TyperTech
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In this post, I’ll talk about the importance of using privacy coins in the dark web such as Monero (XMR) and Zcash (ZEC) compared to other coins that are more transparent such as Bitcoin (BTC) and Ethereum (ETH). For the sake of this post specifically, I’m going to refer to Monero as a privacy coin and Bitcoin as the coin normally used. However, the same can be said about other coins as well.
First of all, lets discuss the difference between privacy and anonymity since these two ideas get quite mixed up, especially by someone new to the darknet. Privacy is when you’re free from public attention, while anonymity is when your real identity is unknown. Quite similar ideas, but totally different. One way to explain this is this: Let’s say you enter a bus with clothes that hides your face and appearance. This is anonymity. Everyone knows you’re there, but they don’t know who you are and your identity. Privacy is when, say you enter a car with no windows. The driver will know you’re there, but nobody else will. It is best to combine the two together and get both privacy and anonymity (such as entering a car with no windows wearing clothes that hides appearance).
So let’s go back to privacy coins. You might ask “Isn’t Bitcoin supposed to be anonymous”? The answer is yes. And yes only to some extent. Bitcoin transactions are recorded in a public ledger, which means everyone can see that you sent/received bitcoins and the amount you have. Go to https://www.blockchain.com/explorer and paste in your bitcoin address. You will see a history of all transactions to and from this address. Because of this, wallet addresses can easily be linked together, which in the end creates chain reactions. This is obviously going to get worse if you get your bitcoins from a centralised exchange with KYC (Know your costumer). And that’s only one aspect you’re looking after. The other thing is privacy, which is to say, Bitcoin isn’t private. As explained above, Bitcoin has a transparent ledger that records transaction, and you can see all the transactions done. With privacy coins such as Monero, however, the ledger is obfuscated, which means that the transaction history cannot be seen by anybody. This is a good thing in that the origin of transactions cannot be tracked to anybody and that coins won’t become blacklisted. Why is this important? Let’s say you want to buy something, but don’t want anybody to know about it. With Bitcoins, the transaction is recorded in the blockchain, which will mean the transaction can be proven to be made by you if they know that the wallet address is associated with you. This is exactly what happened with Dread Pirate Roberts aka Ross Ulbricht. He denied that he paid for hits, but something as small as a transaction history proved that he paid for it since transactions with Bitcoins can’t be faked. Had he used privacy coins, nobody apart from the sender and receiver would know about the transaction, where is came from, where it went, and the amount. The FBI wouldn’t have known about it (apart from it stated in message logs) and it wouldn’t have been used against him.
Another example is when SilkRoad user redandwhite wanted to cash out the bitcoins he got from DPR in the Silk Road. Since his wallet was flagged as related to Silk Road, and because he tried to cash out with his real identity, he was caught by law enforcement. This could have been perfectly avoided had he used privacy coins. The origin of the coins wouldn’t have been known (other than the wallet being stated in message logs, which could have been easily avoided by sending the funds to a new wallet address anyway), so therefore he couldn’t be associated with Silk Road, which would have saved him from many issues.
Furthermore, what makes it more interesting is how the IRS offered a bounty of $625,000 for anyone who could break the privacy of Monero. That was a few months ago, and until now, nobody could find a successful method, which further adds to why you should use Monero or other privacy coins when dealing in the dark web.
That being said, Monero (or privacy coins) will not 100% protect you from being exposed to law enforcement. You should still take proper precaution when you’re buying or selling in the darknet. If let’s say you bought exactly 1 XMR at a KYC exchange, and then within 1 hour sent that amount to a vendor, who immediately cashes out at a KYC exchange, it wouldn’t take a detective to figure out where the coins came from.
There is also a video series on how the privacy and anonymity offered by Monero can be broken which can be found in the sources. Take time to watch them to make sure you won’t be making any obvious mistakes.
Many might argue that with proper OpSec, Bitcoin can match the privacy and anonymity of Monero. Although Bitcoin can be made more private and anonymous, it’ll never offer it at the same level as Monero, since Bitcoin is traceable. And it never hurts to use Monero anyway since transaction fees are very cheap (see sources). So not only will Monero provide you with privacy and anonymity, but will also be far cheaper.
