Bitcoin is a ‘boon for surveillance’, says former CIA director(decrypt.co)
decrypt.co
Bitcoin is a ‘boon for surveillance’, says former CIA director
https://decrypt.co/66411/cia-bitcoin-surveillance
389 comments
It can be pretty anonymous too. You can use fiat to buy mining hardware and then it's pretty hard to connect an identity to a wallet if you're careful.
Don't you eventually need fiat? Yes, so you have someone sell NFTs to those untraceable wallets and now you have a legit income stream as an artist. Pay the tax in the place you want your money to end up and you really only need like one person in your destination country to clean as much as you'd like.
Don't you eventually need fiat? Yes, so you have someone sell NFTs to those untraceable wallets and now you have a legit income stream as an artist. Pay the tax in the place you want your money to end up and you really only need like one person in your destination country to clean as much as you'd like.
You pretty much need to go through a Know your customer(KYC) process to really trade in crypto. At least here in western Europe i had to upload a Id doc, I don't mind it because saving money costs me money, buying satoshis earns me money.
Given cryptos nature of being a public ledger and there more then enough compute power available everything can probably be traced and backtracked in real-time.
Given cryptos nature of being a public ledger and there more then enough compute power available everything can probably be traced and backtracked in real-time.
Only in the destination country. Let's say someone in China wanted to move $$$$ out of China for whatever reason. They could use yuan to purchase mining hardware and use that to generate clean wallets with no identity attached. A good friend of this person is an artist in the UK. The artist cashes in the ETH, properly reports taxes from income, and now has a completely clean and clear source of cash. Now if the Chinese person wants to get out of China in a hurry, they can visit their close friend in the UK.
Being generous you can mine ~$10 of crypto per day with a 3080 based on its hashrate, zero electricity cost.
So to transfer $1 million out over 3 years, you'd need to run mine ~$900 of crypto per day, ie. run 90 RTX3080s 24/7/365.
Also note that this would draw around 20kW.
[1] https://www.nicehash.com/profitability-calculator/nvidia-rtx...
So to transfer $1 million out over 3 years, you'd need to run mine ~$900 of crypto per day, ie. run 90 RTX3080s 24/7/365.
Also note that this would draw around 20kW.
[1] https://www.nicehash.com/profitability-calculator/nvidia-rtx...
NiceHash shows a profitability of $9/day (1) given $0.08/kwh which is average in China (2). So to get a positive return on your investment assuming a cost of $700 per card, it takes less than 80 days. Never before have you been able to launder and invest your money at the same time.
The questions of number of cards and electricity usage are pretty secondary and easy enough to hide. Go off grid, setup a similar legitimate company, lots of options to hide it.
This is backed by the fact the vast majority of hash power for BTC comes from China (3). There are world wide shortages for sha asics and gpus. I'm not describing a hypothetical.
(1) https://www.nicehash.com/profitability-calculator/nvidia-rtx...
(2) https://www.globalpetrolprices.com/China/electricity_prices/
(3) https://www.statista.com/statistics/731416/market-share-of-m...
The questions of number of cards and electricity usage are pretty secondary and easy enough to hide. Go off grid, setup a similar legitimate company, lots of options to hide it.
This is backed by the fact the vast majority of hash power for BTC comes from China (3). There are world wide shortages for sha asics and gpus. I'm not describing a hypothetical.
(1) https://www.nicehash.com/profitability-calculator/nvidia-rtx...
(2) https://www.globalpetrolprices.com/China/electricity_prices/
(3) https://www.statista.com/statistics/731416/market-share-of-m...
Googling I see the price of a 3080 is 700 dollars, so this would cost 700 * 90 = 63,000. Plus electricity, which, maybe you can get cheap somehow in China if you have the right friends. Seems like an amount this size is pretty small compared to what you're moving. If you think bitcoin will go up long term then the cost might work out to be negative.
> Googling I see the price of a 3080 is 700 dollars
assuming you're able to buy them and have the money upfront and are able to hide the purchase.
"What this person could be doing with 90 3080, I wonder" asks the Chinese government employee that checks your bank transactions.
https://www.techradar.com/news/nvidia-rtx-3080-shortage-coul...
assuming you're able to buy them and have the money upfront and are able to hide the purchase.
"What this person could be doing with 90 3080, I wonder" asks the Chinese government employee that checks your bank transactions.
https://www.techradar.com/news/nvidia-rtx-3080-shortage-coul...
Training facial recognition models for the CCP of course.
I'm sitting here more like how can I get money into China and access their markets, like pretty much every western capital institution at the moment,
that's the the whole thing about the trade deal phase 1 how can black rock like institutions carve up a bigger piece of the China pie.
Wouldn't be surprised if the US is using its mainstream media machine to sabotage the EU-China deal, so they can also claim up EU part of the China pie.
Its like kind of like the unequal treaties but now china can fight back and as small concession for less aggressive approach, offered a small piece of the China pie for the outsiders to fight over. Let the outsiders fight among themselves instead of letting them fight together against you.
Isn't the cap like $25k/year/person that's like top 5~10% of the global citizens that can save up like $25k per year.
Its like kind of like the unequal treaties but now china can fight back and as small concession for less aggressive approach, offered a small piece of the China pie for the outsiders to fight over. Let the outsiders fight among themselves instead of letting them fight together against you.
Isn't the cap like $25k/year/person that's like top 5~10% of the global citizens that can save up like $25k per year.
Western govs are going to let greedy capital pour into China and thus monetarily support the CCP finishing the civil war against the Taiwanese people in a couple of years?
Once the US and EU if/have succeeded in building their own semi conductor supply lines, Taiwan will just be disposed off like some old used condom.
Taiwan's silicon shield and western semi conductor independence are contradicting objectives, sacrificing Taiwan for a bigger piece of the Chinese market is more then worth it from a realist/Mercantilism perspective.
Taiwan's silicon shield and western semi conductor independence are contradicting objectives, sacrificing Taiwan for a bigger piece of the Chinese market is more then worth it from a realist/Mercantilism perspective.
Yeah but the CCP then controls that first island chain and easily squeeze off Japan and SK. US carriers are kept far away by stationing missiles on Taiwan. Thus they can continually stake out control.
The US investing in the Chinese "pie" is useless because they're just feeding the CCP more. CCP will use the power to take over the world. US companies would get eaten by the Chinese companies and US gov would be taken over from within, once mainstream and social media is taken over by CCP hands.
The US investing in the Chinese "pie" is useless because they're just feeding the CCP more. CCP will use the power to take over the world. US companies would get eaten by the Chinese companies and US gov would be taken over from within, once mainstream and social media is taken over by CCP hands.
See the US losing is not really my problem, the current cold war was started some years ago and only the future will tell how this will end.
Taiwan will hardly add to the Chinese ant ship missile shield, putting more space assets in the region will offer a more accurate kill chain.
I wouldn't be surprised that South Korea is already in the Eurasian camp or at least neutral there's a reason they are not part of the quad.
Don't listen to words look for the actions of each player, because words are cheap but actions aren't.
But don't be afraid of China taking over US cyberspace, I wouldn't be surprised that the Anglo-Europeans will build their Hadrian fire wall. To keep the Eurasian troll armies out of their part of the cyber world. This might all grow out of the clean network initiative.
But don't be afraid of China taking over US cyberspace, I wouldn't be surprised that the Anglo-Europeans will build their Hadrian fire wall. To keep the Eurasian troll armies out of their part of the cyber world. This might all grow out of the clean network initiative.
Ok but if the CCP is authoritarian and takes control of everything, it will be your problem. Unless you are part of the CCP, or just a troll.
The king is dead, long live the King...
For most non westerns nothing will really change if the king sits in Washington or Beijing. If you think it does you have been drowned in US propaganda. Maybe the biggest historical difference is that Beijing builds, and Washington bombs cities in the global south.
For most non westerns nothing will really change if the king sits in Washington or Beijing. If you think it does you have been drowned in US propaganda. Maybe the biggest historical difference is that Beijing builds, and Washington bombs cities in the global south.
Hah, you clearly don't have a balanced view. US doesn't install pure puppet oligarchs and mass surveillance tech. CCP does whatever it takes to expand economic influence and tighten their autocratic control.
TLDR: CCP doesn't answer to the people. US gov at least has open elections.
I agree that at this moment, a poor person in central africa should not care 1% between US and CCP. But for their descendants, yes they should care.
TLDR: CCP doesn't answer to the people. US gov at least has open elections.
I agree that at this moment, a poor person in central africa should not care 1% between US and CCP. But for their descendants, yes they should care.
I believe this is how it works at the beginning, and I consider it as the main use of crypto in China. It was actually easier when exchange was legal in China, you can just buy bitcoin. Even now, you can use AliPay, WeChat and bank transfer to do P2P crypto transaction.
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it looks pretty complicated for a person who wants to send money (illegally) out of China and clean it up.
The easiest thing for China would be monitor crypto transactions and stop them from happening.
But suppose you are Chinese and have a good friend in UK who's going to report as legit income the result of your criminal activity in China (criminal as in simply hiding the money from the government, for whatever reason) on your behalf.
Why should you set this complex scheme up when you could simply fly to UK to visit your artist friend, buy one of his artwork with your yuan and you're done?
Or better yet, invite your UK friend to China and give him the money, that he can then deposit on his account.
Purchasing mining hardware or artworks with your money that can be trace back to you it's the exact same thing.
The easiest thing for China would be monitor crypto transactions and stop them from happening.
But suppose you are Chinese and have a good friend in UK who's going to report as legit income the result of your criminal activity in China (criminal as in simply hiding the money from the government, for whatever reason) on your behalf.
Why should you set this complex scheme up when you could simply fly to UK to visit your artist friend, buy one of his artwork with your yuan and you're done?
Or better yet, invite your UK friend to China and give him the money, that he can then deposit on his account.
Purchasing mining hardware or artworks with your money that can be trace back to you it's the exact same thing.
> Why should you set this complex scheme up when you could simply fly to UK to visit your artist friend, buy one of his artwork with your yuan and you're done?
> Or better yet, invite your UK friend to China and give him the money, that he can then deposit on his account.
China has capital controls and dual currencies to prevent these common scenarios. The yuan that the Chinese resident can get from a Chinese bank is devalued outside of China, and it is forbidden to move large quantities anyway (much less than the 1M USD mentioned in the thread).
https://statrys.com/blog/cnh-vs-cny-differences-chinese-renm...
> Or better yet, invite your UK friend to China and give him the money, that he can then deposit on his account.
China has capital controls and dual currencies to prevent these common scenarios. The yuan that the Chinese resident can get from a Chinese bank is devalued outside of China, and it is forbidden to move large quantities anyway (much less than the 1M USD mentioned in the thread).
https://statrys.com/blog/cnh-vs-cny-differences-chinese-renm...
> China has capital controls and dual currencies to prevent these common scenarios
that's why you buy stuff in yuan and sell the stuff for dollars/euro or other currencies
BTW we are talking about criminal activities here (money laundering), of course there's a price to pay and that price usually is in the 20-40% range (I've checked CNY and CNH and they are being traded at very similar rates right now [1][2])
there's no need to buy hundreds of GPU to mine crypto to do what the OP intended to do
unless OP meant btc it's a cheaper and safer way to launder money, which is a good reason why people could think it's a scam
[1] https://www.bloomberg.com/quote/USDCNY:CUR
[2] https://www.bloomberg.com/quote/USDCNH:CUR
that's why you buy stuff in yuan and sell the stuff for dollars/euro or other currencies
BTW we are talking about criminal activities here (money laundering), of course there's a price to pay and that price usually is in the 20-40% range (I've checked CNY and CNH and they are being traded at very similar rates right now [1][2])
there's no need to buy hundreds of GPU to mine crypto to do what the OP intended to do
unless OP meant btc it's a cheaper and safer way to launder money, which is a good reason why people could think it's a scam
[1] https://www.bloomberg.com/quote/USDCNY:CUR
[2] https://www.bloomberg.com/quote/USDCNH:CUR
> You pretty much need to go through a Know your customer(KYC) process to really trade in crypto
KuCoin? Binance?
KuCoin? Binance?
Binance is a great example because you can just keep creating new accounts to circumvent their KYC limits heh. I'm sure they have no idea.
You just have to take it up with the government in whatever country they're domiciled in. Like any legitimate company, they simply won't tell anyone which country that is, of course.
You just have to take it up with the government in whatever country they're domiciled in. Like any legitimate company, they simply won't tell anyone which country that is, of course.
A more local crypto exchange, when I started buying bitcoin it was harder to get euros in and out of Binance. Seeing how I'm not really a dissident or a rebel and I'm lazy so I'm not going to jump through multiple hoops.
So I don't mind the KYC process so I don't have to jump through hoops, but I do see how nations can use lawfare to attack/monitor crypto currencies, its not that hard to see. You have a open ledger, you have wallet addresses connected to personal identities. They can probably use social media connection graphs to fill in the gaps of unknown wallet addresses. Its a real time financial monitoring tool like the current system, just packaged up as some libertarian/tech bro nirvana escape hatch. Brilliant marketing if you ask me, but I'm just using it as an inflation hedge.
So I don't mind the KYC process so I don't have to jump through hoops, but I do see how nations can use lawfare to attack/monitor crypto currencies, its not that hard to see. You have a open ledger, you have wallet addresses connected to personal identities. They can probably use social media connection graphs to fill in the gaps of unknown wallet addresses. Its a real time financial monitoring tool like the current system, just packaged up as some libertarian/tech bro nirvana escape hatch. Brilliant marketing if you ask me, but I'm just using it as an inflation hedge.
Yeah literally, is it not just a connected graph of transactions? Sounds like smart people can split and roll and all this stuff to their main transaction to try to obfuscate it. But with the proper tool, couldn't the FBI use powerful computers to fill the graph in with human links and deduce a lot from it?
XMR I don't know though.
XMR I don't know though.
I don't know enough, but the moment I saw I needed to go through a Know your customer process I knew block chain privacy is compromised.
Wouldn't be surprised if there are ways to obfuscate your bitcoins. Something like wrapped bitcoins or something.
For the time being you already have block chain analytics companies that can trace and back trace transactions. Hell maybe they can even do it cross chain.
I wouldn't be surprised if a NSA or other nat sec organization can hack something together in a weekend.
Wouldn't be surprised if there are ways to obfuscate your bitcoins. Something like wrapped bitcoins or something.
For the time being you already have block chain analytics companies that can trace and back trace transactions. Hell maybe they can even do it cross chain.
I wouldn't be surprised if a NSA or other nat sec organization can hack something together in a weekend.
What are the features of the problem that make you think deanonymization is computationally impractical for non-nation states?
non-nations states don't have access to the exchange logs
Here is a link to a very high level layman explanation: https://en.wikipedia.org/wiki/Cryptocurrency_tumbler
If I was a local drug kingpin I could reduce risk with cash. At some point I’d need to sell my Bitcoin and that’d appear in my bank.
As a local drug kingpin you can employ somebody to spend all day trading bitcoin to strangers for cash at the mall foodcourt and avoid the banking system entirely.
Instead of just having the cash in the first place?
cash doesn't scale, it becomes difficult to store, hard to move, and is easily discovered.
That also sounds like Bitcoin
I'll carry two BTC, you carry $120k USD, we'll see who gets to the finish line first!
Is the finish line spending any of this money on a car? Or a house?
But with cash you'd have an inflation tax on everything you earn.
And depending on where you live you wouldn't be able to make big purchases in cash (in France I think the maximum cash transaction allowed is about 3000€).
BTC or cash you would have to launder your money to make it look like legit and be able to buy a house etc
Of course the other problem of BTC is that transactions are stored forever (as long as the BTC network operates) so it might bite you decades later.
And depending on where you live you wouldn't be able to make big purchases in cash (in France I think the maximum cash transaction allowed is about 3000€).
BTC or cash you would have to launder your money to make it look like legit and be able to buy a house etc
Of course the other problem of BTC is that transactions are stored forever (as long as the BTC network operates) so it might bite you decades later.
> But with cash you'd have an inflation tax on everything you earn.
This has to be the worst reason a drug dealer would avoid dealing in cash ever. Inflation is literally 2% per annum. Drug dealers pay 20%-50% to launder their money. C'mon now.
This has to be the worst reason a drug dealer would avoid dealing in cash ever. Inflation is literally 2% per annum. Drug dealers pay 20%-50% to launder their money. C'mon now.
With BTC you would need to pay transaction fees, and in practice, anonymization fees (e.g. for mixing services, tunneling through a private cryptocurrency) for many transactions. These would amount to far more than inflation for USD, EUR, etc.
