That is not what structuring is at all. Structuring is conducting transactions in a way that will avoid triggering reporting requirements. If the legislation in your country requires financial services providers to report any cash transaction greater than or equal to say, $10,000, and you go and deposit $9500 five times with the sole purpose being to avoid these reporting requirements, then you are in breach of structuring laws. That's it. It has nothing to do with the legality or otherwise of the source of your money.
Also, money laundering is not about forbidding buying bad things. In fact, it's entirely the opposite. It's about buying legal things to hide the proceeds of crime.
Structuring laws are pretty shitty there have been plenty of examples of people being screwed over by the government w/o legal due process for just conducting legitimate businesses that happen to receive a lot of cash payments from customers. Just one recent one...
The financial regulations are pretty complicated and can be interpreted or retroactively changed as guys in your government want. Especially in US. There are already "anti-hidden compartment laws": http://www.aei-ideas.org/2013/11/america-heres-your-war-on-d...
So if you want to hide your bitcoin traces, it's better to make them completely diffused in the rest of the blockchain history to avoid attracting any extra eyes.
Never post your bitcoin address anywhere you can be identified, such as a msg forum signature, or directly to an exchange for withdrawal/deposit. Use addresses not linked to you (OPSEC).
Stay away from the exchanges that want piles of ID and use P2P trading on IRC or in person.
Managing addresses seems like the easy part, to me. The real challenge is getting money in & out of BTC, at least until you can spend it just about anywhere.
::Yawn:: The insurance contract approach is lame as it makes you lose your funds if the other party suffers an honest failure (e.g. they get hit by a bus).
Describing it as "laundering" is more than a little hopeful-eyed. These sorts of things are privacy mechanisms, which make Bitcoin's privacy a bit closer to traditional banking... but they don't provide an apparent legitimate origin of the funds, so they aren't themselves useful for money laundering.
Tor works somehow and NSA admits that it's a pain in the ass even for them. When someone targets you specifically, you have little chances, but when the whole network routinely mixes coins it's much easier to hide in the woods.
Zerocoin is interesting, but Bitcoin in its current form has two practical advantages:
1. Cryptographic primitives used in Bitcoin are old and well-tested. There's no crypto code in Bitcoin that was invented by Satoshi and could have been badly broken in a subtle manner. Zerocoin's commitment scheme requires years of testing, attempts to crack it and fixing may be impossible. If the problem is discovered, the whole thing may lose all value overnight.
2. Bitcoin is more friendly in the eyes of the law enforcement. Bitcoin looks like a traceable, compatible with "tracking all citizens" policy. It gives it a green light from the governments. Of course, in reality, you can launder bitcoins and hide yourself quite well, but that's extra work and complexity. Meanwhile, like a Trojan horse, Bitcoin comes to the legal scene as a nice instrument that allows to track "bad" guys. Not relevant in the long term, but important in the short term to get legality and massive adoption.
He does mention Zerocoin. His argument is that when using it, your intent to hide your transaction history is explicit, while with the proposed "mixing" you supposedly can't tell it from regular transactions.
Starting, eh?
The author basically says the bitcoin handler at the coffee shop will know how much you have unless you go through a massive scheme (which is probably borderline illegal for decent reasons) to gain back any sense of normalcy.
This is what happens when people take their own ball to go play in their own yard.
If it's going to take the amount of time, energy, and expertise to barely make bitcoin usable, how does the cognitive dissonance not overwhelm the coinbugs?
Yeah I can actually understand where you are coming from. I spend a lot of time with Bitcoin but never come to HN for Bitcoin information, I prefer my HN being startups and programming/algorithm stuff.
I think one of the reasons Bitcoin is becoming more popular on HN is that a lot of us are interested in fun/challenging tech ways to make a decent living or even make a million bucks.
At the moment Bitcoin is making a bunch of nerds millionaires and we are all interested in making sure Bitcoin overcomes all the hurdles ahead.
The issue with money laundering in the real world isn't the technical difficulty. It's easy as pie to launder cash if you ignore the laws surrounding it.
I'd imagine that if Bitcon becomes prevalent, governments would ask you to "voluntarily" declare your "salary" wallet. And then if they spotted any sort of suspicious laundering-like activity happening from that wallet, they would very quickly obtain warrants and show up at your door asking for an explanation.
Government would still have to set up a center of "approving" unknown money coming from other sources into local economy. These centers, as you can expect, will be massively bribed by everyone who needs to launder their tainted coins.
Also, governments will be much more limited in power when they can't print their money at will and do any "deficit spending".
How would that help? You declare your "salary" wallet, your salary flows from your day job. You run your underworld schemes in another wallet, and ne'r the two do meet.
The Bitcoin protocol isn't encrypted (it can't be, nodes have no identities in the network), and doesn't attempt to mask itself in any way. An ISP can absolutely log every transaction relayed by their customers... of course, it's still impossible to determine whether that person actually created that transaction
I mentioned explicitly why it's not like CoinJoin. CoinJoin leaves a trace of "structuring money", while perfect mixing needs to leave no such trace. All transactions must look like regular payments, statistically indifferent from any other payment. Also, CoinJoin in present form requires a trusted operator who can mark all transactions as "laundering".
