Quote from: avision on August 09, 2016, 08:39:02 AM

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Not sure what you're trying to say here. Tracing any bitcoins through addresses is possible given enough computing power and good enough analysis software. Attaching identities to any of those addresses requires that the entity doing the tracing has access to a list of addresses for which they know the owner. Then once traced bitcoins pass through such an address, the entity doing the tracing can approach that owner and ask them who they got the bitcoins from. They can then approach that sender and ask who they got the bitcoins from, and so on until they trace back to the beginning.

Well but transactions only record "how much" btc where moved not "which" bitcoins. So if A and B give C a bitcoin each - C has now two btc. If C gives D a bitcoin there is no way i could say that this bitcoin D now has came from A or B - it could originate from both - A or B. That is the point where in my eyes it should get impossible to do a solid analysis.

Forward it is the same: A and B give C a btc each. C now has two bitcoins. C gives D a bitcoin. At this moment i do not know if C gave D the btc from A or the one from B. Atleast if i look at the protocol it should not be possible to identify D`s btc. Because in the transaction most importantly two things are checked - do i have the private key to sign the transaction - and if the sum of the future transactions from and to this address enables me to send amount X of btc to another address.

Blockchain.info and other explorers use a system called taint analysis to determine how closely the coins in one address are linked to the coins in another address. If one address A sent coins to another unused address B then the coins in address B have 100% taint from the coins in address A.

If one address C sent address D the same amount of coins that it address D was already holding then the coins in address D have 50% taint from the coins in address C.

https://blockchain.info/taint/3AbixYB8q3hHuAkFWSxUnTtqncFgRFYGDb

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