Switching to monero would incur you, what? 0.1% fee total even when you add all the transaction fees? Doesn't seem like much of a problem.
Sure, at small scale, not much of a problem. But start moving $$millions, and you'll simultaneously move the market, paying more as you buy and receiving less as you sell.
There is no such thing as a free lunch.
There is no such thing as a free lunch.
The problem isn't just the transaction fees but markups by exchanges (BTC -> XMR, XMR -> BTC) that each take a cut. Last time I calculated this, even after shopping around for cheaper exchanges it was well over 1% in total fees and probably something closer to 3%, but I'll have to double-check.
I'm beginner, but if both ExchangeA and ExchangeB is investigated by law enforcement, ExA knows sent address and ExB knows received address. So it's not perfect unless you add intermediate private XMR wallet between A and B, isn't it?
Why would you buy BTC at all in this scenario? If you are going to an exchange you can just buy fiat-XMR and XMR-fiat.
Deposit money to Binance, covert to XMR, withdraw XMR is well under 0.1% total in fees.
Deposit money to Binance, covert to XMR, withdraw XMR is well under 0.1% total in fees.
I wouldn't. As you mentioned, I would just find an exchange that supports fiat <-> XMR. I'm just responding to the top-level comment that specifically referred to Bitcoin as the preferred currency for these transactions.
> But with cash you'd have an inflation tax on everything you earn.
Yes, there are risks involved in doing criminal business, inflation is not one of them
Yes, there are risks involved in doing criminal business, inflation is not one of them
Why not someone else's bank...?
That thinking is quite shallow.
That thinking is quite shallow.
Sure so now you’ve paid it to their account what happens? They will be investigated for unknown wealth. At some point they’ll need to move that money to the drug dealer - either by cash or another bank transfer.
You show up at their house and escort them to the bank where they withdraw the money and give it to you?
> But if I was a local drug kingpin in Baltimore, or a corrupt mid-level CCP official, or a Cypriot corporate money launderer, then Bitcoin deanonymization is probably a small risk in the scheme of things. Certainly orders of magnitude less risk than using the traditional banking system.
... for now.
The thing is, 2-3 tx/sec is basically snail mail. That's such a small number of transactions that there's not even a forest to hide within.
As the analytics tools improve the de-anonymization will be faster and more automatic, and that "tens of millions" figure will dwindle down to pennies. State actors can easily combine that data with actual fiat, and you'll be in court before you know it.
The problem is you're committing a ledger of your criminal activity to the cloud forever, and CCing your attorney general, smirking that they'll never figure it out. Of course they will. Either they'll figure it out or ban it. Or both.
... for now.
The thing is, 2-3 tx/sec is basically snail mail. That's such a small number of transactions that there's not even a forest to hide within.
As the analytics tools improve the de-anonymization will be faster and more automatic, and that "tens of millions" figure will dwindle down to pennies. State actors can easily combine that data with actual fiat, and you'll be in court before you know it.
The problem is you're committing a ledger of your criminal activity to the cloud forever, and CCing your attorney general, smirking that they'll never figure it out. Of course they will. Either they'll figure it out or ban it. Or both.
> ... for now
It bears repeating explicitly I think: you're not working against today's analysis tools, you're working against whatever analysis tools exist far into the future, since everything is recorded for eternity.
It bears repeating explicitly I think: you're not working against today's analysis tools, you're working against whatever analysis tools exist far into the future, since everything is recorded for eternity.
I don't think many people become drug dealers by worrying about the hypothetical effects their decisions might have on them in 10 years.
They do if they want to stay tf out of prison.
From what I've seen, success in this industry is predicated upon planning, caution, and constantly thinking of ways that people are going to screw you over.
From what I've seen, success in this industry is predicated upon planning, caution, and constantly thinking of ways that people are going to screw you over.
If your first thought when making decisions was "what won't send me to prison" you probably wouldn't be engaging in criminal enterprise in the first place.
Most people who break the law do so because they either don't consider the consequences or accept the rewards as justifying the risks. And plenty of criminals go to prison because they judged wrong. That those who are successful for long periods of time buck this trend is just survivor bias.
Most people who break the law do so because they either don't consider the consequences or accept the rewards as justifying the risks. And plenty of criminals go to prison because they judged wrong. That those who are successful for long periods of time buck this trend is just survivor bias.
Well, it's true that the official manual contains mostly short-term, actionable recommendations, but some of them do have the goal of avoiding long-term consequences.
https://m.youtube.com/watch?v=ZYb_8MM1tGQ
https://m.youtube.com/watch?v=ZYb_8MM1tGQ
> whatever analysis tools exist far into the future
only as far as statute of limitations. figuring out the crime after that point is not a risk ... but it does put a target on your back
only as far as statute of limitations. figuring out the crime after that point is not a risk ... but it does put a target on your back
These can be changed and you can be charged under other crimes which may have different statue of limitations. When the government decides they want you in prison, it doesn't particularly care how it does so. Tax evasion, drug trafficking, funding terrorism, CSA changes, weapons smuggling, or RICO or country equivalent, they'll use which ever seems easiest to get you.
For a buyer, this isn't as big of a deal because you won't have that level of target on your back, but for anyone running a marketplace I don't think statute of limitations will protect you once they figure out who you are.
For a buyer, this isn't as big of a deal because you won't have that level of target on your back, but for anyone running a marketplace I don't think statute of limitations will protect you once they figure out who you are.
Even in the ancient Silk Road you could sell contraband effectively using internal, offchain transactions only. The customers pay using offchain transactions using the market, and the vendor can cash out via some trader in the same market.
Like Hawala?
No, not at all.
Basically, if you dont want to deal with the onchain transactions, you could sell the risk of that to someone else and only deal in internal offchain transactions. Dont know if this actually happens though.
Basically, if you dont want to deal with the onchain transactions, you could sell the risk of that to someone else and only deal in internal offchain transactions. Dont know if this actually happens though.
Bitcoin Mixers are really effective against even state actors. Especially decentralised mixers.
Are they effective against this technique?
https://www.wired.com/story/bitcoin-blockchain-fifo-dirty-co...
You might find that the mixer, rather than washing your bitcoin, unexpectedly taints them.
https://www.wired.com/story/bitcoin-blockchain-fifo-dirty-co...
You might find that the mixer, rather than washing your bitcoin, unexpectedly taints them.
Are you sure you understand the content of the link you shared? It’s talking about a hypothetical legal framework, not actually concretely descrambling the input and outputs of a mixer service.
It doesn't matter how good your technical solution is if the law says that the scrambling doesn't matter.
The threat being considered in this thread is a future crackdown on bitcoin and how the blockchain may be used against bitcoin owners. Legal threats seem very relevant.
The threat being considered in this thread is a future crackdown on bitcoin and how the blockchain may be used against bitcoin owners. Legal threats seem very relevant.
I don't think people appreciate the fact that government agencies have the cheat codes to the server of life.
While some will try to do everything the legal way, the the wily people who believe they are getting away on some kind of technicality sometimes find themselves charged with a different crime, or maybe just unlucky after a pre-dawn police raid or traffic stop goes south.
While some will try to do everything the legal way, the the wily people who believe they are getting away on some kind of technicality sometimes find themselves charged with a different crime, or maybe just unlucky after a pre-dawn police raid or traffic stop goes south.
So let's say your name is Paul. In this scenario, I steal your bitcoin. I go over to a gold seller named Peter and use your bitcoin to buy gold. You report your bitcoin stolen. The guy who sold me gold owes you bitcoin, but I don't. Effectively I have simply robbed Peter.
Nah in the real world code isn't law. They'll do what they do with stolen cash. They confiscate it, and create a liability on the person who gave it to you. Or squeeze you both.
But you don't know who gave it to you, because it's obfuscated. Which is the whole problem this law was supposed to solve.
My read on the article is that they're considering two different frameworks: one where everything that comes out of the mixer is considered fractionally dirty based on the inputs. Or, randomly picking an output and tainting it 100% under the "FIFO" method.
The idea isn't necessarily to de-anonymize the transactions here but to disincentivize people from using mixers. Either a haircut kills a portion of your value, or you lose it all, the idea is you won't do that again.
That doesn't change that legally it still kills all your money, and creates a liability on the person who put in the dirty money. If you figure out who they are it's all you, you're welcome to sue them. If not, you've learned a hard lesson.
I'm fine with either.
The idea isn't necessarily to de-anonymize the transactions here but to disincentivize people from using mixers. Either a haircut kills a portion of your value, or you lose it all, the idea is you won't do that again.
That doesn't change that legally it still kills all your money, and creates a liability on the person who put in the dirty money. If you figure out who they are it's all you, you're welcome to sue them. If not, you've learned a hard lesson.
I'm fine with either.
Again, the whole problem is that the bad actor can pass off their stolen bitcoin before anyone knows its tainted. So it doesn't matter if you didn't use a mixer, if that bitcoin ever went through a mixer it could potentially be a live hand grenade. People could just mix large numbers of bitcoin periodically so everything is suspect.
You're not solving the problem, you are just introducing new problems that affect other people in the hopes that the entire system becomes unworkable.
You're not solving the problem, you are just introducing new problems that affect other people in the hopes that the entire system becomes unworkable.
I would argue that solves the problem, just not in a way that you are a fan of.
Still if you are a corrupt mid-level CCP official you can just say send a bitcoin to account xyz and there's no way of knowing who owns that unless the money is transferred out to something identifiable. It's like Satoshi's bitcoins. There they are on the chain but you can't tell who controls them from that.
Bitcoin transactions don't have to be on-chain
https://en.wikipedia.org/wiki/Lightning_Network
https://en.wikipedia.org/wiki/Lightning_Network
Bitcoin transactions do, LN transactions have completely different characteristics, including having to settle back on-chain for security.
The Lightning Network literally exchanges Bitcoin transactions that are withheld from being broadcasted on-chain until channel closure. Bitcoins exchanged via the Lightning Network are just Bitcoins. Saying they are a different kind of "IOU" or token is a lie often employed by alt-coiners trying to push a "Layer 1-only"-Bitcoin fork (e.g. BSV).
The security in the Lightning Network doesn't come from settling on-chain after a transaction happened but from signing over all your money in a Lightning Network channel to the other party should somebody catch you cheating.
The security in the Lightning Network doesn't come from settling on-chain after a transaction happened but from signing over all your money in a Lightning Network channel to the other party should somebody catch you cheating.
The real lie is saying that LN transactions are "just Bitcoins".
They are unconfirmed transactions and there are many ways of losing your funds compared to confirmed ones. Such as having your harddrive corrupted and your node trying to propagate an old state.
They are unconfirmed transactions and there are many ways of losing your funds compared to confirmed ones. Such as having your harddrive corrupted and your node trying to propagate an old state.
Unconfirmed Bitcoin transactions are still Bitcoin transactions, with the advantage that on the Lightning Network you have a built-in protection against doublespends in contrast to accepting 0-conf tx.
You are correct that funds in a Lightning Network wallet are at higher risks than those in a cold wallet, but this applies to all "hot" crypto wallets. Most LN wallets supports "Static Channel Backups" which you only create and store once after setting up a channel. In case your phone goes up in flames, you can use it to safely close your channels and receive your balance.
You are correct that funds in a Lightning Network wallet are at higher risks than those in a cold wallet, but this applies to all "hot" crypto wallets. Most LN wallets supports "Static Channel Backups" which you only create and store once after setting up a channel. In case your phone goes up in flames, you can use it to safely close your channels and receive your balance.
From the perspective of (black) market participants, the characteristics of LN are preferable. Including privacy aspects.
Or you could just hand someone the private key to your address that contains $100. Let them figure out how to obfuscate their stuff.
Nobody is going to accept this as payment for something illicit. They know you've seen the private key. They have no reason not to assume you have something set up to sweep the wallet as soon as they accept the "payment."
“Opendime is a small USB stick that allows you to spend Bitcoin like a dollar bill. Pass it along multiple times. Connect to any USB to check balance. Unseal anytime to spend online. Trust no one.”
https://opendime.com/
https://opendime.com/
That's not the same as just "handing someone your private key."
It involves either buying or creating a tamper resistant device and a reputation for authenticity.
It's significantly more complicated.
It involves either buying or creating a tamper resistant device and a reputation for authenticity.
It's significantly more complicated.
You can put the money in an off chain escrow like Lightning for things like this though.
«As far as I can tell, hundreds of millions in drugs and contraband are regularly transacted using Bitcoin. Billions in global capital controls and taxes are evaded every day with Bitcoin»
That is completely unsubstantiated. You have no evidence for that.
That is completely unsubstantiated. You have no evidence for that.
Russian darknet market Hydra, which is probably the biggest darknet market in the world, uses only Bitcoin for everything.
OP doesn't or you doesn't ? OP appears to have plenty.
It’s a fair inference given the size and rate of known Bitcoin black market busts. In one search, I found a paper that estimates $76B worth of Bitcoin is used in illegal trade per year.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3102645
I remember this paper. A major flaw that was pointed out to the authors (and never corrected) is that Bitcoin tumbling services—popular among illicit users—artificially increase the transaction volumes. So if tumbling services puts the BTC on average through 10 transactions, then this will multiply by 10-fold the volume. In other words there wouldn't be $76B transacted annually, but only $7.6B.
Tumbling also makes some of their other figures unbelievable. For example in table 2 they report "181.82%" of all users transactions attempt to use tumbling services... I have little confidence in this paper being accurate.
Tumbling also makes some of their other figures unbelievable. For example in table 2 they report "181.82%" of all users transactions attempt to use tumbling services... I have little confidence in this paper being accurate.
Imagine if you were a drug dealer smuggling in a million dollars of cocaine into Chicago from Mexico. Great, you got the drugs in, now how do you get the money back out? You'll still have to find a way to move a million dollars all the way, through air, land, and sea. It's so much easier to hide a pen drive or a laptop.
Except it's not hidden in a laptop. Your balance and your entire transaction history is on the blockchain for everyone to see.
Imagine a tumbler, where fractions of bitcoins are taken in (say 100 bitcoin split into 1000 pieces each) then from 1000 people (including you and you're "illicit" 100 bitcoin) and then you get back 100000 pieces, passed on to another tumbler until eventually you get back 100000 randomized pieces = 100 bitcoin. Where did all those pieces come from and why? How do you connect that in the blockchain ledger to prove the income is illicit?
Is bitcoin tumbling feasible anymore?
First problem: transaction fees are currently over $10 per transaction.
Second problem: max transactions per block (2k?). Wouldn’t a single tumbling instance of 100k pieces completely fill 50 bitcoin blocks, effectively browning out the system?
First problem: transaction fees are currently over $10 per transaction.
Second problem: max transactions per block (2k?). Wouldn’t a single tumbling instance of 100k pieces completely fill 50 bitcoin blocks, effectively browning out the system?
What happens if the tumbler "loses" your bitcoins?
Same thing that happens when a bookie "loses" your bet. Probably nothing. There are illicit activities which use systems of trust based on past behavior just like in the "legal" world and there are usually consequences.
Coinbase, shockingly, violated trust on both sides and is still being hyped. Doesn't take much to understand what a terrible investment that is.
Coinbase, shockingly, violated trust on both sides and is still being hyped. Doesn't take much to understand what a terrible investment that is.
You still need to deposit cash to crypto. Since those things are mostly not bought with crypto.
> Imagine if you were a drug dealer smuggling in a million dollars of cocaine into Chicago from Mexico
Now imagine I smuggled in from Mexico to Chicago this[1] but I don't know how to take back this[2]
What kind of genius/idiot criminal would I be?
[1] https://www.gannett-cdn.com/-mm-/6d0c827943b8dc8c2c7449974d0...
[2] https://www.cbp.gov/sites/default/files/u6097/CBP-AMO%20-%20...
Now imagine I smuggled in from Mexico to Chicago this[1] but I don't know how to take back this[2]
What kind of genius/idiot criminal would I be?
[1] https://www.gannett-cdn.com/-mm-/6d0c827943b8dc8c2c7449974d0...
[2] https://www.cbp.gov/sites/default/files/u6097/CBP-AMO%20-%20...
It does look to be about double the work, which is less bad than a larger multiple, but still well worth optimizing.
> but still well worth optimizing
are we still talking about criminals?
I don't think something that make it worth optimizing for but is intended to optimize criminals activities is really desirable.
