Fun With Bitcoin For Beginners: Part Seven

(As it has been since January since I last wrote on Bitcoin ("BTC"), there have been several changes in the BTC Community and it is possible that some of you have may have forgotten some of the information, review my posts in November, December and January in needed)

Despite the over 50% drop of Bitcoin prices in recent months, it is not going to disappear anytime soon.  Just a few minutes ago I caught the below transaction of $1,009,441.35.  The transaction costs were 22 cents (well under one thousandth of 1%)...!  The hash code for this transaction is:

9f3c9177f97484b3e6a3951889bcd0ae1a2949926ba4ea1c2b3d7192a198f71c

^--- Just click that link, and look around blockchain.info for more about it.

Here is a map below of the propagation of that million dollar plus transaction among "Bitcoin Nodes" around the world, *click* the image for a better view:

Note that Europe is also big in BTC, many nodes, also note there in the "Gulf of Guinea" near bottom right, that there are 37 nodes that relayed this transaction.

Quick Contest: Why are there so many nodes there in the Gulf of Guinea?  The winner gets 0.05 Bitcoin! The Winner is the first one to provide a plausible explanation by comment only here at my blog, so get going!

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In recent days I have had the chance to try out two BTC "mixing services".  In easy language, mixing services take the ID numbers of various peoples' Bitcoins "going in", and shuffle them together via one or more algorithms to make the origin of Bitcoins com "coming out" more difficult to track.

The Blockchain, you will recall, is the public ledger of Bitcoin transactions.  It is only "somewhat" anonymous, anyone's BTC wallet is posted there along with some details, as visible in the above million dollar plus transaction.

There are two ways that I know of (and there are more) to insure better privacy.  One way is to create wallets and use new wallets regularly.  That helps, particularly if you tell no one (not even the person or exchange where you got your BTC) about your new wallets...

And the other way is to use the mixing services.  There are a number of these, and I suppose they could be divided into two broad classes: gambling sites (where when you win a bet, your BTC comes back "mixed") and the regular mixing services.  As a relative beginner myself, I went ahead and chose to use two mixing services I had seen advertised:

sharedcoin.com  (which seems to be affiliated with blockchain.info)

bitmixer.io

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blockchain.info is apparently NOT any kind of "official service" of Bitcoin and the Blockchain itself (there are very few "official anythings" with Bitcoin, it is a p2p network that no one runs), it is a free service that allows anyone to poke around some of the infrastructure of BTC.  The service seems to be very respected by the Bitcoin Community, my source "Bitcoin Insider" had good things to say about them as I was learning how to perform basic tasks under his instruction.  An option of using blockchain.info is included with the MuliBit Bitcoin client.

blockchain.info allows anyone to enter a BTC wallet and check for "taint", a measure of how strong the link(s) are between BTC received and from where it came.  Taint is measured as a percent from 0% - 100%, I am guessing that a high level of taint ties the sender and the receiver rather closely.    Two quotations from blockchain.info's taint analysis page:

"The data can be used to evaluate the anonymity provided by a mixing service."

and

"The more "taint" the stronger the link remains." (the link between sender and receiver)

In the above hash-coded transaction, here is the recipient's wallet and the associated "taint", again this is all publicly available information:

https://blockchain.info/taint/1AvMFLLHSqJToYdizu1erS1iGcXaQgUVJg

If you click that link, you will note a large number of wallets with 50% taint, a rather strong link (per sender -- notice many senders though -- so the transaction seems to be pretty anonymous), but you will also note a much larger number of wallets (from senders), making this transaction an even harder nut to crack...  I am not skilled enough to make any further remarks about the "taint" of this transaction nor if the sender or receiver even used a mixing service.

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IMPORTANT DISCLOSURES!  These are my experiences only!  Your mileage may vary!  Mixing BTC is at your own risk!  What worked today might not tomorrow!  I suggest sending very small amounts only as you get started and build confidence.

I first tried out sharedcoin.com, a frequent advertiser at blockchain.info, and because they use the same logo of a capital "B" with pieces coming off, I inferred that they are affiliated.  I also guessed that they were likely legitimate as they have been advertising there at blockchain.info for sometime.  I would like to thank "Peter R" for giving me some instruction in first using this mixing service.

-- Start by opening a new wallet at blockchain.info (unless, of course, you already have one).

-- Open your wallet, and click "Send Money", here's a picture (images below edited for privacy), note: choose "Shared Coin" (at left in blue):

-- Enter the to and from wallet IDs and number of repetitions (three seems to be enough)

--  Click blue Review Payment button, you will then get this, it took 6 minutes for sharedcoin to round up some other participants:

After you are done you can check out your transaction, mixed with other people's:

Some text re receipt of the BTC from my MultiBit wallet, there is a LOT of text (again edited):

Seen by 7 peers. Appeared in best chain at height 299xxx, depth 1, work done 3436405.
     in   [304407fc9b0fc13c33c556ec057491bb50a0855ae

Total elapsed time: about 25 minutes.  Of course, I have been writing this part of the article while mixing the BTC, but 25 minutes, perhaps up to 45 minutes would be about right.

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Using bitmixer.io is different (duh!).  First go to their home page, click the green box ("Start Here").  Then type in recipient address.  Then you will see the below box, click "Mix my coins!":

You will then get a new wallet address (you just have to trust them not to steal your BTC, this is my second go 'round with them) in the orange box, as below:

You then return to your original (sending) wallet.  Then send your BTC to the "orange" wallet that bitmixer created for you.  It has now been some 15 minutes, and my receiving wallet is waiting on confirmations.  Last time I sent my BTC through bitmixer.io, it took some 35 minutes total.

Update: This time it took almost an hour for everything to come through.  Hey, now you know!

Note that bitmixer gives you a 4-length alphanumeric code.  This allows you to send more BTC to that same wallet address for 24 hours, the code ensures that none of your older (first transaction) BTC gets mixed in should you want to send more BTC within that 24 hour window.

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Look around the sites and FAQs of the mixing services for more information.