Really are Bitcoins untraceable? Usually, when some bad guy do something, he requests a payment using Bitcoins. Given that the demanded payment is not common, wouldn't be easy to trace the attackers when they retrieve the money back? Assuming that the bad guy wants to retrieve all the money.

For example:

A) X requests 1000000 BTC.

B) Y is monitoring all transactions and notice about a payment of 1000000 BTC to qwerty

C) Y reports to all banks about the address qwerty, as it looks suspicious due to that recent income.

D) X goes to Z to withdraw the money, but as Z knows about that address, it blocks the funds and call the police.
All bitcoin transactions are actually traceable by protocol definitions. Basically the blockchain is a long list of all the transactions throughout the history of bitcoin. The problem arises when trying to pinpoint who owns the address the transactions are being sent to. You can create as many BTC addresses as you want. Also with services like coin join and tumbling you can make tracing the coins much harder. Basically what your saying is possible but there are ways to easily mitigate any tracing being done.

The "bad guy" requests payment to a certain BTC address, they then tumble the coins through multiple intermediary addresses. At this point it's pretty hard to trace where the money actually ends up. Tumblers have built in features that convert a 100 BTC transation into multiple 10 BTC transactions that all end up at the same address in the end, making you tracking idea much harder. They also have features to delay a transaction making it harder to trace on the way out since you are expecting the transaction to happen immediately and instead it was delayed by a random increment of time. Tumblers also institute a random fee usually varying from 1-3% meaning the value coming out of the tumbler is not going to be easily traced to the value going in.


Wallet (A) is sent 100 BTC
Wallet (A) tumbles 100 BTC over 10 transactions of 10 BTC increments to wallet (B)
repeat until satisfied.


Since the attacker can create as many BTC addresses as they want they can easily hide the trail of where the BTC is being sent.

Basically bitcoin transactions are traceable, there are just ways to make it not worth attempting to trace.