Anyway, there's no advantage with crypto, the smuggler didn't smuggle 1 million dollar worth of cocaine from Mexico, cocaine is moved in much larger volumes, if a few pounds are lost, it's part of the business risks, criminals understand it and sometimes facilitate it, so that police can make big splash announcements and everybody is happy.
money is another thing entirely.
that million dollar worth of cocaine has been cut in hundreds of smaller doses, that are being paid mostly in cash.
so now every corner dealer has a pile of cash that use to pay the bigger dealer and so on.
first of all, you can't buy crypto with cash. You should go through another person who already owns enough to sell them to you, which means another breadcrumb that could lead back to you in case that other person is caught.
also, cash has some disadvantages over a usb pendrive, but one big advantage is that it's harder to lose a briefcase than a usb drive and they don't break as easily.
so the smaller dealers have no incentive to do it.
the average dealer has no incentive on buying crypto to pay the larger dealer, because he gets rid of the cash pretty fast and keeps his cut that invests into criminal but legal activities so that the facade is clean.
the larger dealers have now a pile of cash that need to handle anyway, they can't ignore it and make it disappear just because it takes too much space.
let's go back to the smuggler (probably a cartel man) that moved cocaine from Mexico to Chicago
they have bank accounts in Panama and don't care about moving large sum of money anonymously or through perfectly clean American front men.
The system already works, there was an article the other day on front page titled "The war against money laundering is being lost" (https://news.ycombinator.com/item?id=26786810), so why change it for an asset that has not even a stable value?
I guess they tried at one point, but there's too much attention on them now, so criminals with capital C dropped them and let only their kids play with it so they can pay for their college expenses.
are we still talking about criminals?
I don't think something that make it worth optimizing for but is intended to optimize criminals activities is really desirable.
Anyway, there's no advantage with crypto, the smuggler didn't smuggle 1 million dollar worth of cocaine from Mexico, cocaine is moved in much larger volumes, if a few pounds are lost, it's part of the business risks, criminals understand it and sometimes facilitate it, so that police can make big splash announcements and everybody is happy.
money is another thing entirely.
that million dollar worth of cocaine has been cut in hundreds of smaller doses, that are being paid mostly in cash.
so now every corner dealer has a pile of cash that use to pay the bigger dealer and so on.
first of all, you can't buy crypto with cash. You should go through another person who already owns enough to sell them to you, which means another breadcrumb that could lead back to you in case that other person is caught.
also, cash has some disadvantages over a usb pendrive, but one big advantage is that it's harder to lose a briefcase than a usb drive and they don't break as easily.
so the smaller dealers have no incentive to do it.
the average dealer has no incentive on buying crypto to pay the larger dealer, because he gets rid of the cash pretty fast and keeps his cut that invests into criminal but legal activities so that the facade is clean.
the larger dealers have now a pile of cash that need to handle anyway, they can't ignore it and make it disappear just because it takes too much space.
let's go back to the smuggler (probably a cartel man) that moved cocaine from Mexico to Chicago
they have bank accounts in Panama and don't care about moving large sum of money anonymously or through perfectly clean American front men.
The system already works, there was an article the other day on front page titled "The war against money laundering is being lost" (https://news.ycombinator.com/item?id=26786810), so why change it for an asset that has not even a stable value?
I guess they tried at one point, but there's too much attention on them now, so criminals with capital C dropped them and let only their kids play with it so they can pay for their college expenses.
What if you bought physical assets with it? Exchanged with an escrow account.
We are still talking about criminals. By "well worth optimizing", I meant worth to them.
I'm not defending that Bitcoin is a solution to moving money, I'm attacking what I perceived to be an argument that it's not a problem for dealers because they can just do to cash as they do to drugs.
I'm not defending that Bitcoin is a solution to moving money, I'm attacking what I perceived to be an argument that it's not a problem for dealers because they can just do to cash as they do to drugs.
>As far as I can tell, hundreds of millions in drugs and contraband are regularly transacted using Bitcoin
What a hilarious claim. Everything else you've said just confirms you've fallen for the "BTC bad" narrative. I wonder how you feel about you-know-who printing unlimited toilet paper money for their own benefits.
What a hilarious claim. Everything else you've said just confirms you've fallen for the "BTC bad" narrative. I wonder how you feel about you-know-who printing unlimited toilet paper money for their own benefits.
It's not. All of the DNMs have switched to Monero already. Ransomware is also changing to Monero. Anyone using Bitcoin for illegal stuff at this point will be caught.
Correction: Anyone running a large business using bitcoin for illegal stuff is likely to be caught at this point.
Even the 1Feex wallet that has the stolen Mt. Gox funds (now worth $5B) hasn't been touched. Bitcoin has been radioactive for illegal stuff for a while.
Or the owner might just have died or might be in prison. I'm pretty sure that the reason for not moving those coins is because BTC is radioactive. It might be partly a reason, but surely not the only reason. If you really needed the money you could try several methods to launder them.
You could try, but miners aren't going to include a transaction from that address in a block, especially not to some sort of mixing service.
It takes something pretty extreme to get the consensus of enough miners to matter, but the hack of Mt. Gox was that extreme.
It takes something pretty extreme to get the consensus of enough miners to matter, but the hack of Mt. Gox was that extreme.
This is not true.
We'll probably never find out, but there are plenty of blacklisted addresses miners won't touch. Ignorance of this is revealing.
What miners are blacklisting addresses? $623m in hacked Bitfinex funds were moved today without issue.[1]
[1] https://www.coindesk.com/623m-in-bitcoin-from-2016-bitfinex-...
[1] https://www.coindesk.com/623m-in-bitcoin-from-2016-bitfinex-...
I am deeply familiar with these systems. Maybe there are miners out there doing this, but it's not widespread enough to have any impact.
Transactions are broadcasted well before they are included in a block, so we'd know immediately if it happened.
[deleted]
Why does it cost anything to de-anonymise anyone? Aren’t all transactions observable in the public ledger? Then all you need to do is to observe one transaction and follow the money, or catch the identity of the person when going through a regulated exchange. Am I missing something?
There are ways to get Bitcoin that avoid centralized exchanges.
Anonymously buying in cash/something else via p2p. Mining. Are there any others?
> As far as I can tell,
Sources?
Sources?
Darknet markets almost universally advise against using BTC that hasn't been explicitly anonymized, a process that costs money and effort and requires knowhow to do properly. Mixers, tunneling through a private cryptocurrency, or other methods almost all involve transaction fees. Few people are seriously engaging in trading contraband without this overhead.
> hundreds of millions in drugs and contraband are regularly transacted using Bitcoin. Billions in global capital controls and taxes are evaded every day with Bitcoin
The same applies with fiat. This is a tired argument against cryptocurrencies.
It seems that HN has been upvoting anti-bitcoin content for the past few days now.
The same applies with fiat. This is a tired argument against cryptocurrencies.
It seems that HN has been upvoting anti-bitcoin content for the past few days now.
> Bitcoin can be traced by sophisticated nation state actors at the cost of tens of millions per intercepted target.
Please... Bitcoin transactions can be traced by whoever has a laptop and internet. If you want to stay anonymous, there is nothing worse than Bitcoin. Do yourself a favour and switch to Monero and similar which offer some level of privacy. But there is nothing better than the good old bank notes. Anyway, please educate yourself https://en.wikipedia.org/wiki/Bitcoin
Please... Bitcoin transactions can be traced by whoever has a laptop and internet. If you want to stay anonymous, there is nothing worse than Bitcoin. Do yourself a favour and switch to Monero and similar which offer some level of privacy. But there is nothing better than the good old bank notes. Anyway, please educate yourself https://en.wikipedia.org/wiki/Bitcoin
How is a guy with a laptop and internet know that the start/end address at e.g. an exchange is connected to me specifically? Sure, they can trace all the transactions of an address but you need more than that to connect the address to a specific person.
Of course, Monero is a better option but even with BTC it's not as trivial as you claim.
Of course, Monero is a better option but even with BTC it's not as trivial as you claim.
It doesn't by itself, but it's a much better start. You can simply match up addresses with activity from other digital systems. That link is present in a global, transparent, up to the minute, cheap to ingest data source (the blockchain).
Comparing that to any other payment system (or combination of) where there is due process in collecting this information (hopefully accurate and valid) you're going to have a much easier time developing tools to detect and alert with Bitcoin.
Comparing that to any other payment system (or combination of) where there is due process in collecting this information (hopefully accurate and valid) you're going to have a much easier time developing tools to detect and alert with Bitcoin.
So you need is a financial institution to give you unrestricted access to their records. And it can't be just any financial institution, it has to be the one used by the person you are targeting. And you don't know what financial institution that is because you are still trying to identify who the address belongs to. So really all you need is unrestricted access to many financial institutions' records.
wouldn't that be more reason for nation states to track monero?
Lol classic Bitcoin price goes up and HN goes on attack. Whats with it with this site?
They hate bitcoin here
The information is there but law enforcement hasn't widely used it for mass arrests -- just not yet. There is also wide evidence of crime on Facebook messages that goes unnoticed but that doesn't mean it is private.
History shows that reducing costs of computing, and the availability of on-demand large scale computing, will make is exponentially cheaper to do such tracing as time goes.
I would not be surprised if there will be agencies that will bid on tracing services.
I would not be surprised if there will be agencies that will bid on tracing services.
> Bitcoin deanonymization is probably a small risk in the scheme of things
its really not.
unlike cash or bearer bonds, _all_ transactions are recorded in perpetuity. That's literally the entire selling point of bitcoin, the ledger is opensource and universal.
Given that virtually all money going into and coming out of bitcoin is through establishments that have financial licenses, its perfectly trivial to trace the flow of money from its first exchange of real cash for bitcoin, to when its used for illicit purposes.
You're currently labouring under the impression that tracing cash flows in the real world is hard. its not, especially for a government. what is hard is proving that its illicit. cash is fungible, as in each unit of currency has no ID. so its much harder to prove that this $1 came from a drug sale.
with bitcoin, you have a public wallet, and a clear lineage of transactions from start to end.
its really not.
unlike cash or bearer bonds, _all_ transactions are recorded in perpetuity. That's literally the entire selling point of bitcoin, the ledger is opensource and universal.
Given that virtually all money going into and coming out of bitcoin is through establishments that have financial licenses, its perfectly trivial to trace the flow of money from its first exchange of real cash for bitcoin, to when its used for illicit purposes.
You're currently labouring under the impression that tracing cash flows in the real world is hard. its not, especially for a government. what is hard is proving that its illicit. cash is fungible, as in each unit of currency has no ID. so its much harder to prove that this $1 came from a drug sale.
with bitcoin, you have a public wallet, and a clear lineage of transactions from start to end.
If the currency is acquired through mining, then it doesn't have to flow through an establishment that has a financial license. It can still be traced, but identifying the individual is much more difficult.
And there are other ways to make things hard to trace. Buy for cash on localbitcoins. Go via a privacy coin. Go via a sketchy exchange.
Miners still have to record the BTC they've added to the blockchain if am not mistaken.
The miner reward is sent to a bitcoin address. Anyone can create a bitcoin address without going through any 3rd party so it’s totally anonymous until you spend it.
Okay. So basically useless. And not exactly anonymous since to use it in any way would ultimately defeat the purpose.
Is there a use case for unspent bitcoin?
Is there a use case for unspent dollars?
>cash is fungible, as in each unit of currency has no ID
This may seem nitpicky to point out that it does, but since it does, I'm not sure of your point.
"A unique combination of eleven numbers and letters appears twice on the front of the note. Each note has a unique serial number"
https://www.uscurrency.gov/denominations/bank-note-identifie...
This may seem nitpicky to point out that it does, but since it does, I'm not sure of your point.
"A unique combination of eleven numbers and letters appears twice on the front of the note. Each note has a unique serial number"
https://www.uscurrency.gov/denominations/bank-note-identifie...
yes, the physical currency does. but as soon as its in a bank, thats lost.
moreover we are assuming that cash is ID at entry and exit, which its not, unless someone suspects something.
moreover we are assuming that cash is ID at entry and exit, which its not, unless someone suspects something.
Isn't that the exact same way crypto works? It has a unique identifier, but as soon as you own it indirectly, on an exchange or something, then that clear link no longer exists. I'm wondering why it wouldn't be a parallel?
Cash is rarely verified. Sure they might do spot checks to see if its a fake. but its rarely tied directly to a deposit.
So when a cash machine gives you money, the ID of the currency not be tied to your account. When you spend that money in a shop, those notes will not be attached as having come from you as a customer.
With bitcoin, that all comes for free, we know when money left your wallet, what addresses it passed through to get to someone's else's. the whole selling point of bitcoin is that you can trace the provenance of each transaction right back to when that coin was originally mined.
For example, if I was to use bitcoin as a bank account replacement, everyone would know my employer, they would know how much money I give to my spouse each month. They would know who I invest with. They would know when I do my shopping at the super market. They would know when I'm having work done at the house. They would know if I got a bonus, and how much.
Some of those things I'm ok with, but a lot of things, I'm not
So when a cash machine gives you money, the ID of the currency not be tied to your account. When you spend that money in a shop, those notes will not be attached as having come from you as a customer.
With bitcoin, that all comes for free, we know when money left your wallet, what addresses it passed through to get to someone's else's. the whole selling point of bitcoin is that you can trace the provenance of each transaction right back to when that coin was originally mined.
For example, if I was to use bitcoin as a bank account replacement, everyone would know my employer, they would know how much money I give to my spouse each month. They would know who I invest with. They would know when I do my shopping at the super market. They would know when I'm having work done at the house. They would know if I got a bonus, and how much.
Some of those things I'm ok with, but a lot of things, I'm not
How do you trace funds through international exchanges that have throwaway wallets for the purposes of the transfer?
I'm curious too. At a guess, probably similar to attacks on Tor. In this analogy, those exchanges are like tor exit nodes.
Bearer bonds aren't really legal in most jurisdictions anymore due to the obvious potential for misuse. It's mostly a hollywood trope now. There are still companies where ownership is determined by bearer shares, usually found in tax havens and such.
> as in each unit of currency has no ID
If you mean physical units of currency that is no longer the case, most notes have serial numbers. In principle quite a lot of tracing can be done.
If you mean physical units of currency that is no longer the case, most notes have serial numbers. In principle quite a lot of tracing can be done.
can be done, but often isn't. It requires someone to be suspicious to trigger the various institutions to start tracking it.
there is lots of scope for laundering by giving the cash to third parties, before it gets to the banks.
Laundering inside bitcoin is pretty futile, because we can trace from mining to current wallet. we don't even need to trace all bitcoins.
All you have to do is pay for something illicit, and you can trace the flow of money from wallet to wallet, until its either converted into real cash, or held as a "reserve"
there is lots of scope for laundering by giving the cash to third parties, before it gets to the banks.
Laundering inside bitcoin is pretty futile, because we can trace from mining to current wallet. we don't even need to trace all bitcoins.
All you have to do is pay for something illicit, and you can trace the flow of money from wallet to wallet, until its either converted into real cash, or held as a "reserve"
I often see this argument as though in the future some advance technology can go back through the ledger and de-anon people.
Outside of some exchange link keeping a name = address record, the public wallet doesn't really expose you as there's no link between an address and a person.
Also, that $1 can be charged with crime and sized directly. Good luck siezing a brainwallet etc.
Outside of some exchange link keeping a name = address record, the public wallet doesn't really expose you as there's no link between an address and a person.
Also, that $1 can be charged with crime and sized directly. Good luck siezing a brainwallet etc.
It sounds like to me that the argument isn't that an advanced technology will go back through the ledger and identify people. It's that once people have been identified/linked to a public wallet, it's really easy to determine how they spent bitcoin because the record is public and permanent.
I agree, but there are people who create bank accounts (and I'm sure Coinbase accounts) with fake ID and use them for illegal proceedings. So while we can trust that the transactions log is accurate, it doesn't always prove a link to an actual person. My concern is someone having their identity stolen (or even just impersonation), used for KYC, then being linked to crimes without any deniability at all.
Edit: like IP address and torrent lawsuits etc.
Edit: like IP address and torrent lawsuits etc.
Plenty of Bitcoins have been sized. People don’t memorize their private keys, they store them somewhere. It’s quite hard to minimize the attack surface of your crypto currency without also risking the coins being lost.
Then that is entirely on them.
> Outside of some exchange link keeping a name = address record
"Outside of" is doing a lot of work here.
"Outside of" is doing a lot of work here.
That's why mixing services exists. Other than that darknet is using Monero AFAIK.
The only difficult to trace transactions in Bitcoin is from transactions which occur purely in btc and don’t touch anyone with a financial license.
