Quote from: [mike] on January 29, 2011, 01:04:46 AM

One problem is the maximum amount you can mix is the min(all pool sizes), which is probably not that huge assuming reasonable fees.

That's not quite true. Since the client preparing a transaction knows what size transaction each mixnet node can accept, it can choose nodes with larger maximum transaction sizes. For example, for a 3-node chain, the largest possible transaction will be as large as the third largest node in the pool (ignoring the problem of trust for the moment).

Also, one of the suggested extensions in the document allows single transactions to be broken into smaller pieces and sent along different paths. That increases the largest possible transaction size to the sum of all node sizes (assuming that a 1-node chain is sufficient for that transaction).

Quote from: [mike] on January 29, 2011, 01:04:46 AM

Another problem is that - let's face it - running a mixer is going to be seriously risky for anyone who lives in the USA or Europe

I'm not sure I see why. People in Western countries run Tor nodes all the time, which carries similar risks. They are sometimes harassed by poorly-informed authorities but to my knowledge none of them have ever been fined or jailed.

Maybe it's different because Bitcoins are a carrier of value. Still, they are not a recognized currency. I think the political climate will have to change a lot before we begin to worry about government intervention.

Quote from: [mike] on January 29, 2011, 01:04:46 AM

So I think it's worth exploring not only a "mixnet" model of many co-operating coin mixers, but also a model in which a small number of sophisticated mixers with large coin pools and possibly special hardware can provide this service, whilst still providing the same kinds of privacy guarantees a large mixnet would provide.

Just to make sure I've understood you, you're talking about a single entity that runs many internal coin exchangers, essentially an entire mixnet controlled by one individual/organization? Wouldn't that organization be extremely vulnerable to subpoena/search and seizure? They'd have full knowledge of the sender and receiver of every transaction, so it would be easy for an authority to trace an individual they've taken an interest in, or to trace every single user of the mixnet.

Quote from: [mike] on January 29, 2011, 01:04:46 AM

The final weak point in zipslacks scheme is the mapping of local address -> destination address.

How do you mean? If the database is seized by some authority? In that case it's not going to matter what obfuscation you use, the attacker will be able to decode it. That's the whole reason behind multiparty mixnets: no individual has enough information to trace the entire path, and the path can be chosen to cross many jurisdictions to make traces that much harder.