All that the blockchain does is say that code UVW signed code XYZ. Tracing that to individual transactions is a lot tougher, especially considering that one person can have multiple randomly generated bitcoin wallets. Who's to say that when 123 signs 456 that he didn't pay for some service somewhere, as opposed to just sending coins to another wallet under his control?
There's no "who". There's a cryptographic hash that may or may not be under the control of a specific person at any given time. If you're smart, the only link an attacker can make is that you used your traceable money to purchase BTC sent to this wallet. Once that BTC leaves that wallet, the chain is broken, because you have no way of tying an identity to that second wallet.
Tracing mass flows, the concept of guilt by association, and general investigation say otherwise.
Please take a look at the properties provided by a system based on http://en.wikipedia.org/wiki/Blind_signature for a perspective on the guarantees that Bitcoin lacks. (Unfortunately, such schemes require a Bank and are thus not practical for adoption. still it's instructive to see what other properties are actually possible rather than devolving into the technicalities of performing various degrees of untraceable btc transaction in the immediate future)
It's really a matter of time until all exchanges routinely report their customers and a list is made of all the major above-board merchants. For the sake of the naive users, let's hope this is done openly rather than covertly. FINCEN has decades of experience tracing pseudonymous transactions.
> Tracing mass flows, the concept of guilt by association, and general investigation say otherwise.
Those arguments could also be applied to Tor. In fact, I'd contend that bitcoin is easier to anonymise than a TCP connection, as you don't need to obscure the transfer in real time.
There's no "who". There's a cryptographic hash that may or may not be under the control of a specific person at any given time. If you're smart, the only link an attacker can make is that you used your traceable money to purchase BTC sent to this wallet. Once that BTC leaves that wallet, the chain is broken, because you have no way of tying an identity to that second wallet.