[mehwoot]

See my comment here: https://news.ycombinator.com/item?id=6204187.

It's pretty straightforward for the Government to come up with a scheme to defeat tumbling services. Just make it mandatory to only accept payments from whitelisted addresses. Banks and your average business are not going to go all cypherpunk and circumvent such laws.

[MacsHeadroom]

Meet Zerocoin, the cryptocoin extension adding zero traceability transactions for the low low cost of a few extra bytes per transaction.

http://zerocoin.org/

[mehwoot]

Correct me if I'm wrong, but zerocoin is essentially a formal, decentralised tumbling service, right? It runs parallel to bitcoin and people on bitcoin can choose to use it or not.

Under my scenario, if you used zerocoin, and anybody else using the service wasn't whitelisted, you would be blacklisted, since there would be a chain of coins being sent from non whitelisted addresses to yours. So it would just be up to you not to use it.

The key is at what stage the Government becomes involved. If they implemented this sort of proposal right now, they would just say "if you're using zerocoin, you'll likely be blacklisted- tough luck". If everyone starts using zerocoin, including all legitimate businesses, and then they try to regulate it- then people would have more power.