ELI5: BitCoin tumblers and washing BitCoins

I understand what tumblers are, but I am having trouble finding details on exactly why they are needed. Do all BC exchanges recognize coins that have been used on black markets, and thus none will exchange them for cash? Or are there some exchanges that don't care?

I am considering selling on the DNMs, but I want to make sure I have an efficient and easy pipeline to get my money back out. Do I absolutely need to tumble bit coins? Are there BC exchanges that will let you cash out DNM bit coins? What's the deal here? Explain like I am 5, please.


Comments


[2 Points] kooldays5:

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[2 Points] trynakick:

First, someone has to say: if you're considering selling but unsure of your cash out method, you're going to have a bad time.

Tumblers obfuscate the 'chain of custody' of bitcoins. Every Bitcoin transaction is publicly recorded on the block chain. So when you send 1 coin from wallet A to wallet B, everyone can look that up. This is dangerous to you as a seller because if you have coins going from a market wallet, to electrum to a Local Bitcoin account in the same denominations it's pretty easy to connect those accounts.

do I absolutely need to tumble bit coins?

No, but you need to find a method that obfuscates their origin.

are there exchanges that let you cash out DNM coins?

As far as I know this is only an issue with people buying coins getting their accounts locked, not people selling coins. But I don't think your concern should be the exchange, you should be concerned with creating a direct path to your online drug dealing from your real identity.


[2 Points] sapiophile:

See my discussion about this from a few days ago here:

https://www.reddit.com/r/DarkNetMarkets/comments/46vr2o/a_new_btc_tracing_firm_is_in_town_folks_helix/d08dct7?context=9


[2 Points] DNM-Accountant:

You will absolutely need to obscure the fact that your bitcoins came from a market.

If you have not removed ALL taint from the coins before cashing them in you will be caught eventually. This is reckless and not the way to go.

Always tumble the coins when pulling them from the markets. Be sure that all taint is gone. Then start cashing them in. Do not cash it all in at the same place. Sell some on an exchange. Some at an ATM. Some at LBC. Use different LBC accounts. Even better yet; get smurfs to sell it off if you start getting bigger and have big amounts to cash out.


[2 Points] None:

  1. Receive bitcoins in Electrum wallet in TOR.

  2. Transfer BTC to a multi-currency exchange.

  3. Trade your BTC for a different e-currency.

  4. Sell the new e-currency for BTC again, at the same rate you purchased at.

  5. Move that BTC around a few more wallets through VPN if you are paranoid.

  6. Sell on LBC for cash.

This is essential for any vendor, especially ones who use multisig. With traditional escrow, your only danger is getting your exchange account flagged. With multisig, the funds go directly from the customers address to your address, meaning LE can purchase from you, and immediately determine your address for analysis and further tracking. You must terminate your paper trail before your money is converted to fiat. Everything is traceable, and with the new prevalence of quantum computers, otherwise complex block chain tracing and analysis can be done in milliseconds.

Bitcoin is not anonymous, because the block chain is a publicly available business ledger for anyone to look at and analyze. And you'd better believe that if the the government is losing tax dollars to cryptocurrency, they will invest MILLIONS into stopping it.