Think drug dealers/gangs recirculating bitcoins mined years ago. Now the tricky part of this is that it would only take knowledge of a few transactions in the networks identity, complete with purpose to start identifying everyone. I’m sure an AG is looking forward to the largest RICO case in history at that point.
I’m sure that folks looking to anonymize are aware of this and take further precautions, I’m also sure that there is someone in the network who is dumb.
If I was in law enforcement I’d make btc address collection a top priority.
Think drug dealers/gangs recirculating bitcoins mined years ago. Now the tricky part of this is that it would only take knowledge of a few transactions in the networks identity, complete with purpose to start identifying everyone. I’m sure an AG is looking forward to the largest RICO case in history at that point.
I’m sure that folks looking to anonymize are aware of this and take further precautions, I’m also sure that there is someone in the network who is dumb.
If I was in law enforcement I’d make btc address collection a top priority.
> As far as I can tell, hundreds of millions in drugs and contraband are regularly transacted using Bitcoin. Billions in global capital controls and taxes are evaded every day with Bitcoin. The fraction of black market participants who are revealed on the basis of "chain analysis" is still a rounding error.
Some bold statements there. Do you have any evidence to provide?
Some bold statements there. Do you have any evidence to provide?
Looking at how my nation state is moving to tax even more despite having world highest tax rates, I'd say evading taxes and capital controls is going to be a feature for me as well in the not so distant future. Citizens evading getting taxed to financial death is a pretty legit - surely not legal - use of technology.
> Bitcoin can be traced by sophisticated nation state actors at the cost of tens of millions per intercepted target
Do you have a source for that number, or did you just pull it out of thin air?
Do you have a source for that number, or did you just pull it out of thin air?
I have a friend who works at local police in Europe, and they already regularly use commercial tools to analyze the blockchain and find what service people used to get the names and so on. This is a mid sized town in Europe, not some major department.
Funny how in the hack space some people explained how to buy drugs with bitcoin, others showed how they can track you anyways.
Funny how in the hack space some people explained how to buy drugs with bitcoin, others showed how they can track you anyways.
That's why Zcash, Dash, Monero, et al. are probably going to pop off. That, or become completely illegal, we'll see... not even sure if that can even be enforced beyond pushing centralized exchanges to delist the coins. Coinbase delisted Ripple a few months ago, and Ripple just 5x'd in the past month, so I'm not sure how effective one-off delisting actually is.
They've already been delisted by exchanges in Australia, although voluntarily, not by law.
IMO The whole world has gone mad with the need for surveillance of everything.
IMO The whole world has gone mad with the need for surveillance of everything.
delisting doesn't really change anything. The real threat would be if exchanges started blocking accounts that received BTC deposits from known monero-BTC exchange accounts.
Luckily, they can't really do that, since people would be able to poison an arbitrary BTC wallet just by sending them a quantity of BTC laundered via monero. But it'd be a pretty expensive poison pill.
Luckily, they can't really do that, since people would be able to poison an arbitrary BTC wallet just by sending them a quantity of BTC laundered via monero. But it'd be a pretty expensive poison pill.
The monero atomic swap feature means you can go from BTC to XMR without ever even touching an exchange or one of their wallets.
BTC to XMR, sure. But XMR to BTC is the value proposition -- if you've made a fortune doing something illegal, you'll want to have access to the BTC market somehow.
Right now, you can probably do that without being sent to prison. It's a matter of using one of the many conversion websites to go from XMR to BTC, then depositing to your exchange and selling it. (I don't know how you'd explain it on a tax form, but maybe you can think of something clever.)
But if exchanges start actively cracking down on any account that deposits BTC in response to XMR transactions (i.e. the exchange maintains a known list of wallets used by those conversion websites), they can start putting accounts on hold if those accounts have received large quantities of BTC from any of those XMR-related BTC wallets.
Right now, you can probably do that without being sent to prison. It's a matter of using one of the many conversion websites to go from XMR to BTC, then depositing to your exchange and selling it. (I don't know how you'd explain it on a tax form, but maybe you can think of something clever.)
But if exchanges start actively cracking down on any account that deposits BTC in response to XMR transactions (i.e. the exchange maintains a known list of wallets used by those conversion websites), they can start putting accounts on hold if those accounts have received large quantities of BTC from any of those XMR-related BTC wallets.
The ideal scenario is everyone using monero for everything. Why send money to an exchange at all when we can send monero to each other directly? There should be no need to swap monero for other forms of money.
This is the original cryptocurrency dream. Monero is the only coin that has a shot at actually achieving this.
This is the original cryptocurrency dream. Monero is the only coin that has a shot at actually achieving this.
The atomic swap works both ways.
Also with the lightning network you can mix and change different crypto currencies, and it can be really hard to trace the provenance of the coins. Not something an exchange can do automatically.
> the exchange maintains a known list of wallets used by those conversion websites
Remember that new wallet can be created for each transactions. So even if they'd try to do that, it wouldn't work.
Also with the lightning network you can mix and change different crypto currencies, and it can be really hard to trace the provenance of the coins. Not something an exchange can do automatically.
> the exchange maintains a known list of wallets used by those conversion websites
Remember that new wallet can be created for each transactions. So even if they'd try to do that, it wouldn't work.
You can certainly map clusters of BTC wallets. It doesn’t matter if you create a new wallet for that purpose, since those new wallets are contaminated by the transaction history. Basically, from the exchange’s view, they’d bucket the wallets into either “looks like mixing; hold the account” or “seems legit.”
Most wallets aren’t used for any high volume transactions; most account holders at Coinbase have no need for that. So it’s certainly possible to map out the network and partition it into known good / known bad categories, and handle the middle ground manually.
In other words, yes, XRP is very clever. That’s not the problem. The problem is, you’ll someday find it very hard to convert large quantities of XMR to USD without risking jail time.
Most wallets aren’t used for any high volume transactions; most account holders at Coinbase have no need for that. So it’s certainly possible to map out the network and partition it into known good / known bad categories, and handle the middle ground manually.
In other words, yes, XRP is very clever. That’s not the problem. The problem is, you’ll someday find it very hard to convert large quantities of XMR to USD without risking jail time.
> So it’s certainly possible to map out the network and partition it into known good / known bad categories
You can't do this sort of analysis on the XMR blockchain. Can't see who's actually sending or receiving money. Can't see the transaction amounts. Can't see how much money any given wallet contains. Can't taint coins by association with criminal activities. Without exchange metadata it's impossible to correlate transactions with any certainty.
There's essentially nothing that can be done about it. Will governments become oppressive enough to jail people for the crime of using a medium of exchange they can't control? I'm not even sure that'd be enough to stop it.
You can't do this sort of analysis on the XMR blockchain. Can't see who's actually sending or receiving money. Can't see the transaction amounts. Can't see how much money any given wallet contains. Can't taint coins by association with criminal activities. Without exchange metadata it's impossible to correlate transactions with any certainty.
There's essentially nothing that can be done about it. Will governments become oppressive enough to jail people for the crime of using a medium of exchange they can't control? I'm not even sure that'd be enough to stop it.
Ya'll aren't thinking this through.
Suppose I want to map an XMR->BTC converter.
I sign up for the converter, and say "Here's some XMR. Give me BTC."
At that point, some BTC wallet gives me BTC. I now know which wallet is being used by the XMR converter. And I know all the other metadata as a result.
Suppose I want to map an XMR->BTC converter.
I sign up for the converter, and say "Here's some XMR. Give me BTC."
At that point, some BTC wallet gives me BTC. I now know which wallet is being used by the XMR converter. And I know all the other metadata as a result.
That is the real problem with BTC, that the tokens are non fungible.
When I accept these 'tainted' BTC tokens, they might get blocked by others parties.
So even here, XMR has a real benefit since those tokens are really fungible.
The question will indeed be if it can live together with the economy, or beside it.
When I accept these 'tainted' BTC tokens, they might get blocked by others parties.
So even here, XMR has a real benefit since those tokens are really fungible.
The question will indeed be if it can live together with the economy, or beside it.
> But it'd be a pretty expensive poison pill.
1 Satoshi is only $0.0006 USD plus the transfer fees... which is pretty low on the lightning network
1 Satoshi is only $0.0006 USD plus the transfer fees... which is pretty low on the lightning network
You have exact corect purposes here: no governemint ought to be having surveilance on financial transaction. They are even atempt to removeing cash for to grow surveilance. This is horible and we must have stopping it.
australia is such a cuckolded nation when it comes to privacy and technology
Are they really any better? Zcash has performance issues resulting in fewer people using the private features (privacy is about blending into a crowd. Hard to do that if the crowd is small), dash sounds like a fancier version of normal bitcoin coin laundry. Monero is probably the best but still doesn't provide any math based garuntees, so it's hard to know what it really gives.
Then again, they dont need to provide privacy, just the preception thereof.
(I stopped paying attention to cryptocurrencies a while ago. My opinions may be outdated)
Then again, they dont need to provide privacy, just the preception thereof.
(I stopped paying attention to cryptocurrencies a while ago. My opinions may be outdated)
In terms of protocols, not specific coins, privacy is clearly technically viable.
Take Zcash: for its underlying protocol, known as sapling, the performance issues went away. It's about 2.5 seconds to make a fully private transaction on a pixel 3 and you could get it down to 1 second with some optimizations to the underlying circuit. As a coin, Zcash still has privacy adoption problems, but the roots of that aren't some fundamental technical issue: Zcash isn't focusing on usability, leading to the usage problems. That may change.
Also, there are a number of projects coming on line using the same privacy tech. Good privacy is feasible, we have the technical protocols. But product-market-fit niche isn't entirely there yet: the problem is few people grasp then need for on chain privacy yet.
Also, there are a number of projects coming on line using the same privacy tech. Good privacy is feasible, we have the technical protocols. But product-market-fit niche isn't entirely there yet: the problem is few people grasp then need for on chain privacy yet.
> In terms of protocols, not specific coins, privacy is clearly technically viable.
Can you provide some link to back this up? I am genuinely interested because in principle public ledgers and privacy seem to be antithetic to one another.
Can you provide some link to back this up? I am genuinely interested because in principle public ledgers and privacy seem to be antithetic to one another.
https://elementsproject.org/features/confidential-transactio...
Here's Greg Maxwell (one of the Bitcoin core team members) explaining the confidential transactions.
https://crypto.stanford.edu/bulletproofs/
Here's an optimization used in Monero that optimizes the ledger size (initial confidential transaction proofs were too large).
You can have a public ledger but all of the data in it is encrypted and verifiable.
Each transaction, from the creation, to validation has its amounts and wallet ids hidden, the sender and the receiver cannot know anything about wallet contents of each other and receiver has no idea from where the sender is sourcing the coins.
Here's Greg Maxwell (one of the Bitcoin core team members) explaining the confidential transactions.
https://crypto.stanford.edu/bulletproofs/
Here's an optimization used in Monero that optimizes the ledger size (initial confidential transaction proofs were too large).
You can have a public ledger but all of the data in it is encrypted and verifiable.
Each transaction, from the creation, to validation has its amounts and wallet ids hidden, the sender and the receiver cannot know anything about wallet contents of each other and receiver has no idea from where the sender is sourcing the coins.
OK, you and I exchanging coins do not know about each other's wallets or even the origin & destination of our transaction.
This anonymity depends on encryption to hide the wallets & transaction, and decryption to verify it, and for the receiver to be able to use the funds in the future.
So, who/what controls those keys? Seems they've just exchanged an open ledger problem for a key management problem - why is this not the case?
This anonymity depends on encryption to hide the wallets & transaction, and decryption to verify it, and for the receiver to be able to use the funds in the future.
So, who/what controls those keys? Seems they've just exchanged an open ledger problem for a key management problem - why is this not the case?
The keys are yours. The maths is here https://elementsproject.org/features/confidential-transactio...
The key insight is that you design a cryptographic algorithm that will preserve addition between amounts, even when encrypted but you need to also provide some encrypted data that will allow an independent verifier to validate the whole transaction.
The problem is more nuanced because you need to guarantee that coins aren't produced from thin air.
The problem of the approach in the linked article is that proofs are large. To support encrypted verification (there is no need to decrypt anything in any step of the process) you need thousands of bytes for verifying a 32-bit amount.
Bulletproofs reduced the proof size significantly. There are then additional approaches like MimbleWimble where the proofs on the ledger can be discarded to make it even smaller.
The key insight is that you design a cryptographic algorithm that will preserve addition between amounts, even when encrypted but you need to also provide some encrypted data that will allow an independent verifier to validate the whole transaction.
The problem is more nuanced because you need to guarantee that coins aren't produced from thin air.
The problem of the approach in the linked article is that proofs are large. To support encrypted verification (there is no need to decrypt anything in any step of the process) you need thousands of bytes for verifying a 32-bit amount.
Bulletproofs reduced the proof size significantly. There are then additional approaches like MimbleWimble where the proofs on the ledger can be discarded to make it even smaller.
To be honest, I don't see any maths. I see a document titled "investigation" which contains a bibliography consisting of a single forum post from 2013 by someone named Adam, and then the author goes on saying that he has invented some maths that allegedly would allow confidential transactions. Forgive me if I'm a bit sceptical... better wait until some experts review this material.
https://crypto.stanford.edu/bulletproofs/
Start reading this paper above then, it goes from the simplest form to data optimized form.
Start reading this paper above then, it goes from the simplest form to data optimized form.
Sure.
Starting from the academic beginning and then going to commercial usage: Zerocash[0], a paper from 2014 (I'm an author on it), proposes using zksnarks to get a public ledger + privacy with no centralized parties. Instead of identifying the origin of your money on the blockchain and moving it to someone, you just prove in zero-knowledge your payment is correct. This showed strong privacy on a public blockchain was feasible. But slow (2 minutes per payment IIRC)
Three years and much work by others later, it takes ~2 to 3 seconds on a Pixel three to make a zk-proof for a payment. This can be optimized down to 1 second fairly easily (on that you have only my assertion currently)
This is commercially deployed in Zcash (the above mentioned coin with usability and adoption issues), a few other straight up forks, and a new coin called IronFish. And related protocols are in a few things on Ethereum (e.g., Aztec). If you want to test performance numbers, you can download one of these systems and try it yourself (Nighthawk is a decent mobile wallet for Zcash)
Current technical objections (again, beyond criticisms of Zcash as a coin itself) 1) Current ZK proofs require trusted setup. New ZK proofs developed by engineers at Zcash removed this[1]. So its not longer an issue for the technology (or for Zcash once it's deployed)
2) you have to scan the blockchain to get notified of payments. No, this happens to be how Zcash does it. As I said in a separate comment, it's easy to send payment notifications out of band.
3) Vague objections about "scale." Even though zksnarks take a second or two to prove, they are very fast to verify. So adding privacy doesn't make blockchain's scaling problems worse. And the privacy tech is agnostic to the underlying consensus layer, so if you ever get a blockchain to scale, you can put privacy on it.
4) Other approaches(Monero/RingCt/Coinjoin) are better. The major problem is these don't offer strong privacy, just obfuscation. See [2] if you want a 20 minute talk on the issues or [3] for a blog post covering the same
5) There's an inflation risk. Yes, once you hide the values of a payment, because you want privacy, if the crypto breaks, things can go wrong. This is true of any serious approach to privacy. So you want to very carefully vet the crypto design. But if you don't hide payment values, you get no privacy and your blockchain is twitter for your bank account.
[0] https://www.cs.umd.edu/~imiers/pdf/zerocash-oakland2014.pdf [1]https://electriccoin.co/blog/technical-explainer-halo-on-zca... [2]https://www.youtube.com/watch?v=9s3EbSKDA3o [3]https://www.zfnd.org/blog/blockchain-privacy/
Three years and much work by others later, it takes ~2 to 3 seconds on a Pixel three to make a zk-proof for a payment. This can be optimized down to 1 second fairly easily (on that you have only my assertion currently)
This is commercially deployed in Zcash (the above mentioned coin with usability and adoption issues), a few other straight up forks, and a new coin called IronFish. And related protocols are in a few things on Ethereum (e.g., Aztec). If you want to test performance numbers, you can download one of these systems and try it yourself (Nighthawk is a decent mobile wallet for Zcash)
Current technical objections (again, beyond criticisms of Zcash as a coin itself) 1) Current ZK proofs require trusted setup. New ZK proofs developed by engineers at Zcash removed this[1]. So its not longer an issue for the technology (or for Zcash once it's deployed)
2) you have to scan the blockchain to get notified of payments. No, this happens to be how Zcash does it. As I said in a separate comment, it's easy to send payment notifications out of band.
