It depends on what you mean by 'traced.' All bitcoin transactions are 'traced,' but you can just set up a few thousand wallets, transfer some money to all of them, send them between each other, trade some away to other people for things... it's not clear simply from the transaction log who actually took them, and who is just receiving BTC from an anonymous buyer for some sort of service.
From my understanding of bitcoin, doing this would be trivially easy to track also. However, I haven't studied this in great detail, so what is said here may be incorrect.
*simplified view
Wallet 1 stores 50 bitcoin
for(i = 1; i < 100000; i++) {
Transfer 1 bitcoin from Wallet i to Wallet i+1
}
At this point, wallet 100000 contains exactly 1 bitcoin, that every transaction can be traced back to wallet 0. I understand that you would include more wallets, varying values, etc. But the point is every one of those bitcoins can be traced back to the original wallet which has the stolen funds.
The only way to make this behavior viable that I can see, is to have intermediate services that mix up funds.
So you have 50BTC Stolen funds in Wallet A.
I run Wallet B, that takes transactions from many people.
You give me the 50BTC that is stolen. I send you 50 bitcoins in small increments randomly over a set period of time, but from the other transactions I have. I do the same for other people, using the 50BTC that you sent me.
As such, my service mixed the coins through a common point, which now makes tracking the chain very difficult. If I didn't mix this with other people's transactions, and gave you back you're own coin numbers, the coins would just track through me back to the original stolen wallet.
This would need a party to offer this type of service, with enough volume to obscure the source, and for that service to not keep records (or not be inspected through other means).
Again, I want to re-iterate, my knowledge of bitcoin is somewhat superficial, so don't take this as an authoritative post on the subject.
> The only way to make this behavior viable that I can see, is to have intermediate services that mix up funds.
They're called 'mixers.'
> Again, I want to re-iterate, my knowledge of bitcoin is somewhat superficial, so don't take this as an authoritative post on the subject.
You've got your head on straight. Here's one small aspect you're missing: there's no connection between a person and a wallet, and there's no transaction costs, so just make a million wallets and send random amounts to each one, and then send them through a mixer, and then to each other some more, and then to a mixer....
