Quote from: akujin on July 24, 2014, 05:29:30 AM

Quote from: smooth on July 24, 2014, 05:19:55 AM

Quote from: akujin on July 24, 2014, 05:11:44 AM

Ok let's take this as an example. Let's say I was the one who received the BTC:
http://blockchain.info/tx/b64f6476902dc87ca1bb83ee69e1b259bc6c72bba72bf258330276711c45e3f4
Let's say you are the sender, so, I would know how much is the balance on your address. But how am I going to know what the other transactions are for? How would I know you bought some dildos? How would I know that you are also the one who owns the address that sent the BTC on the address you used to pay me?

Obviously I wouldn't know if you bought dildos from a vendor who sells a variety of goods. That goes well beyond payment.

But if I wanted to know if you bought something from a store that specializes in didoes, I would go ahead and buy some dildos myself from several of these stores, and then look for linkages. But I wouldn't personally need to do this myself, because it is easy for people (and more importantly, because they will likely do it at scale, businesses) to create these sorts of databases on the Internet.

The Internet advertising industry is built around creating databases that track people and share information between millions of web sites. This was not really by design, it is just that the web was also not explicitly designed to protect privacy, and clever people figured out how to track and link. A decade later and we have an whole industry doing it, with almost everyone tracked and identified.

I really doubt we want that kind of tracking and information sharing extended to payment, at least I don't. I prefer my payments remain at least as private as they were before Bitcoin, not less.

LOL! That means you'll end up with a mountain of dildos.

You're missing the point. It isn't about dildos specifically, that was just your example.

It is about tools being developed with that mountain of data that allow much of to be tracked, linked, and identified. It won't be targeted at you specifically (usually not at least), but it will be done in the aggregate and a great deal of identification will drop out. Have you ever posted a bitcoin address online? If so, and if you weren't extremely careful, that address can now be linked to your online identify, perhaps linked to other addresses of yours, and certainly linked to addresses of people who have transacted with you (who may also have posted addresses online, though not necessarily the same one you used) and indirectly (computers are good at this) linked with (many, many) other known addresses.

Here is one small example (though the graphs and tables in the paper are interesting, scary, and worth a look), and this is just the very, very beginning (think "cookies" as a privacy issue in web browsers a decade or more ago):

Quote

In this paper we explore this unique characteristic further, using heuristic clustering to group Bitcoin wallets based on evidence of shared authority, and then us- ing re-identification attacks (i.e., empirical purchasing of goods and services) to classify the operators of those clusters.

http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf