Tracking the Bitcoin Sheep
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The Sheep Marketplace, which was a deep Web location where goods of a dubious legal nature were bought and sold, was robbed of all of its users' BTC and shut down operations on Nov. 21. In the non-digital world, if a thief physically robbed a bank of its paper money, law enforcement could potentially track down the stolen cash by way of bank note serial numbers. The actual BTC unit itself is not trackable, though in the virtual BTC world a different kind of scenario is now playing out that provides insight into the nascent world of virtual currency.
BTC account holders have cryptographic account addresses where the currency is held, and each transaction is tagged in what is known as a blockchain record. BTC holders can go through the digital equivalent of money laundering by way of a "tumbler." A tumbler essentially reshuffles the BTC and divides it up across multiple other addresses and transactions, making it significantly more difficult to follow the money.