[tor-talk] Bitcoin over Tor isn’t a good idea (Alex Biryukov / Ivan Pustogarov story)

[Mirimir]

On 10/28/2014 06:59 AM, Артур Истомин wrote:
> On Mon, Oct 27, 2014 at 03:58:56PM -0400, grarpamp wrote:
>> On Thu, Oct 23, 2014 at 7:35 PM, Erik de Castro Lopo
>> <mle+tools at mega-nerd.com> wrote:
>>
>> http://arxiv.org/pdf/1410.6079v1.pdf
>>
>>> Could this situation be improved if people ran limited exit nodes that only
>>> alloed the bitcoin p2p protocol to exit? I for one don't have enough
>>
>> There are about ten exit nodes that do only this today.
>> [One of which is run by Mike Hearn who has advocated building in
>> censorship capabilities to Tor, and blocking (historically) tainted coins
>> (such as you have now or might receive through otherwise completely
>> innocent transactions with you, or from your own trans/mixing with
>> others).]
> 
> How it affect innocent bitcoin users with tainted bitcoins? Bitcoins
> come back to user' wallets?

Innocent users who buy, unwittingly, tainted Bitcoins, could lose them.
At least, they'd be unable to spend them. So they'd need to use them via
non-censoring nodes.

To sidestep the Biryukov/Pustogarov attacks, one could anonymously lease
a VPS from a trusted provider, and run a private VPN server as a hidden
service. The Bitcoin client would reach the Internet through the VPN,
which would be tunneled through Tor. There would be no Tor exit relays
involved. That would provide some anonymity (limited by the anonymity of
the VPS, considering both payment and management) and also solid
end-to-end encryption through Tor.