Also note, by privacy coins, I mean coins where privacy is enabled by dafault. DASH, for example has a privacy feature which is optional. This is not a good coin to use, since few people are going to use that feature, which will make your transaction unique. This achieves the opposite of anonymity or privacy.
Below I’ll give some tips on how to be careful and how to launder coins as a buyer or a vendor.
For buyers:
• Don’t buy exactly the amount you need. Instead, buy more. Remember the example above about buying an amount and sending it immediately? That’s one way in which you can get caught, which can be easily prevented by not buying and sending the exactly same amount. If you really can’t buy more than you need, consider buying the Monero days before making the transaction.
• Buy Monero from a dexentralised exchange that doesn’t require KYC, such as Bisq or LocalMonero.
• If you must send bitcoin for some reason, Buy Monero and use the XMR.to feature, which will convert the Monero to Bitcoins for you anonymously.
• If sending the Monero to another address makes you feel more secure, then do it. Monero fees are very cheap anyway.
• Use your wallet through TOR, which will prevent IP tracking (which can reveal your location)
For vendors:
• Don’t cash out immediately (Or better yet, don’t cash out at all. Use the Monero as money instead). This can prevent linking transactions. Try to wait several days and mix transactions before cashing out.
• If you must accept Bitcoin for some reason, let the buyer send it to a new address. Then convert that Bitcoin to Monero through a decentralised exchange.
• When cashing out, don’t cash out everything at once especially if the amount you want to cash out is large, since this will result in a lot of questions on where the money came from. Instead, cash out smaller sums which doesn’t raise any suspicions.
• Use a decentralised exchange such as Bisq or LocalMonero.
• If sending the Monero to another address makes you feel more secure, then do it. Monero fees are very cheap anyway.
And that’s the end of my post explaining the importance of using privacy coins such as Monero in the dark. I hope you learnt something new today. If you have any questions or feel something should be added, please comment or message me privately.
Sources:
- https://en.bitcoin.it/wiki/Main_Page
- https://www.monero.how/
- https://en.wikipedia.org/wiki/Ross_Ulbricht
- https://allthingsvice.com/2018/11/2...dandwhite-one-of-silk-roads-greatest-nemeses/
- https://cointelegraph.com/news/the-...-to-anyone-who-can-break-monero-and-lightning
- https://www.monerooutreach.org/breaking-monero/
- https://www.monero.how/monero-transaction-fees
- https://bisq.network/
- https://localmonero.co/
First of all, lets discuss the difference between privacy and anonymity since these two ideas get quite mixed up, especially by someone new to the darknet. Privacy is when you’re free from public attention, while anonymity is when your real identity is unknown. Quite similar ideas, but totally different. One way to explain this is this: Let’s say you enter a bus with clothes that hides your face and appearance. This is anonymity. Everyone knows you’re there, but they don’t know who you are and your identity. Privacy is when, say you enter a car with no windows. The driver will know you’re there, but nobody else will. It is best to combine the two together and get both privacy and anonymity (such as entering a car with no windows wearing clothes that hides appearance).
So let’s go back to privacy coins. You might ask “Isn’t Bitcoin supposed to be anonymous”? The answer is yes. And yes only to some extent. Bitcoin transactions are recorded in a public ledger, which means everyone can see that you sent/received bitcoins and the amount you have. Go to https://www.blockchain.com/explorer and paste in your bitcoin address. You will see a history of all transactions to and from this address. Because of this, wallet addresses can easily be linked together, which in the end creates chain reactions. This is obviously going to get worse if you get your bitcoins from a centralised exchange with KYC (Know your costumer). And that’s only one aspect you’re looking after. The other thing is privacy, which is to say, Bitcoin isn’t private. As explained above, Bitcoin has a transparent ledger that records transaction, and you can see all the transactions done. With privacy coins such as Monero, however, the ledger is obfuscated, which means that the transaction history cannot be seen by anybody. This is a good thing in that the origin of transactions cannot be tracked to anybody and that coins won’t become blacklisted. Why is this important? Let’s say you want to buy something, but don’t want anybody to know about it. With Bitcoins, the transaction is recorded in the blockchain, which will mean the transaction can be proven to be made by you if they know that the wallet address is associated with you. This is exactly what happened with Dread Pirate Roberts aka Ross Ulbricht. He denied that he paid for hits, but something as small as a transaction history proved that he paid for it since transactions with Bitcoins can’t be faked. Had he used privacy coins, nobody apart from the sender and receiver would know about the transaction, where is came from, where it went, and the amount. The FBI wouldn’t have known about it (apart from it stated in message logs) and it wouldn’t have been used against him.