3) Vague objections about "scale." Even though zksnarks take a second or two to prove, they are very fast to verify. So adding privacy doesn't make blockchain's scaling problems worse. And the privacy tech is agnostic to the underlying consensus layer, so if you ever get a blockchain to scale, you can put privacy on it.
4) Other approaches(Monero/RingCt/Coinjoin) are better. The major problem is these don't offer strong privacy, just obfuscation. See [2] if you want a 20 minute talk on the issues or [3] for a blog post covering the same
5) There's an inflation risk. Yes, once you hide the values of a payment, because you want privacy, if the crypto breaks, things can go wrong. This is true of any serious approach to privacy. So you want to very carefully vet the crypto design. But if you don't hide payment values, you get no privacy and your blockchain is twitter for your bank account.
[0] https://www.cs.umd.edu/~imiers/pdf/zerocash-oakland2014.pdf [1]https://electriccoin.co/blog/technical-explainer-halo-on-zca... [2]https://www.youtube.com/watch?v=9s3EbSKDA3o [3]https://www.zfnd.org/blog/blockchain-privacy/
Is privacy feasible?
Opt-in privacy is a fundamental technical issue.
It is shown everywhere that it does not work. This due to human nature, timing analysis, lack of censorship resistance and lack of fungibility.
It is shown everywhere that it does not work. This due to human nature, timing analysis, lack of censorship resistance and lack of fungibility.
There’s still the issue that you need to sync to the full history and look at all the outputs to see if they’re yours right? That’s a real challenge as a light client (which most people are).
For zcash currently, yes. But for the underling tech, no. You scan the blockchain in Zcash to be notified of a payment. But the sender could just as easily send you an out of band message with everything you need to know to spend the money and find the payment.
There's even a draft spec for doing it for Zcash. https://github.com/zcash/zips/pull/420/files#diff-635022fa4a...
There's even a draft spec for doing it for Zcash. https://github.com/zcash/zips/pull/420/files#diff-635022fa4a...
Not in Mimblewimble coins where sender and receiver must interact to build a transaction. So there's no need to scan unless you just built a tx that is awaiting confirmation.
Privacy is a social problem just as much as it is a technical one. If it works in theory but in practise people don't adopt it properly, that means it doesn't work.
A very good point and one I've learned over the years with Zcash. But the social problems, maybe, can change: someone can launch a new coin that fixes them or an existing one can get its act together. Or maybe not.
But it's at least possible if the tech works. So I guess my view is: at least someone has a shot.
But it's at least possible if the tech works. So I guess my view is: at least someone has a shot.
[deleted]
"Monero is probably the best but still doesn't provide any math based garuntees,"
Can you elaborate on why you say this and what you mean by it? From what i've seen no entities, including governments, have been able to crack Monero's privacy, so i'm pretty interested if there's an obvious flaw.
Can you elaborate on why you say this and what you mean by it? From what i've seen no entities, including governments, have been able to crack Monero's privacy, so i'm pretty interested if there's an obvious flaw.
I do not know where they found the information to conclude there are no math based guarantees.
The initial version of Monero had a flaw but if you start transacting now I do not believe anyone can deanonymize wallet ids or amounts.
Even if there's a 51% takeover, those guys would just be able to mint new coins, they still wouldn't be able to see the amounts and wallet ids.
Also, confidential transactions and optimizations (bulletproofs) are math proven.
Zcash and Dash with their optional privacy just leave everyone vulnerable to deanonymization.
The initial version of Monero had a flaw but if you start transacting now I do not believe anyone can deanonymize wallet ids or amounts.
Even if there's a 51% takeover, those guys would just be able to mint new coins, they still wouldn't be able to see the amounts and wallet ids.
Also, confidential transactions and optimizations (bulletproofs) are math proven.
Zcash and Dash with their optional privacy just leave everyone vulnerable to deanonymization.
> privacy is about blending into a crowd. Hard to do that if the crowd is small
Hard to do that if the crowd is all criminals lol. I often say BTC is only used for speculation and crime. At least the criminals in BTC can hide among the speculators. Zcash and Monero are literally only used by criminals and a handful of die hard ancaps. That gives you nowhere to hide.
It's the equivalent of trying to cash out El Chapo Bux. Simple possession is enough to pretty much guarantee anyone looking you've been involved in one crime or another.
The thing about the law is, as Lavrentiy Beria (Stalin's head of the secret police) said, "You bring me the man, I'll find you the crime." Once someone's looking at you, it's too late.
Hard to do that if the crowd is all criminals lol. I often say BTC is only used for speculation and crime. At least the criminals in BTC can hide among the speculators. Zcash and Monero are literally only used by criminals and a handful of die hard ancaps. That gives you nowhere to hide.
It's the equivalent of trying to cash out El Chapo Bux. Simple possession is enough to pretty much guarantee anyone looking you've been involved in one crime or another.
The thing about the law is, as Lavrentiy Beria (Stalin's head of the secret police) said, "You bring me the man, I'll find you the crime." Once someone's looking at you, it's too late.
This is crypto, almost all users are always going to be speculators even with monero.
Pretty much all countries still have presumption of innocence and a legal system
Pretty much all countries still have presumption of innocence and a legal system
Except as privacy coins are delisted from exchanges more and more.
The ownership of the monero itself may be granted the presumption of innocence however if you have a bunch of El Chapo Bux they'll just start digging for other things.
The ownership of the monero itself may be granted the presumption of innocence however if you have a bunch of El Chapo Bux they'll just start digging for other things.
Delistings are irrelevant and ineffective. Monero usage wouldnt be legally enough to start an investigation, by far most users really are just speculators
haha, of course it's enough to start an investigation. The police don't need probable cause to start an investigation. They need probable cause to obtain a warrant. Quite different. Remember, basically everything's a crime. The set of crimes in the US is actually uncountable (a few have tried). All you need to get convicted of something is to attract attention. I guarantee you've committed a handful of felonies today. [1]
[1] https://www.wsj.com/articles/SB10001424052748704471504574438...
[1] https://www.wsj.com/articles/SB10001424052748704471504574438...
MobileCoin is notable here as well, as they’re promising privacy and being integrated into signal
What is notable is that the government has an easy target to monitor or get rid of mobile coin: https://en.wikipedia.org/wiki/Signal_Foundation
Decentralized Exchanges are a matter of time. The best the current establishment can do is provide a superior UX for a DEX or on-off ramps to the traditional markets.
I don’t think we will ever see this. The incentive to modify the code and make it do “evil” things is too high.
We do see it though. There's Uniswap and Bancor on ETH. The trading volumes are in the billions of United States dollars per day. There is also Bisq as a decentralized fiat onramp for BTC and XMR (and soon on-chain atomic swaps). Today it is possible to completely interact with the crypto ecosystem without centralized exchanges.
If you're worried about the code changing, you can run e.g. ETH nodes yourself, download the DEX frontends, and run the DEX locally.
If you're worried about the code changing, you can run e.g. ETH nodes yourself, download the DEX frontends, and run the DEX locally.
Or you can visit uniswap.eth if you have metamask installed since it resolves ENS domains.
Except how do you go from crypto to USD on a decentralized exchange lol... You don't
Uniswap has more daily volume than Coinbase.
Probably Coinbase is going to relist XRP. That was probably to be beyond conform in regard to their IPO and the SEC investigation in Ripple, now settled ...
As for Zcash and Monero, yes, these are sensibly some more anonymous cryptos, still nothing as anonymous as some simple bank notes .. :-)
Btw, when I see the amount of people thinking that Bitcoin is used (nowadays) for illegal activities, and commenting about it on HN (which has theoretically a more educated audience), this is mind-blowing how little Bitcoin is understood at the moment. It feels like our governments have made a really good job of disinformation
As for Zcash and Monero, yes, these are sensibly some more anonymous cryptos, still nothing as anonymous as some simple bank notes .. :-)
Btw, when I see the amount of people thinking that Bitcoin is used (nowadays) for illegal activities, and commenting about it on HN (which has theoretically a more educated audience), this is mind-blowing how little Bitcoin is understood at the moment. It feels like our governments have made a really good job of disinformation
Once upon a time you could actually buy goods and services like pizza and games with BTC, nowadays the most likely reason for an average person to buy bitcoin is to pay the ransom for their locked up computer. Without a legitimate use case (selling your nintendo switch to somebody in venezuela does not count) BTC will be forever associated with the small scale crime scene.
> selling your nintendo switch to somebody in venezuela does not count
How about buying food and paying bills?
https://news.ycombinator.com/item?id=25797143
https://news.ycombinator.com/item?id=25889590
https://www.coindesk.com/bitcoin-adoption-venezuela-research
> By and large, this is true in Venezuela. Expats use bitcoin to send remittances back home, where locals convert it to bolivars to buy food and pay bills. With crypto remittances from expats plunging, peer-to-peer cryptocurrency transactions within the country have proven resilient. LocalBitcoins and Paxful trades using bolivars peaked in the first half of 2019, and have since hovered around $20 million.
> “People living in Venezuela are living under a very unstable and predatory government. They suffer from extreme inflation and general economic instability. And here’s a censorship-resistant, inflation-proof asset, so it’s very attractive to people who are looking for a way to maintain value,” said Andrea O’Sullivan, director of tech and innovation at James Madison Institute, a Washington think tank.
How about buying food and paying bills?
https://news.ycombinator.com/item?id=25797143
https://news.ycombinator.com/item?id=25889590
https://www.coindesk.com/bitcoin-adoption-venezuela-research
> By and large, this is true in Venezuela. Expats use bitcoin to send remittances back home, where locals convert it to bolivars to buy food and pay bills. With crypto remittances from expats plunging, peer-to-peer cryptocurrency transactions within the country have proven resilient. LocalBitcoins and Paxful trades using bolivars peaked in the first half of 2019, and have since hovered around $20 million.
> “People living in Venezuela are living under a very unstable and predatory government. They suffer from extreme inflation and general economic instability. And here’s a censorship-resistant, inflation-proof asset, so it’s very attractive to people who are looking for a way to maintain value,” said Andrea O’Sullivan, director of tech and innovation at James Madison Institute, a Washington think tank.
BTC was never meant to be used to purchase groceries (transaction fees + limitation on the number of tx/s). There are other cryptos which (could) do that very well, however. But large bank transfer may be convenient with Bitcoin: have you ever purchased a used car, not for $500USD, but for $10k+? Arguably, it's a legal, but definitely an edge case. Just giving an example :-)
Speculation is one thing, but BTC is going nowhere and in a world hit by an incoming significant inflation, many have understood that Bitcoin is simply an easy place where to safeguard your wealth if the outlook is at least +5 years, not days / months. That's why people buy Bitcoins at the moment.
Speculation is one thing, but BTC is going nowhere and in a world hit by an incoming significant inflation, many have understood that Bitcoin is simply an easy place where to safeguard your wealth if the outlook is at least +5 years, not days / months. That's why people buy Bitcoins at the moment.
"small casual transactions" is described as a goal of Bitcoin in the opening paragraph of the introduction of the whitepaper
Paper which was written in 2007/2008.
Who would have thought that the ARPANET would be the basis for today's Internet.. and still, here we are..
Who would have thought that the ARPANET would be the basis for today's Internet.. and still, here we are..
This is definitely not true. The most likely reason for someone to buy BTC is speculation. Darknet markets and ransomware volume is tiny in comparison.
You can still buy pizza and games with BTC. If anything, I'd argue that the market for this has increased.
How are bank notes more secure than Monero?
Because we don't know enough about Monero? Unless proven otherwise, Monero is anonymous. The IRS is even paying a nice bounty of 625K (but not that much actually as per the IRS resources) for whoever can crack the protocol https://news.ycombinator.com/item?id=25752042#:~:text=IRS%20....
But, there is a string attached. Who knows whether a genius will not have found a solution in 6 months?
One thing is sure, if you buy some drugs with some bank notes, that's not the bank notes which will betray you. If you're into any kind of (highly) illegal activity, Monero is not bad, but bank notes are just safer.
But, there is a string attached. Who knows whether a genius will not have found a solution in 6 months?
One thing is sure, if you buy some drugs with some bank notes, that's not the bank notes which will betray you. If you're into any kind of (highly) illegal activity, Monero is not bad, but bank notes are just safer.
I think it is good for criminals to have a separate system like monero. Then law enforcement and intelligence can attack it without worries about disrupting the legitimate system.
Out of all privacy coins, Monero is the only one with a future.
One-liner with no arguments for why you believe so, great comment! Why don't you tell us why this is a "one-takes-it-all" market and why specifically Monero?
Because Monero's the only coin that can't actually be traced or tainted. Looks like even government agencies haven't been able to break it yet. It's also actually useful as currency due to low transaction fees.
It doesn't matter. Making a wire payment or paying with a card is also surveilled and archived until the end of time.
BitCoin's major purpose is as a hedge to massive fiat printing.
BitCoin's major purpose is as a hedge to massive fiat printing.
Fiat is money not backed by a commodity. What commodity was it again that backs Bitcoin?
Fiat means "by decree," I don't think it means anything about being backed by a commodity.
Dollars used to be backed by gold and it was still fiat money.
Bitcoin is backed by its own scarcity.
Dollars used to be backed by gold and it was still fiat money.
Bitcoin is backed by its own scarcity.
"Dollars used to be backed by gold and it was still fiat money." - This is just plain wrong.
Fiat money means exactly a government-issued currency not backed by a commodity such as gold.
https://www.investopedia.com/terms/f/fiatmoney.asp
https://www.investopedia.com/terms/f/fiatmoney.asp
I'm questioning Investopedia here.
Fiat is typically contrasted with commodity or representational currencies. The key element is that fiat has no intrinsic value. It's usually issued by a government, but need not be. The value comes from faith.
Bitcoin meets all the qualifications save government issuance. The bits themselves have no value. The currency's value is based on faith in both the underlying computations and in the existence of a market for trading bitcoin.
Wikipedia gives the definition "often by government regulation" (implying not necessarily) citing Goldberg, Dror (2005). "Famous Myths of "Fiat Money"". Journal of Money, Credit and Banking. 37 (5): 957–967. doi:10.1353/mcb.2005.0052. JSTOR 3839155. S2CID 54713138.
Fiat is typically contrasted with commodity or representational currencies. The key element is that fiat has no intrinsic value. It's usually issued by a government, but need not be. The value comes from faith.
Bitcoin meets all the qualifications save government issuance. The bits themselves have no value. The currency's value is based on faith in both the underlying computations and in the existence of a market for trading bitcoin.
Wikipedia gives the definition "often by government regulation" (implying not necessarily) citing Goldberg, Dror (2005). "Famous Myths of "Fiat Money"". Journal of Money, Credit and Banking. 37 (5): 957–967. doi:10.1353/mcb.2005.0052. JSTOR 3839155. S2CID 54713138.
That definition is wrong. "by fiat" does not imply a commodity, it was just one of the many alternatives
By which definition Bitcoin is still not a "fiat" currency, since it is not government-issued.
Technically correct however ‘fiat’ usually means both legal tender and government-backed too
technically they didn't say that bitcoin wasn't fiat, but that it hedged against massive fiat printing, presumably referring to the fixed issuance schedule.
Why does a fixed issuance schedule give it value?
Just because something takes a while to produce does not give something value otherwise I’d be making a killing on my Etsy store
Also that fixed schedule will end soon.
Just because something takes a while to produce does not give something value otherwise I’d be making a killing on my Etsy store
Also that fixed schedule will end soon.
the idea being that the schedule is known, and therefore, in comparison to something that can change and have large issuance, you can be confident that the particular cause of "because a whole bunch got printed unexpectedly" won't cause it to become devalued, as opposed to other options.
Doesn't mean that other things couldn't cause it to be devalued.
(and, of course, if the network consensus shifts in a way that changes the issuance rate... though perhaps it wouldn't really "be bitcoin" if that happened.)
Doesn't mean that other things couldn't cause it to be devalued.
(and, of course, if the network consensus shifts in a way that changes the issuance rate... though perhaps it wouldn't really "be bitcoin" if that happened.)
It makes no difference if its a known schedule. A schedule still only matters if it has value to begin with.
What exactly does btc solve or bring to the table? People buy it “cause it goes up”. That won’t end well.
Feels like a bunch of people buying digits rocks.
What exactly does btc solve or bring to the table? People buy it “cause it goes up”. That won’t end well.
Feels like a bunch of people buying digits rocks.
> Feels like a bunch of people buying digits rocks.
