It still bugs me whenever professional journalists repeat the claim that Bitcoin is untracable. Fleischman’s article bothers me even more, because he mentions that every transaction is recorded in the block chain (the reason why Bitcoin transactions are totally easy to trace and impossible to launder), and then immediately repeats the claim that transactions are untracable. Jesus Christ, dude – read your own article.
The truth is that the transactions are pseudonymous with a very nearly one-to-one relationship between an address and a person or organization. After all, while you can make many addresses, in order to have any benefit with regards to tracability none of the addresses can be directly connected to each other (in other words, you can’t use any of the money supply from one to pay for anything with the other because you can’t transfer money between them without making a publicized connection). There are no Tor-like mixmaster systems for Bitcoin, because the whole point of Bitcoin is to minimize necessary trust levels (and a mixmaster would be the precise opposite: you pay into a giant network of independent nodes, any of whom could steal your money, in order to generate enough transactions to make it prohibitive to trace). Using Bitcoin to pay for anything is like paying in cash and then displaying the itemized reciept on prime-time television every night for eternity.
