribers to 'invest' in them to
paying for mass reddit vote manipulation to buying very expensive
ads and sponsorship programs to lying about their company model,
CEO, etc), it seems really out of place to me that this article
links to them as the first link.
the_common_man - 11 minutes ago
ICOs are the new nigerian banks