Bitcoin jackpot

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Just two days ago, someone sent a transaction for 0. A lucky miner quietly collected a jackpot. That fee is approximately 3 million times higher than it ought to be.

So the question is: Because the amount involved is so large, there were immediate accusations of nefarious activity and money-laundering.

Christian Decker to rule out one of the possibities. There is no counterpart for this in the regular fiat currency world, since the scheme involves collusion with the Mint.

Suppose I have some tainted coins. Suppose they came from someone or some activity I do not want to reveal publicly to the world, say, moonlighting as a PHP programmer.

The traditional way to do this in Bitcoin is to " tumble " [1] the money. You may have seen collection bags that go around churches, where you put a bill in your closed fist and stick your hand in the bag, so no one knows how much you put in or took out.

In essence, we swap our bills so as to throw off anyone who may have recorded the serial numbers and is watching the coins. Tumbling makes it very difficult to trace the individual banknotes back to me.

You may, perhaps, have heard of Panama Papers, where some of the companies involved exist solely to make it difficult to audit the cash flows.

Tumbling is also not necessarily nefarious: But tumbling is not foolproof. If I really want to erase all connection to past transactions recorded on the blockchain, I can just find a miner that I trust and let him mine my transactions with hefty fees.

My payment is going to be with newly mined coins, the Bitcoin equivalent of fresh, crisp dollar bills straight from the Mint. There will be no white powder residue on these particular bills.

Hot, neatly lined up, and a fire hazard: This is a brilliant way to launder money, because it leaves no trace on the blockchain.

Miners, in effect, terminate and regenerate cash flows, the same way the US mint withdraws old and tattered bills out of circulation and reissues brand new ones.

The only fly in the ointment is the need to trust the miner, but hey, people with these kinds of cash flows typically have what we in the distributed systems community would euphemistically call "exogeneous enforcement mechanisms.

And there is reason to suspect this might have been what happened, because there are rumors which we have not ascertained independently that this transaction was being tumbled using the traditional tumbling technique when it suddenly evaporated into mining fees, raising eyebrows about potential MML.

Luckily, Christian Decker has been recording transactions on the Bitcoin blockchain, and we can pin down parts of the backstory using his data.

This suggests that miners had a fair shot at mining this transaction. Cookies are sometimes used to improve the website experience of a visitor to a website.

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