Gavin Andresen - 2012-01-03 02:00:40

@s{quotedtext} @s{quotedtext}
Ok, here are three:

Authorities gather enough circumstantial evidence to get a warrant.  They raid the guy's house/office, and find a wallet on an unencrypted hard disk with private keys corresponding to "B".  That should be enough evidence to convict.

Or the guy thinks he's being clever by breaking up his 10,000 BTC into 50 BTC chunks and slowly, over time, transfers them to new wallets C, then D.  Then deletes B and C.
But he doesn't realize that the graph of transactions he is creating would be IMPOSSIBLE to happen by chance if wallets B and C belonged to innocent bystanders (what are the chances that, say, 10,000 stolen bitcoins were broken up into a bunch of pieces and then just happened to end up later in the SAME wallet?)

Or somebody with lots of connections to the bitcoin network is figuring out (with pretty good precision) what IP address each transaction is coming from. The guy doesn't use a proxy to hide his IP address, and the transactions from A->B->C->D all appear to come from IP addresses allow assigned by the same Internet Service Provider in the guy's town. The authorities subpoena the ISP and find out the guy was assigned those IP addresses when the transactions hit the network.

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All of the above is why I say it is hard to be anonymous when using Bitcoin, and I'd urge you not to do anything with bitcoins that would prompt The Authorities to bother getting subpoenas/warrants to try to figure out who you are.