CoinJoin is better for making Bitcoin look good in the eyes of law enforcement. You can get your privacy with it from everyone, except law enforcement. Lawful citizens and cops must be both happy and not fear that Bitcoin will be used for "terrorism".
Insurance deposits. Both nodes lock up much more money than being "promised". If one node does not deliver, another node will automatically destroy both deposits. Nodes thus are motivated to follow the protocol and not cheat. Since the process is automated, there's no one to play extortion games.
[+] [-] jamhan|12 years ago|reply
Also, money laundering is not about forbidding buying bad things. In fact, it's entirely the opposite. It's about buying legal things to hide the proceeds of crime.
[+] [-] pmorici|12 years ago|reply
http://overlawyered.com/2013/09/institute-justice-tackles-st...
[+] [-] oleganza|12 years ago|reply
So if you want to hide your bitcoin traces, it's better to make them completely diffused in the rest of the blockchain history to avoid attracting any extra eyes.
[+] [-] dobbsbob|12 years ago|reply
Generate addresses offline or proxied through Tor or JonDonym. Use different addresses for every input. Use CoinControl program to send coins https://bitcointalk.org/index.php?topic=144331.0
Never post your bitcoin address anywhere you can be identified, such as a msg forum signature, or directly to an exchange for withdrawal/deposit. Use addresses not linked to you (OPSEC).
Stay away from the exchanges that want piles of ID and use P2P trading on IRC or in person.
[+] [-] sliverstorm|12 years ago|reply
[+] [-] nullc|12 years ago|reply
Better protocols are possible: https://bitcointalk.org/index.php?topic=321228 (CoinSwap)
Describing it as "laundering" is more than a little hopeful-eyed. These sorts of things are privacy mechanisms, which make Bitcoin's privacy a bit closer to traditional banking... but they don't provide an apparent legitimate origin of the funds, so they aren't themselves useful for money laundering.
[+] [-] hershel|12 years ago|reply
[+] [-] oleganza|12 years ago|reply
[+] [-] a3_nm|12 years ago|reply
[+] [-] oleganza|12 years ago|reply
1. Cryptographic primitives used in Bitcoin are old and well-tested. There's no crypto code in Bitcoin that was invented by Satoshi and could have been badly broken in a subtle manner. Zerocoin's commitment scheme requires years of testing, attempts to crack it and fixing may be impossible. If the problem is discovered, the whole thing may lose all value overnight.
2. Bitcoin is more friendly in the eyes of the law enforcement. Bitcoin looks like a traceable, compatible with "tracking all citizens" policy. It gives it a green light from the governments. Of course, in reality, you can launder bitcoins and hide yourself quite well, but that's extra work and complexity. Meanwhile, like a Trojan horse, Bitcoin comes to the legal scene as a nice instrument that allows to track "bad" guys. Not relevant in the long term, but important in the short term to get legality and massive adoption.
[+] [-] ricardobeat|12 years ago|reply
[+] [-] cheesylard|12 years ago|reply
[+] [-] VMG|12 years ago|reply
[+] [-] shadowOfShadow|12 years ago|reply
This is what happens when people take their own ball to go play in their own yard.
If it's going to take the amount of time, energy, and expertise to barely make bitcoin usable, how does the cognitive dissonance not overwhelm the coinbugs?
[+] [-] na85|12 years ago|reply
[+] [-] josephagoss|12 years ago|reply
I think one of the reasons Bitcoin is becoming more popular on HN is that a lot of us are interested in fun/challenging tech ways to make a decent living or even make a million bucks.
At the moment Bitcoin is making a bunch of nerds millionaires and we are all interested in making sure Bitcoin overcomes all the hurdles ahead.
[+] [-] fat0wl|12 years ago|reply
[+] [-] JSZZHlmumeUE|12 years ago|reply
I'd imagine that if Bitcon becomes prevalent, governments would ask you to "voluntarily" declare your "salary" wallet. And then if they spotted any sort of suspicious laundering-like activity happening from that wallet, they would very quickly obtain warrants and show up at your door asking for an explanation.
[+] [-] oleganza|12 years ago|reply
Also, governments will be much more limited in power when they can't print their money at will and do any "deficit spending".
[+] [-] sliverstorm|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] Ihmahr|12 years ago|reply
[+] [-] nly|12 years ago|reply
[+] [-] oleganza|12 years ago|reply
[+] [-] nwh|12 years ago|reply
https://bitcointalk.org/index.php?topic=279249.0
[+] [-] oleganza|12 years ago|reply
CoinJoin is better for making Bitcoin look good in the eyes of law enforcement. You can get your privacy with it from everyone, except law enforcement. Lawful citizens and cops must be both happy and not fear that Bitcoin will be used for "terrorism".
[+] [-] jedunnigan|12 years ago|reply
[+] [-] FreedomDealer|12 years ago|reply
[+] [-] drakaal|12 years ago|reply
[+] [-] zapt02|12 years ago|reply
[+] [-] oleganza|12 years ago|reply
The insurance contract is a special type of transaction that I invented: http://blog.oleganza.com/post/58240549599/contracts-without-...
[+] [-] eriksank|12 years ago|reply
[deleted]