@Grant_Hawkins this lecture was really fun! I especially liked question nr 4 Also now I wonder, what happened to bitlaundry, was it raided by the SEC or by some other “nice” government agency?
I did my quick research about bitlaundry, here what I found:
Wow, I was assuming such a service would have already closed down… I wonder how is it possible it survived with all those KYC and anti-money laundering laws! I mean look at ShapeShift and Changejelly: they both had to give up user’s privacy and implement KYC… Soon or later bitcoin-laundry will end up the same
And here my answers to the quiz:
1. Alice uses BitLaundry to send funds to Bob. What information specifically is ‘private’ for Alice and Bob?
They don’t want anyone to be able to make a link between them. Especially Alice doesn’t want anybody to know that she sent funds to Bob.
2. Explain a situation where Alice’s and Bob’s privacy could be compromised?
If the bitlaundry website is raided by some government agency, or if such an agency (NSA does this all the time) implants some backdoor and spies everything, the db records and logs that the website claims to delete directly after each transaction may be leaked to these agencies. With the requests IP addresses in the logs they can easily find Alice’s identity and can create the link between her and Bob, that she wanted to hide. They can of course not only see the link, but also he amount she sent.
3. What is BitLaundry’s incentive to be honest?
They get 0.5% fee on the transaction’s value, which is really a good cut. If it turns out that the service is a scam, people would stop using it and they would be out of business and stop gaining those good fees.
4. What is BitLaundry’s incentive to be dishonest?
If somebody would use the service to transact a big amount of money, I mean a life changing amount such as several millions worth of crypto, the website may just grab these funds and disappear.