I think it's more like digital beanie babies but to each their own :)
I think it's more like digital beanie babies but to each their own :)
It seems that you think I'm arguing in favor of BTC being successful in the long term. That's not what I'm doing. I'm explaining the idea of it being a hedge against the printing. I'm not advocating for buying it on that basis, or on any basis.
All I'm doing, is explaining as best I can, why someone might see it as a "hedge" against large amounts of money printing.
If it is valued by people at some time (it has a price that people are buying and selling it at, whether in exchange for some currency like USD or for pizzas), and the value for the USD (in the sense of "how many pizzas / market-basket-of-goods does it buy?") is going down as a result of the quantity of money being printed-and-introduced-into-the-economy being unexpectedly very large, if that sort of event isn't positively correlated (as in, in the probabilities that people assign to future outcomes) with the value (in the same sense of number of pizzas) of btc going down, that could be something people see as merit-worthy in it.
People conceivably could want to hold something which is both easily exchangable, and highly subdivisible, and which has such a property, .... provided that they didn't expect the number of pizzas it buys to rapidly decrease.
I do wonder though, why there isn't simply a common financial instrument which pays out with the price of some market basket of goods at a designated time? It seems like such an instrument would serve much the same appeal.
Perhaps the issue is that, in order for people to be willing to issue such an asset, one would have to pay them a large amount to account for the risk that they are taking on?
There's also the issue that one would presumably have to keep actively buying more of such an instrument if one wanted to hold large portions of it over time.
All I'm doing, is explaining as best I can, why someone might see it as a "hedge" against large amounts of money printing.
If it is valued by people at some time (it has a price that people are buying and selling it at, whether in exchange for some currency like USD or for pizzas), and the value for the USD (in the sense of "how many pizzas / market-basket-of-goods does it buy?") is going down as a result of the quantity of money being printed-and-introduced-into-the-economy being unexpectedly very large, if that sort of event isn't positively correlated (as in, in the probabilities that people assign to future outcomes) with the value (in the same sense of number of pizzas) of btc going down, that could be something people see as merit-worthy in it.
People conceivably could want to hold something which is both easily exchangable, and highly subdivisible, and which has such a property, .... provided that they didn't expect the number of pizzas it buys to rapidly decrease.
I do wonder though, why there isn't simply a common financial instrument which pays out with the price of some market basket of goods at a designated time? It seems like such an instrument would serve much the same appeal.
Perhaps the issue is that, in order for people to be willing to issue such an asset, one would have to pay them a large amount to account for the risk that they are taking on?
There's also the issue that one would presumably have to keep actively buying more of such an instrument if one wanted to hold large portions of it over time.
> soon
In the year 2140. And the end strengthens the point you're disputing.
In the year 2140. And the end strengthens the point you're disputing.
History is on my side here. A currency that can’t be produced anymore doesn’t last long as a currency.
Energy. Also Math.
Math isn’t a commodity, and it’s not backed by energy as you can’t trade Bitcoins in to get energy back.
Right, it’s more like being backed by a derivative of energy; based on local power prices, seasonal variation and political climate. It’s a strange concept. Redefines “backed”. Backed means ‘security of value’ and this in bitcoin comes from mathematics of cryptography and energy in proof of work.
I've heard this before and tbh I think it's like issuing receipts for 1 (one) barrel of oil that has already been consumed. Like, yeah, someone spent effort making it, but what does that do for me?
From a mathematical crypto standpoint it's sorta good, but again what value has been created? It's not like the blockchain is now saving us time and effort in factorization that can be applied to real world problems that would otherwise need to be recalculated regularly, which is a pity.
Of course you can truthfully say fiat currencies are totally notional, but as a practical matter the value of a fiat currency reposes economic stability and security offered by whatever government issues it (which may or may not be valued by other people).
From a mathematical crypto standpoint it's sorta good, but again what value has been created? It's not like the blockchain is now saving us time and effort in factorization that can be applied to real world problems that would otherwise need to be recalculated regularly, which is a pity.
Of course you can truthfully say fiat currencies are totally notional, but as a practical matter the value of a fiat currency reposes economic stability and security offered by whatever government issues it (which may or may not be valued by other people).
That’s not what “backed” means.
A backed currency means another entity is willing to guarantee they will trade the currency for something else. In the example of the gold standard, this means the government would exchange dollars for a certain fixed amount of gold. This meant that dollars could be worth more than gold, but theoretically wouldn’t fall below their fixed value in gold, because at that point people would trade them in for the gold.
You can’t just redefine backed to mean something that is expensive to produce. If something is expensive to produce it also doesn’t mean it has any intrinsic value.
(I’m also not arguing that modern fiat currencies are backed - in fact they are not backed by definition! I just get frustrated by all the fake economic mumbo-jumbo about Bitcoin).
A backed currency means another entity is willing to guarantee they will trade the currency for something else. In the example of the gold standard, this means the government would exchange dollars for a certain fixed amount of gold. This meant that dollars could be worth more than gold, but theoretically wouldn’t fall below their fixed value in gold, because at that point people would trade them in for the gold.
You can’t just redefine backed to mean something that is expensive to produce. If something is expensive to produce it also doesn’t mean it has any intrinsic value.
(I’m also not arguing that modern fiat currencies are backed - in fact they are not backed by definition! I just get frustrated by all the fake economic mumbo-jumbo about Bitcoin).
This expands the definition of "backed by" into meaninglessness.
I used to be able to trade dollars for gold and vice versa, at a fixed price, guaranteed.
I can't trade bitcoin for 'math'. No-one is storing energy reserves in case there's a run on people converting bitcoin to energy. Bitcoin is not backed by anything.
I used to be able to trade dollars for gold and vice versa, at a fixed price, guaranteed.
I can't trade bitcoin for 'math'. No-one is storing energy reserves in case there's a run on people converting bitcoin to energy. Bitcoin is not backed by anything.
You can't trade money to get time back but you probably sell your time pretty often.
Correct - But that doesn’t mean that money is backed by time, either.
You're arguing semantics, switching between a strict definition of "backed" and thinking of value as it suits you.
And if you want to be that picky, Bitcoin is backed by math and energy (or at least heat). You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
And if you want to be that picky, Bitcoin is backed by math and energy (or at least heat). You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
> You're arguing semantics, switching between a strict definition of "backed" and thinking of value as it suits you.
Can you show me where I'm swapping? I don't think I am. It's not semantics anyway, its a fundamental definition of what a backed currency means! The value of my car isn't backed by all the petrol I have used in it, nor is bitcoin backed by the electricity used to produce it.
> You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
This is not what backing means - at all. Backing doesn't mean "is expensive to make", it means its value "has a direct correspondence to the cost of another commodity".
So a few questions to test if it is backed:
* Is the price of bitcoin directly linked to the cost of electricity? (No - there is a relationship between bitcoin price and the amount of energy used for bitcoin mining, but I can't track electricity and use that to guess what the cost of a bitcoin is and visa-versa). Meanwhile, Tether IS backed by USD so I can use the historic value of tether in BTC to act as a proxy to understand how much BTC cost in USD.
* Have we seen the cost of bitcoin track global electricity prices? (No!)
* If abundant cheap energy is discovered tomorrow, does bitcoin become valueless? (I believe no, it maintains value!)
Almost all modern currencies aren't backed, nor do they need to be, so this is a weird hill to fight for.
Can you show me where I'm swapping? I don't think I am. It's not semantics anyway, its a fundamental definition of what a backed currency means! The value of my car isn't backed by all the petrol I have used in it, nor is bitcoin backed by the electricity used to produce it.
> You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
This is not what backing means - at all. Backing doesn't mean "is expensive to make", it means its value "has a direct correspondence to the cost of another commodity".
So a few questions to test if it is backed:
* Is the price of bitcoin directly linked to the cost of electricity? (No - there is a relationship between bitcoin price and the amount of energy used for bitcoin mining, but I can't track electricity and use that to guess what the cost of a bitcoin is and visa-versa). Meanwhile, Tether IS backed by USD so I can use the historic value of tether in BTC to act as a proxy to understand how much BTC cost in USD.
* Have we seen the cost of bitcoin track global electricity prices? (No!)
* If abundant cheap energy is discovered tomorrow, does bitcoin become valueless? (I believe no, it maintains value!)
Almost all modern currencies aren't backed, nor do they need to be, so this is a weird hill to fight for.
Given how electricity has pretty much become synonymous with labor. I would say Bitcoin is backed by electricity given how Iran and Venezuela are doing oil/gas etc trade with bitcoin seems like you actually can get commodities out of it.
No, they are recorded. The government needs a warrant after convincing a judge that there is probable cause that you have committed a crime before they can pull your bank records. When you use crypto, you're just broadcasting every transaction to the world, so they can just watch.
Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
> The government needs a warrant after convincing a judge that there is probable cause that you have committed a crime before they can pull your bank records.
Unfortunately, transaction records like financial records are currently afforded a very low level of legal protection in the U.S., so the "warrant" and "probable cause" parts don't describe current practice. (That would be the case for a telephone wiretap, or a search of your home, but not for access to your financial records.)
https://en.wikipedia.org/wiki/Third-party_doctrine
One thing that I don't think the press ever managed to chase down -- following the Snowden revelations -- is the rumor that there was also a "bulk financial records program" which would have involved intelligence agencies and/or law enforcement getting access to search all bank transactions, without any individualized suspicion. (Recall that one thing Snowden revealed is that there was a bulk telephone records program, in which telephone metadata was turned over to the government in bulk, without individualized suspicion, which the government justified in part due to the third-party doctrine.)
In the government's view, the third-party doctrine means that it's never a fourth amendment violation if the government compels access to most kinds of transaction data in the possession of some kind of service provider or intermediary. (Some of those kinds of data may have higher levels of statutory protection but the government's position, as I understand it, has been that it's not an infringement of your fourth amendment rights even if those protections are circumvented or ignored.)
Unfortunately, transaction records like financial records are currently afforded a very low level of legal protection in the U.S., so the "warrant" and "probable cause" parts don't describe current practice. (That would be the case for a telephone wiretap, or a search of your home, but not for access to your financial records.)
https://en.wikipedia.org/wiki/Third-party_doctrine
One thing that I don't think the press ever managed to chase down -- following the Snowden revelations -- is the rumor that there was also a "bulk financial records program" which would have involved intelligence agencies and/or law enforcement getting access to search all bank transactions, without any individualized suspicion. (Recall that one thing Snowden revealed is that there was a bulk telephone records program, in which telephone metadata was turned over to the government in bulk, without individualized suspicion, which the government justified in part due to the third-party doctrine.)
In the government's view, the third-party doctrine means that it's never a fourth amendment violation if the government compels access to most kinds of transaction data in the possession of some kind of service provider or intermediary. (Some of those kinds of data may have higher levels of statutory protection but the government's position, as I understand it, has been that it's not an infringement of your fourth amendment rights even if those protections are circumvented or ignored.)
The Third Party Doctrine does not apply to Bank Records since the Right to Financial Privacy Act was enacted in 1978. Cops need a warrant to pull your bank records.
Thanks, I didn't know about that and I'll have to look at that some more.
(Technically the third party doctrine would still apply in any case, because this would be a statutory protection rather than a constitutional protection.)
(Technically the third party doctrine would still apply in any case, because this would be a statutory protection rather than a constitutional protection.)
Yeah, most times the Third Party Doctrine comes up these days afaik is with location tracking services.
EG, technically cops don't need a warrant or subpoena to ask Google where you were on a particular day. Though, in practice, they often still get one because they know that it's kinda unfair and judicial or statutory protections are probably coming soon and they don't want to jeopardize the prosecution should the law change during the investigation.
For example, the January 6 insurrectionists are largely being caught through location data obtained under warrant from Google. Do they technically need the warrant? No. And if they were investigating, like, shoplifters, they probably wouldn't have bothered to get one. But they don't want to let thousands of insurrectionists off the hook in case this is the case where the courts decide to flip.
EG, technically cops don't need a warrant or subpoena to ask Google where you were on a particular day. Though, in practice, they often still get one because they know that it's kinda unfair and judicial or statutory protections are probably coming soon and they don't want to jeopardize the prosecution should the law change during the investigation.
For example, the January 6 insurrectionists are largely being caught through location data obtained under warrant from Google. Do they technically need the warrant? No. And if they were investigating, like, shoplifters, they probably wouldn't have bothered to get one. But they don't want to let thousands of insurrectionists off the hook in case this is the case where the courts decide to flip.
"Presumably". In truth they are filtered and data mined on the spot.
A cross-country wire payment visits multiple jurisdictions already with the US getting first dibs via SWIFT.
My local IRS can also read them.
So they are effectively public for all major actors.
> Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
And I'm saying its main purpose is not to avoid surveillance but at as an inflation hedge.
The fact that the governments also see in real time should count as a vote of no confidence.
A cross-country wire payment visits multiple jurisdictions already with the US getting first dibs via SWIFT.
My local IRS can also read them.
So they are effectively public for all major actors.
> Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
And I'm saying its main purpose is not to avoid surveillance but at as an inflation hedge.
The fact that the governments also see in real time should count as a vote of no confidence.
>>> The government needs a warrant after convincing a judge
Granted, it's not for your local drug dealer but for higher level surveillance.
> The government needs a warrant
not everywhere. In some places in Europe (e.g. Germany) the IRS is able to pull up your banking history without the bank having to notify you, and they can query a subset of the info (time of account opening, current deposit, personal info) without even notifying the bank.
not everywhere. In some places in Europe (e.g. Germany) the IRS is able to pull up your banking history without the bank having to notify you, and they can query a subset of the info (time of account opening, current deposit, personal info) without even notifying the bank.
AFAIK in Germany they can ask you to submit your banking history for tax purposes (for example they have doubts about your declaration), if you fail to submit it or refuse, they can go to the bank, but you are notified way before they go through the bank and if you comply with the request, they don't go to the bank at all.
Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
quick googling would show that your knowledge on this is dated (laws changed in mid 2000). See linked article[1] (or many other articles like it - it was a huge topic at the time creating much outrage).
The bank will not be informed of the invasion of privacy (the excuse is so that banking customers don't have any negative impact when they realize customers get probed - it's probably more to avoid spooking the public about the frequency of how often this happens).
> Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
you're mistaken. These are the organs which have automated access (in addition to the IRS):
[1] in German (just run through any translate service): https://www.vlh.de/wissen-service/steuer-nachrichten/kontena...
[2] https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...
The bank will not be informed of the invasion of privacy (the excuse is so that banking customers don't have any negative impact when they realize customers get probed - it's probably more to avoid spooking the public about the frequency of how often this happens).
> Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
you're mistaken. These are the organs which have automated access (in addition to the IRS):
- social services
- job center
- bailiff
- state attorney
- customs authorities
[1] in German (just run through any translate service): https://www.vlh.de/wissen-service/steuer-nachrichten/kontena...
[2] https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...
Would a government need a warrant to pull records from an exchange to connect it to a real identity?
The usual way bitcoin payments are traceable are due to crypto-fiat exchanges requiring that information (AML & KYC regulations).
Wouldn't that make it effectively equivalent?
The usual way bitcoin payments are traceable are due to crypto-fiat exchanges requiring that information (AML & KYC regulations).
Wouldn't that make it effectively equivalent?
Only if they can't get you with public information. Suppose that your transactions reveal enough about you to allow the government to profile you, arrange a stake out (and thus get you in another way) or something like that. Or you could have left some trace in a direction which is not that much protected (like you bought something physical which has been delivered to you).
What do you have against fiat printing?
I wouldn't have anything if I would receive any of it. But otherwise it seems to devalue the fiat I own so we have to come up to solutions to counterbalance that.
It apparently doesn’t, look at the inflation of japan and how much they’ve printed money and you will see that there are many more factors than impact inflation.
It inflates the money supply, reducing the value of the money we already have. Inflation is essentially a tax that gets constantly applied.
probably the potential of rampant inflation. When a government summons trillions of dollars into existence (like most governments have been doing throughout the pandemic) it dilutes the underlying value of every single unit of currency in circulation. Its not nearly as simple as "double the money supply == halve your current cash's value", but some amount of dilution and inflation are definitely happening. BTC is theoretically a good hedge against this as it is deflationary by design.
I learned the other day that this is not necessarily true, as long as the money printed creates value. Japan is an example: they have printed tons of money and haven’t had inflation.
I have read about that too and know that there is quite a big debate about inflation. I still think that modern economic systems are sufficiently complex that there is no one person or government on the planet smart enough to allocate printed money in a way that is always 100% efficient - some amount of dilution is absolutely going to occur when you just will a couple trillion dollars into existence and inject it into the economy. Hopefully the value is greater than the dilution, but its not always going to work that way - this is what a well balanced portfolio will counter.