Another example is when SilkRoad user redandwhite wanted to cash out the bitcoins he got from DPR in the Silk Road. Since his wallet was flagged as related to Silk Road, and because he tried to cash out with his real identity, he was caught by law enforcement. This could have been perfectly avoided had he used privacy coins. The origin of the coins wouldn’t have been known (other than the wallet being stated in message logs, which could have been easily avoided by sending the funds to a new wallet address anyway), so therefore he couldn’t be associated with Silk Road, which would have saved him from many issues.
Furthermore, what makes it more interesting is how the IRS offered a bounty of $625,000 for anyone who could break the privacy of Monero. That was a few months ago, and until now, nobody could find a successful method, which further adds to why you should use Monero or other privacy coins when dealing in the dark web.
That being said, Monero (or privacy coins) will not 100% protect you from being exposed to law enforcement. You should still take proper precaution when you’re buying or selling in the darknet. If let’s say you bought exactly 1 XMR at a KYC exchange, and then within 1 hour sent that amount to a vendor, who immediately cashes out at a KYC exchange, it wouldn’t take a detective to figure out where the coins came from.
There is also a video series on how the privacy and anonymity offered by Monero can be broken which can be found in the sources. Take time to watch them to make sure you won’t be making any obvious mistakes.
Many might argue that with proper OpSec, Bitcoin can match the privacy and anonymity of Monero. Although Bitcoin can be made more private and anonymous, it’ll never offer it at the same level as Monero, since Bitcoin is traceable. And it never hurts to use Monero anyway since transaction fees are very cheap (see sources). So not only will Monero provide you with privacy and anonymity, but will also be far cheaper.
Also note, by privacy coins, I mean coins where privacy is enabled by dafault. DASH, for example has a privacy feature which is optional. This is not a good coin to use, since few people are going to use that feature, which will make your transaction unique. This achieves the opposite of anonymity or privacy.
Below I’ll give some tips on how to be careful and how to launder coins as a buyer or a vendor.
For buyers:
• Don’t buy exactly the amount you need. Instead, buy more. Remember the example above about buying an amount and sending it immediately? That’s one way in which you can get caught, which can be easily prevented by not buying and sending the exactly same amount. If you really can’t buy more than you need, consider buying the Monero days before making the transaction.
• Buy Monero from a dexentralised exchange that doesn’t require KYC, such as Bisq or LocalMonero.
• If you must send bitcoin for some reason, Buy Monero and use the XMR.to feature, which will convert the Monero to Bitcoins for you anonymously.
• If sending the Monero to another address makes you feel more secure, then do it. Monero fees are very cheap anyway.
• Use your wallet through TOR, which will prevent IP tracking (which can reveal your location)
For vendors:
• Don’t cash out immediately (Or better yet, don’t cash out at all. Use the Monero as money instead). This can prevent linking transactions. Try to wait several days and mix transactions before cashing out.
• If you must accept Bitcoin for some reason, let the buyer send it to a new address. Then convert that Bitcoin to Monero through a decentralised exchange.
• When cashing out, don’t cash out everything at once especially if the amount you want to cash out is large, since this will result in a lot of questions on where the money came from. Instead, cash out smaller sums which doesn’t raise any suspicions.
• Use a decentralised exchange such as Bisq or LocalMonero.
• If sending the Monero to another address makes you feel more secure, then do it. Monero fees are very cheap anyway.
And that’s the end of my post explaining the importance of using privacy coins such as Monero in the dark. I hope you learnt something new today. If you have any questions or feel something should be added, please comment or message me privately.
Sources:
- https://en.bitcoin.it/wiki/Main_Page
- https://www.monero.how/
- https://en.wikipedia.org/wiki/Ross_Ulbricht
- https://allthingsvice.com/2018/11/2...dandwhite-one-of-silk-roads-greatest-nemeses/
- https://cointelegraph.com/news/the-...-to-anyone-who-can-break-monero-and-lightning
- https://www.monerooutreach.org/breaking-monero/
- https://www.monero.how/monero-transaction-fees
- https://bisq.network/
- https://localmonero.co/