One can argue money printing has really worked out for the US so far...
There is potential for hyperinflation, just like having a police force means there is a potential for extrajudicial killings and all sorts of nasty stuff. The thing is when was the last time a western country experienced hyperinflation? I think Germany in the 1930s. Hyperinflation is a made-up problem.
Who said anything about hyperinflation? Regular inflation occurs constantly (and by design) and must be compensated for. If you just leave your cash in a checking account and walk away for 10 years you will come back to radically less buying power than when you left it - the number might be the same, but the total money supply will have grown tremendously thus reducing that money's buying power. According to inflation estimates $1 USD in 1970 was equivalent to almost $7 USD in 2021 value. The point of an investment portfolio is to outpace this dilution so that your wealth grows and you are not diluted into ruin by the printing of new money. A balanced portfolio that has some percentage allocated to instruments that tend to hold a steady value or grow inversely to inflation are critical. BTC is shaping up to be a good choice to add alongside of gold and other precious metals which have historically been used for this purpose. It is short term VERY volatile, but long term it has consistently WAY outpaced inflation.
No. The point of an investment portfolio is not to outpace inflation. The point of investing (in general) is to trade an amount of present consumption for a greater amount of future consumption. This is true whether the inflation rate is positive, negative or zero. If you simply save and hedge against inflation (i.e. you invest in something that provides a real rate of return of zero), then it means you're trading an amount of present consumption for the same amount of future consumption. In other words, you lose because you're not getting compensated for delaying consumption. At any rate, neither gold nor BTC are considered good investments by people who know anything about economics and finance, since neither of these assets provide income, but of course feel free to invest your money in whatever you like.
And you as well mr all knowing sage of finance
Hyperinflation can happen in any society if the productive capability of the society goes to the shitters. Printing money does not trigger such a collapse though. So if anyone is scared of hyperinflation, look at how industries and services in the country do instead of at how the money supply change.
> The thing is when was the last time a western country experienced hyperinflation?
So it's alright because western countries aren't suffering any side effects?
> Hyperinflation is a made-up problem.
My country suffered hyperinflation multiple times. It was so bad we had to create new currencies with every iteration. I think the most recent episode happened in the 90s or so.
So it's alright because western countries aren't suffering any side effects?
> Hyperinflation is a made-up problem.
My country suffered hyperinflation multiple times. It was so bad we had to create new currencies with every iteration. I think the most recent episode happened in the 90s or so.
It devalues everyone's hard work, other than the ones who will benefit from it. Then people complain about the wealth gap.
In the United States, most people are in debt. When you're in debt inflation doesn't devalue your hard work... it devalues your debt.
For most people in the United States, some inflation would be objectively positive.
[0]: https://www.bankrate.com/personal-finance/debt/average-ameri...
For most people in the United States, some inflation would be objectively positive.
[0]: https://www.bankrate.com/personal-finance/debt/average-ameri...
It definitely devalues your hard work, it becomes very difficult to save. Some people don't want to go into debt because they don't engage in usurious transactions.
In fact, I've never met anyone who wants to go into debt, and yet here we are in the real world where "The bottom half of Americans combined have a negative net worth,"
[0]: https://www.businessinsider.com/bottom-half-of-americans-neg...
In objective reality, setting aside philosophical objections to usury, since inflation devalues debt as well as savings it is a net benefit to the above mentioned Americans.
[0]: https://www.businessinsider.com/bottom-half-of-americans-neg...
In objective reality, setting aside philosophical objections to usury, since inflation devalues debt as well as savings it is a net benefit to the above mentioned Americans.
We wouldn't be having this discussion in the first place if people refused to engage in usury.
> BitCoin's major purpose is as a hedge to massive fiat printing
Do you know what else is a great inflation hedge? An index of stocks. Unlike BTC, the stocks also pay dividends, are backed by real economic activity, enjoy massively lower volatility, don't suffer from large fees, are never going to be banned, aren't tainted by endemic fraud and scam, and even produce a tiny bit of societal good. Stocks are objectively a better inflation hedge than BTC in just about every aspect, apart from not being a novel tech bro toy.
Do you know what else is a great inflation hedge? An index of stocks. Unlike BTC, the stocks also pay dividends, are backed by real economic activity, enjoy massively lower volatility, don't suffer from large fees, are never going to be banned, aren't tainted by endemic fraud and scam, and even produce a tiny bit of societal good. Stocks are objectively a better inflation hedge than BTC in just about every aspect, apart from not being a novel tech bro toy.
I like to think of it like this: am I going to give my money to a network of computers that will make heat and burn coal just to maintain a small global ledger, or will I give my money to an organization of people who will presumably try to build a better life for themselves and others, and maybe accidentally burn some funds along the way? I'm giving my money to people.
So you only participate in IPOs? Otherwise you probably buying your shares from a market maker, which runs computers that make heat and burn coal to take advantage of a small difference between buy and ask price.
Comparing apples vs container ships.
With bank ledgers, the computation energy is a minimized side effect that does not even show up as a rounding error in the financial reports of companies, and they do tens of thousands of transactions per second.
For cryptocurrencies, burning the energy is a key feature - 100% correlated to the proof of work and increasing by design. This achieves handfuls of transactions per second with energy burn exceeding that of nations.
Children's cartoons make better representations of the real world than that post.
With bank ledgers, the computation energy is a minimized side effect that does not even show up as a rounding error in the financial reports of companies, and they do tens of thousands of transactions per second.
For cryptocurrencies, burning the energy is a key feature - 100% correlated to the proof of work and increasing by design. This achieves handfuls of transactions per second with energy burn exceeding that of nations.
Children's cartoons make better representations of the real world than that post.
In a 'normal' economy that would make sense. However, Central Banks have gotten involved in buying stocks and as such, stock values have been hugely inflated. Many companies that might have otherwise not succeeded in a 'normal' market might have been able to survive due to QE. Which is part of the reason why more and more investors try to find alternative investment opportunities like metals and crypto.
Caveat: some established crypto (not BTC) have lower transaction fees and entry requirements in some countries than the stock markets.
I can't help add a cynical comment: BTC is also backed by real economic activity, it's "just" the legality that makes it different.
BTC like fiat money is not backed by anything. Anyone claiming otherwise just show they haven't got a clue what "backed" means.
I'm confused. Isn't the US dollars something like a legally-backed "we-owe-you" of US goods and services? Why else do non-US residents value the USD? And why does EURUSD vary with relative economic output of the two countries?
I can issue fiat money myself. Here: "I owe you 5 CKD." What is the value of that? Zero. You don't know me, you have no reason to trust me, you cannot take my IOU to court and force my property to be seized. Your 5 CKD is worthless, in contrast to 5 USD.
I can issue fiat money myself. Here: "I owe you 5 CKD." What is the value of that? Zero. You don't know me, you have no reason to trust me, you cannot take my IOU to court and force my property to be seized. Your 5 CKD is worthless, in contrast to 5 USD.
> I'm confused. Isn't the US dollars something like a legally-backed "we-owe-you" of US goods and services?
Not at all. You can't take your dollars to the issuer (the Federal Reserve) and have them redeemed for goods and services. They are not redeemable, hence not "backed". Fiat simply means not backed.
> Why else do non-US residents value the USD?
Do you mean why they demand USD? For different reasons. One reason is to pay for goods and services imported from the US. Another reason is to use it as reserve currency.
> And why does EURUSD vary with relative economic output of the two countries?
It doesn't.
Not at all. You can't take your dollars to the issuer (the Federal Reserve) and have them redeemed for goods and services. They are not redeemable, hence not "backed". Fiat simply means not backed.
> Why else do non-US residents value the USD?
Do you mean why they demand USD? For different reasons. One reason is to pay for goods and services imported from the US. Another reason is to use it as reserve currency.
> And why does EURUSD vary with relative economic output of the two countries?
It doesn't.
The value of fiat money is maintained by the issuer though. How does this happen? The Government demands payments of tax etc in this issued money. Means you need to have this funny money otherwise you go to jail. After a while we also get used to it as "an accepted means of exchange". But the value of course will quickly evaporate if the authority of the Government goes.
The ability to pay taxes with a currency is indeed one of the reasons people will demand that currency, but this doesn't mean its value is maintained by the government. History has shown repeatedly that a currency's value can collapse while people are still required to pay taxes with it.
I agree and I'm not saying to only pick one hedge.
Extraordinary. I will tell the people of Venezuela and Argentina to drop their savings in Bitcoin and get stocks. Such a great idea, they will see the benefits within the year.
I know nothing of BTC but how would you stack it against gold, real estate, other traditional stores of value as a hedge against hyperinflation?
You want to own all of those if possible, but for normal working people bitcoin is easy way to convert fiat into a asset.
Given each bitcoin breaks down into 100 million sathosis you can always buy/sell parts of a bitcoin. Doing the same with other assets classes is harder or not even possible.
Given each bitcoin breaks down into 100 million sathosis you can always buy/sell parts of a bitcoin. Doing the same with other assets classes is harder or not even possible.
A number of voices from government and surveillance circles, like Thiel et al, have come forward lately to caution about "big problems" with Bitcoin. I have to conclude that Bitcoin is actually winning, and these people are just spreading FUD in an effort to crush something they can't control.
When the US government declares you a problem and is serious about it you're many things, but winning is probably not one of them.
It's pretty trivial to make Bitcoin virtually useless. Pass some laws that effectively render it useless to corporate entities and it's basically banished to the shadow realm. Won't stop criminals from using it, but you can regulate crypto to hell for 99% of the population.
It's pretty trivial to make Bitcoin virtually useless. Pass some laws that effectively render it useless to corporate entities and it's basically banished to the shadow realm. Won't stop criminals from using it, but you can regulate crypto to hell for 99% of the population.
Even if it's technically feasible to implement I imagine the population would not respond well to the government seizing millions of fortunes overnight. I would guess public opinion toward btc is fairly neutral or positive at the moment. Although it seems like certain entities are attempting to change that with all the recent environmental bitcoin FUD articles.
So is cocaine, and cocaine is big business.
The government cannot make bitcoin worthless through legislation. The government can make bitcoin worthless through an attack that costs less than 1% of the DoD budget though.
The government cannot make bitcoin worthless through legislation. The government can make bitcoin worthless through an attack that costs less than 1% of the DoD budget though.
Cocaine is a highly inelastic good. Bitcoin is highly elastic. It's trivial to ban goods with elastic demand.
> Cocaine is a highly inelastic good. Bitcoin is highly elastic. It's trivial to ban goods with elastic demand.
What do people use Bitcoin for? Buying drugs online! If the demand for drugs is inelastic, then presumably the demand for a way to buy them online is somewhat inelastic too?
What do people use Bitcoin for? Buying drugs online! If the demand for drugs is inelastic, then presumably the demand for a way to buy them online is somewhat inelastic too?
I would think that BTC is not used only for buying drugs. If my numbers are correct daily BTC transaction volume is 290K or 15B€ or 750 tones of cocaine at 20€/g. Thats a lot of cocaine. In 2018 its estimayed that worldwide 1.7k tones were produced totally.
The world is more than US alone. Convert your BTC into Euros, and then you can take those euro's to dollars.
The law fighting internet stuff seems very difficult. Just look at the rich media companies. Name me a movie or song and I'll download it. Even with all their money and laws they couldn't stop this. So how would you expect them to stop internet money.
The law fighting internet stuff seems very difficult. Just look at the rich media companies. Name me a movie or song and I'll download it. Even with all their money and laws they couldn't stop this. So how would you expect them to stop internet money.
That's why the EU parlament said that any ban has to be coordinated internationally.
[deleted]
It is winning as internet gold, but not as internet money. The fees are as large as banks', if not larger.
The only advantage over fiat is the theoretical purchasing power stability due to algorithmic supply.
The only advantage over fiat is the theoretical purchasing power stability due to algorithmic supply.
> The fees are as large as banks', if not larger.
The fee does not depend on transaction value, so the greater the value transferred the smaller the fee in percent. Bank transfer fees are a percentage of value transferred, in my experience.
The fee does not depend on transaction value, so the greater the value transferred the smaller the fee in percent. Bank transfer fees are a percentage of value transferred, in my experience.
Yeah, so it discourages small payments relative to large ones.
Strictly looking at this, it is somewhat more unfair to poorer people compared to banks.
Strictly looking at this, it is somewhat more unfair to poorer people compared to banks.
Just to bring some perspective, JP Morgan alone transfers the equivalent of the U.S. real gross domestic product each week. $2.8T per day, just by one bank.
Bitcoin+all of crypto combined is nowhere close to that scale. Bitcoin sees around 300k transactions per day. It's miniscule.
Bitcoin+all of crypto combined is nowhere close to that scale. Bitcoin sees around 300k transactions per day. It's miniscule.
Minor nit, but you are comparing amount transferred vs number of transactions. Yes, there is a difference of several orders of magnitude, in favor of usd.
Fair - it's hard to get accurate info on the sum value of the transactions. Even if every transaction was a full bitcoin, it's still only $17B per day. Or still just six tenths of one percent of what JPM processes daily.
No it's not hard to get some idea of the transaction volume, at least on chain transactions: https://www.blockchain.com/charts/estimated-transaction-volu....
It stands though that it's orders of magnitudes less than USD.
We will never find out such data for USD anyway, where do you verify for yourself that the claimed 2.7T is accurate?
It stands though that it's orders of magnitudes less than USD.
We will never find out such data for USD anyway, where do you verify for yourself that the claimed 2.7T is accurate?
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what if each of those BTC trasactions will be $1M ? btc is not going to be used to buy groceries obviously, and its slow tech will not become an issue for international trasactions. Banks still take days to clear their own international transactions and it hasnt stopped their adoption
The US is the only country that has a vested interest in keeping the dollar as the one and only reserve currency, so these reactions were expected. However, bitcoin is winning in the sense that even the US cannot afford to miss out now.
The US has been trying to reduce the usage of the USD as a reserve currency (it's the largest such currency but not the only one - EUR, GBP and JPY are also used) due to it not having any real benefit to the US while exposing its economy to the effects of financial crises around the world, which tend to lead to countries purchasing dollars and driving the price up which makes imports more expensive.
---
Ben Bernanke (ex-FED Chairman) - The dollar’s international role: An “exorbitant privilege”?
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
> A great deal of U.S. currency is held abroad, which amounts to an interest-free loan to the United States. However, the interest savings are probably on the order of $20 billion a year, a small fraction of a percent of U.S. GDP, and that “seigniorage,” as it is called, would probably still exist even if the dollar lost ground to other currencies...
> The safe haven aspect of the dollar is actually a negative for U.S. firms, since it implies that they become less competitive (the dollar is stronger) at precisely the times that global economic conditions are most difficult.
---
Ben Bernanke (ex-FED Chairman) - The dollar’s international role: An “exorbitant privilege”?
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
> A great deal of U.S. currency is held abroad, which amounts to an interest-free loan to the United States. However, the interest savings are probably on the order of $20 billion a year, a small fraction of a percent of U.S. GDP, and that “seigniorage,” as it is called, would probably still exist even if the dollar lost ground to other currencies...
> The safe haven aspect of the dollar is actually a negative for U.S. firms, since it implies that they become less competitive (the dollar is stronger) at precisely the times that global economic conditions are most difficult.
Thiel recently said something to the effect that it's possible bitcoin could be a tool for China to threaten the stability of the US dollar. Interestingly, he is an investor in a crypto startup[1] that (if its intents are read uncharitably) aims, with a stablecoin, to do something similar to the economy of Venezuela and other South American countries that have extremely inflation-prone currencies/have experienced hyperinflation. Mass adoption in Venezuela is the current goal of this project. At least as far as I can see, success for this project would mean some significant chunk of the Venezuelan population transacting in a currency controlled by a company based in California.
[1] https://reserve.org/
[1] https://reserve.org/
Couldn't it be the opposite? Bitcoin is losing, so they say this to get people to think Bitcoin is good so they'll use it instead of much harder to analyze crypto?
If you are using Bitcoin for privacy you are an idiot.
Dedicated privacy coins like ZCash have existed for years, and even more modern systems like Aztec are on the rise.
https://zk.money/
Eventually Aztec will allow not just private payments but running arbitrary code on-chain in private.
The mainstream is completely clueless.
Dedicated privacy coins like ZCash have existed for years, and even more modern systems like Aztec are on the rise.
https://zk.money/
Eventually Aztec will allow not just private payments but running arbitrary code on-chain in private.
The mainstream is completely clueless.
The mainstream is confused by the sheer number of coins available. For example, I have never heard of zcash or aztek. I have no idea what they're about or how long they've existed, or whether or not they're a scam.
I understand there are different uses for all of these coins, vaguely. But I also have no idea which are scams, which are not, and which are good for what I need. Further, I have zero idea where to even start to evaluate those three points, let alone the trading process.
And a lot of that issue is because crypto zealots are sort of awful to deal with, because many times they are needlessly condescending. Ask for help in crypto forums, and you get responses such as, "don't be clueless" or "use [insert weirdly named coin here], obviously [zero references to follow this statement]."
Also, the number of people shilling various coins is genuinely startling. Too many people have too much invested in too many coins for me to be comfortable that I'm not being scammed.
Source: I am as mainstream as it gets with this stuff.
I understand there are different uses for all of these coins, vaguely. But I also have no idea which are scams, which are not, and which are good for what I need. Further, I have zero idea where to even start to evaluate those three points, let alone the trading process.
And a lot of that issue is because crypto zealots are sort of awful to deal with, because many times they are needlessly condescending. Ask for help in crypto forums, and you get responses such as, "don't be clueless" or "use [insert weirdly named coin here], obviously [zero references to follow this statement]."
Also, the number of people shilling various coins is genuinely startling. Too many people have too much invested in too many coins for me to be comfortable that I'm not being scammed.
Source: I am as mainstream as it gets with this stuff.
Monero is apparently better then Zcash
If I buy Bitcoins using cash, it can be pretty good, privacy-wise...
Zcash privacy features aren't even on by default. You have to explicitly choose to make private transactions. This isn't good for a coin with Tor-like properties such an anonymity set. In practice, that set will be small enough for users to stand out and be identified.
The link you provided literally has one option, "Connect", outside of the GDPR cookie banner.
I can't even see what this website is doing and you expect people to just trust their money with these types of actors? I think that says more about you than "the mainstream".
I can't even see what this website is doing and you expect people to just trust their money with these types of actors? I think that says more about you than "the mainstream".
Try Bitcoin Cash, they have https://cashfusion.org... it's like a mixer you can switch on in your wallet and because the fees are what they are meant to be (according to Satoshi - https://satoshi.nakamotoinstitute.org/emails/cryptography/2/), the mixing cost only a few pennies.
BCH is a scam. Not because they advertise that the removal of the block size limit comes without any costs, but because it regularly splits after influential but narcissistic 'leaders' attempt to grab more power and because its community continues to justify deceitful tactics to promote BCH and trick people into buying BCH when they expected Bitcoin.
I think people underestimate how easy it is to launder money with more traditional methods and overestimated how easy it is with crypto.
Slightly off topic but SEC is going after small competition to YouTube LBRY and Odysee platform by claiming their LBRY Credits are "securities" and thus need to be regulated. If this happens to LBRY, then other cryptocurrencies will be next.
https://helplbrysavecrypto.com/faq
Video summaries:
> SEC vs. LBRY Could be DEVASTATING! Viva & Barnes HIGHLIGHT:
https://youtu.be/kB_TrpRikq8
> SEC vs. LBRY Crypto Lawsuit
https://www.youtube.com/watch?v=1JyIPFuUbWg
https://helplbrysavecrypto.com/faq
Video summaries:
> SEC vs. LBRY Could be DEVASTATING! Viva & Barnes HIGHLIGHT:
https://youtu.be/kB_TrpRikq8
> SEC vs. LBRY Crypto Lawsuit
https://www.youtube.com/watch?v=1JyIPFuUbWg
that's okay, the market hasn't seemed to really care about any of that. its been a Sword of Damocles hanging over many tokens heads, and sometimes they've dropped pretty hard on the teams and the market shrugged it off.
the issue is that actual unregistered securities can't be traded by custodial exchanges, and registered securities have to be traded by broker dealers, and none of that exists or has any liquidity in crypto land.
but the autonomous non-custodial exchanges have more volume and liquidity now anyway
so nobody cares.
the issue is that actual unregistered securities can't be traded by custodial exchanges, and registered securities have to be traded by broker dealers, and none of that exists or has any liquidity in crypto land.
but the autonomous non-custodial exchanges have more volume and liquidity now anyway
so nobody cares.
Is LBRY a registered business?
I don't see how SEC could regulate cryptos much more than they already do. I suppose the could force US exchanges to disable withdrawals like the Chinese government did a while ago for Chinese exchanges. Other than that there's nothing they can do regulation wise.
I don't see how SEC could regulate cryptos much more than they already do. I suppose the could force US exchanges to disable withdrawals like the Chinese government did a while ago for Chinese exchanges. Other than that there's nothing they can do regulation wise.
There are very specific requirements with strong precedent (see: Howey Test https://www.investopedia.com/terms/h/howey-test.asp) that must be met to be considered a security, and it is very clear that currencies like Bitcoin don't meet them. If various bodies wish to regulate it, there are plenty easier and stronger tools to use than securities laws. With that said, many companies involved in minting their own cryptocurrency (primarily during the IPO craze a few years ago) did sell unregistered securities in plain sight, often committing massive fraud alongside it, and it's no surprise that the SEC has been catching up with it over the last few years.
Most of your comment is okay but the last line in your comment seems to making a slight allegation that LBRY did something fraudulent which is not what happened nor is being accused here by the SEC. Nor is this a recent development. SEC has been harassing LBRY since May of 2018 and they have spent over a million in legal fees so far.
If this harassment continues, how any startup will be able to continue fighting bigger fish like YouTube, FB etc is beyond me.
If this harassment continues, how any startup will be able to continue fighting bigger fish like YouTube, FB etc is beyond me.
> ...how any startup will be able to continue fighting bigger fish like YouTube, FB etc is beyond me.
Maybe by not selling unlicensed securities. Like bitchute is doing, or daily motion, or rumble, or even peertube.
I'm not saying that selling unlicensed securities should be illegal, but it currently is, and if you look at LBRY, there's a strong case that it did sell an unlicensed security.
Maybe by not selling unlicensed securities. Like bitchute is doing, or daily motion, or rumble, or even peertube.
I'm not saying that selling unlicensed securities should be illegal, but it currently is, and if you look at LBRY, there's a strong case that it did sell an unlicensed security.
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I always wondered about this, and figured I was missing something. If every transaction is recorded for eternity, then tracking funds is just a matter of linking wallets to individuals, which while that may be difficult, it's not impossible. Certainly not with the kind of funds that three letter agencies command.
I always assumed the closest you could get to anonymity with any blockchain based coin is to use a burner wallet, and convert it cash as soon as the transaction is complete--but that's just using cash with extra steps.
I always assumed the closest you could get to anonymity with any blockchain based coin is to use a burner wallet, and convert it cash as soon as the transaction is complete--but that's just using cash with extra steps.
Monero does anonymous transactions.[1]
[1] https://en.m.wikipedia.org/wiki/Monero
[1] https://en.m.wikipedia.org/wiki/Monero
And the fact that it's recorded for eternity means that maybe you don't have enough information to link people to the transaction today, but the information will keep accumulating...
Monero solves this with ring signatures. Every transaction is automatically signed by a lot of wallets and there's no way to tell from which wallet the coins are actually coming from.
How I understand it, please correct me if I'm wrong :
All transactions are visible, sure, but Bitcoin also enables mass dilution and mass money washing.
Let's say there is a bitcoin address A on which you have identified that 50% of the Bitcoins are legit, and 50% came from a suspicious flagged address B.
Now what? Do you also flag A as "suspicious". What if A also made thausands other payments, do you flag all the recipients as suspicious?
Let's say you are drastic and your external system only allows payments from the addresses with a 100% verifiable and clean history. Now all I have to do as an attacker is to make a payment to your address from a flagged address I own, and all your bitcoins are also now flagged for life.
You quickly end up flagging the whole address base as suspicious, because there is no way to :
Or am I missing something ?
All transactions are visible, sure, but Bitcoin also enables mass dilution and mass money washing.
Let's say there is a bitcoin address A on which you have identified that 50% of the Bitcoins are legit, and 50% came from a suspicious flagged address B.
Now what? Do you also flag A as "suspicious". What if A also made thausands other payments, do you flag all the recipients as suspicious?
Let's say you are drastic and your external system only allows payments from the addresses with a 100% verifiable and clean history. Now all I have to do as an attacker is to make a payment to your address from a flagged address I own, and all your bitcoins are also now flagged for life.
You quickly end up flagging the whole address base as suspicious, because there is no way to :
- block deposit
- differentiate Bitcoin X from Bitcoin Z
Or am I missing something ?
You are missing the concept of a UTXO, but that's a bit besides the point.
You are in general correct.
However, there is currently no market price difference for "untainted coins". Some are expecting a secondary market to appear, some are not. A lot to uncover in this area!
You are in general correct.
However, there is currently no market price difference for "untainted coins". Some are expecting a secondary market to appear, some are not. A lot to uncover in this area!
That is not how anti money laundering works. Person has to prove their income is clean, there is no presumption of innocence.
This is why I don't see the USA banning Bitcoin anytime soon. Using it makes it all too easy to catch nefarious activity.
Ray Dillinger was there in bitcoin's early days. He recently wrote this:
https://www.metzdowd.com/pipermail/cryptography/2020-Decembe...
> The pseudonymity of coins being owned by the bearer of some cryptographic key is a failure;
> People have been eavesdropping and aggressively analyzing the block chain from day 1.
> And the block chain will always be there, it will always be public, and it will always be subject to further analysis.
> And we are learning that analysis of that record is sufficient to destroy any pretense of anonymity or pseudonymity.
https://www.metzdowd.com/pipermail/cryptography/2020-Decembe...
> The pseudonymity of coins being owned by the bearer of some cryptographic key is a failure;
> People have been eavesdropping and aggressively analyzing the block chain from day 1.
> And the block chain will always be there, it will always be public, and it will always be subject to further analysis.
> And we are learning that analysis of that record is sufficient to destroy any pretense of anonymity or pseudonymity.
Bitcoin has become more successful as an investment or store-of-value than as an "anonymous" payment option. Even within the cryptos, there are already better options than Bitcoin if someone is worried about transaction monitoring.
Headline is misleading. The whitepaper by the CIA director emphasizes that the US should not outlaw crypto, because China would then capture all the value that the US would miss out on.
You don't even have to interact with a bank to clean money with bitcoin:
https://i.imgur.com/Qd7h2yu.png
https://i.imgur.com/Qd7h2yu.png
MWEB on Litecoin solves this by adding Financial Confidentiality (Fungibility) as an extension block.
The code is complete and is open for review.
https://litecoin-foundation.org/mweb-code-complete/
https://litecoin-foundation.org/the-battle-for-sound-money/
The code is complete and is open for review.
https://litecoin-foundation.org/mweb-code-complete/
https://litecoin-foundation.org/the-battle-for-sound-money/
What Litecoin provides is far from what Monero provides.
And confidentiality isn't the same as fungibility. To be fungible all transactions need protection, so it cannot be opt-in. This is what Monero provides.
And confidentiality isn't the same as fungibility. To be fungible all transactions need protection, so it cannot be opt-in. This is what Monero provides.
Being opt-in is a feature, not a bug. Because of Monero's privacy not being opt-in, there are so many exchanges that simply blacklist it. But being a hybrid coin will mean that you can use privacy when transacting, but can disable privacy when you need to interact with exchanges.
> What Litecoin provides is far from what Monero provides.
Monero's privacy technology is a bit more nuanced than Litecoin, but again, this is also a feature, not a bug. Litecoin's technology being simple means it's more difficult to get wrong, and also allows for scalability overhaul improvements, which cannot be applied to Monero (read the MimbleWimble whitepaper for more info on this).
> What Litecoin provides is far from what Monero provides.
Monero's privacy technology is a bit more nuanced than Litecoin, but again, this is also a feature, not a bug. Litecoin's technology being simple means it's more difficult to get wrong, and also allows for scalability overhaul improvements, which cannot be applied to Monero (read the MimbleWimble whitepaper for more info on this).
There's always a tradeoff. MWEB allows for scalability whereas Monero won't be able to handle the same amount of traffic MWEB or Litecoin can handle. Also, for people to use XMR, they'll need access to XMR and they do not have that in the U.S.
You can buy Monero from Kraken in the US just fine.
Also, Monero actually focused on on-chain scaling with it's dynamic blocksize, as opposed to Litecoin that follows the Bitcoin way of second layer scaling.
Also, Monero actually focused on on-chain scaling with it's dynamic blocksize, as opposed to Litecoin that follows the Bitcoin way of second layer scaling.
Trash tech design that's won't be private nor used by anyone
Every big blocker said the same thing about SegWit.
Also, remember the blockchain is effectively permanent.
Even if many of these activities cannot be identified today, it seems likely that many peoples transactions will be unmasked at some point in time.
I would not recommend using bitcoin for illegal or embarassing activity.
Even if many of these activities cannot be identified today, it seems likely that many peoples transactions will be unmasked at some point in time.
I would not recommend using bitcoin for illegal or embarassing activity.
Doesn't anyone else here think that this is a damm good thing. Getting rid of unsavoury characters and thier businesses would be good for Bitcoin in the long run and attract more asset managers to include this in their portfolio.
Does anyone know what's going on with the kovri project that's suppose implement I2p tunneling for monero? It seems like the project stalled and the developer dropped off the face of the earth.
or it's probably why the NSA published a paper on digital cash, cause bailing out banks and reinsurance companies is really fun and a positive for future generations.
Well, of course - it was either started at NSA or by Paul Le Roux, so, neither is a good reason to invest money or energy in this stinky steamy pile.
I wonder if we will get blacklisted individual bitcoins that no regulated firm will be allowed to accept.
And yes mayebe, but not in this case for every crypto. We all should ought to be using Monero, escape digital financail system that government can be tracking every transaction. There ought not to be any way for tracking of transaction for to be happening.
Wait what? Who has ever been caught from analysing the blockchain? Everyone uses local crypto exchanges to cashout/cashin and burner wallets. It's literally paying/receiving cash but with extra steps.
Gee, who would have thunk?!
A complete transaction history for users which were attracted by alleged anonymity?!
The ability to extort even if you just traded with someone who’ve traded with someone shady?
The possibility to thread ceasing of wealth without one judge approval needed?
Ability to manipulate the price by extorting whales?
The ability to extort miners because all of them store and share child pornography via the blockchain?
What could possibly go wrong...
A complete transaction history for users which were attracted by alleged anonymity?!
The ability to extort even if you just traded with someone who’ve traded with someone shady?
The possibility to thread ceasing of wealth without one judge approval needed?
Ability to manipulate the price by extorting whales?
The ability to extort miners because all of them store and share child pornography via the blockchain?
What could possibly go wrong...
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If the CIA wants you to believe something... you'd be much better off not doing that. Three letter agencies always support existing power structures.
No obviously Bitcoin is bad mkey. Because unregulated money is basically the same as illegal money. Or so.
The answers in here are horribly sad really.
The answers in here are horribly sad really.
This is misleading. Crypto is used by most ransomwares nowadays and terrorist groups have embraced crypto as a valid source of financing.
That crypto is still a low percentage of overall illicit transactions makes sense, but give it 10 more years and that wont be the case anymore.
https://t.co/TFB02c7FEM
That crypto is still a low percentage of overall illicit transactions makes sense, but give it 10 more years and that wont be the case anymore.
https://t.co/TFB02c7FEM
That assumes that legitimate use does not also grow.
Which is a baseless assumption.
Which is a baseless assumption.
I am constantly amazed by the Luddite comments on hacker News everytime crypto comes up.
Nobody with a modicum of opsec knowledge would even use Bitcoin for secure, secret transactions. There are better alternatives
Get over your conservatism and accept the fact that crypto is the future.
Nobody with a modicum of opsec knowledge would even use Bitcoin for secure, secret transactions. There are better alternatives
Get over your conservatism and accept the fact that crypto is the future.
It all depends what your threat model is. Bitcoin can be traced by sophisticated nation state actors at the cost of tens of millions per intercepted target. If I was Osama bin Laden or El Chapo or a guy who personally pissed off Putin, I probably wouldn't rely on it. But if I was a local drug kingpin in Baltimore, or a corrupt mid-level CCP official, or a Cypriot corporate money launderer, then Bitcoin deanonymization is probably a small risk in the scheme of things. Certainly orders of magnitude less risk than using the traditional banking system.