Wait, you mean something that literally tracks any and all actions in a literal chain of history that is immutable is easy to track?!?
You mean that pattern recognition can be applied to even “randomized” in both size, time, and destination of transactions can be done to track like how they can track burner phones?
When it comes to cryptocurrencies, a lot of people involved are so ignorant that "water is wet" statements come as a genuine revelation to them. Why? Bitcoin advocates have been deliberately targeting very ignorant and naive people because they're easy money.
Bitcoin advocates have generally been exceedingly clear about these kinds of things. To the point of begging people to listen. From "not your keys, not your coins" to "KYC/AML bought coins are easy to trace" to "please, for the love of god, don't give your coins to the centralized Celsius to try to eek out an extra 10% gains you greedy dumbass".
People consistently don't listen.
Crypto pumpers on the other hand tend to not care and say whatever BS they want to pump their bags.
That speaks more about the people you're surrounded by than it does the incredible people actually doing the very interesting work of developing the bitcoin ecosystem behind the scenes.
It is a shame that your only exposure to the space comes from pump monkeys who don't understand that a blockchain is barely more than a distributed linked list (hell, it's basically just glorified git) and the real innovation was not the data structure, but the integration of proof of work to create Byzantine fault tolerance.
I'm pretty sure the only difference between a Merkle tree and an Oak is the theoretically infinite branching. Is that right? /s
My (very rough) estimate is that somewhere between 1% and 5% of those who enthuse about crypto-currencies are actually interested in the underlying tech. The rest being in it for one of "it's a safe way to do nefarious economy" and/or "it's easy money".
Me? I think the tech is intellectually interesting, but doesn't really scale to the point where it can provide a "world economy". If nothing else, with Proof-of-Work, you need 51% of ALL available computing resources dedicated to maintaining the chain, which is an incredible waste (if you don't have a majority of all available computing power, the chain is vulnerable). With Proof-of-Stake, you need a majority of the economic system dedicated to just maintaining the economic system.
So, intellectually interesting, but practically useless.
FYI, I regularly interact with people who actually understand blockchain and cryptocurrencies, so your assumptions are a little mistaken. None of those people are telling me to buy Bitcoin though, so I don't count them among "Bitcoin advocates".
> Bitcoin advocates have generally been exceedingly clear about these kinds of things. To the point of begging people to listen. From "not your keys, not your coins" to "KYC/AML bought coins are easy to trace"
Such advocates are the fringe. Most bitcoin advocates are saying "If you're not buying bitcoin you're an idiot! It's easy money! My critics are no-coiners who didn't listen to me!"
Such advocates are the ones with the credentials to actually bother listening to, like core devs or the people who literally wrote the book on understanding the technical nature of the system.
They're not the fringe, they're the core that the fringe pump monkeys looking for a quick buck latch onto and promptly ignore.
The majority of people who talk about literally anything aren't worth listening to, and if you can't differentiate between the two, we have bigger problems to work through.
Laws are generally not retroactive (though admittedly this principle does get violated).
> The Ex Post Facto Clause, contained in Article I, Section 9, Clause 3 of the Constitution, provides: “No . . . ex post facto Law shall be passed.” The phrase “ex post facto,” Latin for “after the fact,” refers to laws that apply retroactively. While the Ex Post Facto Clause on its face might appear to bar all retroactive legislation, courts have applied the Clause only to penal laws.
> Congress has much greater leeway to enact retroactive legislation in the civil sphere than in the criminal sphere. However, certain constitutional limits apply, and courts interpreting ambiguous statutes apply a general presumption against retroactivity.
People think "burner phones" are not traceable. They watch too much CSI etc.
Pattern matching has been successfully applied to phone logs between seemingly randomized src and dst phones. I'm busy at work and terrible at communicating clearly but what I am trying to say is that even when person A is using multiple phones and person B is also using multiple phones, there is still enough of a pattern involved such as call lengths, time of calls, etc to be able to sniff out and match these seemingly random devices to specific users.
I would have to dig up papers/reports on times this has been successfully done and reported publically.
But my point is that even running shit through coin mixers etc there is a high probability of there /still/ being enough latent information floating around to suss out a track between src and dst of blockchain transactions.
> they could see that a given assassin had an “operational phone in his front pants pocket” and “in the back pocket a phone that he used to call his girlfriends.”
If your investment horizon is long enough and your secure storage space cheap enough, Lego might be a more prudent investment.
Basic strategy: buy and hold unopened copies of the 'flagship' sets of each Lego theme. If a theme is small enough, get complete sets of sets. For instance, the Muppets minifigs were sold in blind bags, but every case was guaranteed to hold three complete sets, so buy a whole case, not random bags. The Speed Champions line, after the switch to 8-stud wide models, had a dozen or so sets over two years (so far).
At your time horizon, decide whether you want to sell as parts or sets.
In 2000, the UCS X-wing (7191-1) was about $150 new. There appears to be one incomplete set on the open market for $831. The parts are worth about twice that if sold individually. I suspect an unopened set would go for about $2000, implying a return rate of about 12.5% APY.
Side note re: Lego, I have fond memories of the first Lego X-Wing and Snowspeeder. I’ll never forget losing pieces in the grass outside and calling up Lego. They asked me for the page number and sent me more pieces than I needed.
Paper money is tracked all the time. US bills have serial numbers. This has resulted in the arrest of bank robbers, ransomers, and hijackers in the past.
For money to be effectively tracked it needs to be scanned and recorded at every transaction the reality is that most bills especially lower denominations tend to circulate without being deposited, in fact many of them would circulate until they are in such bad shape that they have to be destroyed without ever being deposited back at a bank.
Even when they are deposited at a bank the banks don’t tend to keep those records forever, they have lists of serial numbers that they need to watch for but if you deposit cash into your account the bank would hold the bill information for a relatively short period of time and they don’t actively share that information with LEOs or other agencies unless explicitly requested to do so.
Even with robberies it sometimes takes years or even decades before enough bills surface to actually trigger an alert and many of them never do.
Not to mention that there are billions in counterfeit dollars in circulation at any point in time and many of them are rarely caught because they never reach a point where a good enough forgery would be discovered.
How are people going to do moral things against an immoral enforcer when the enforcer becomes immoral, if we assume all are too immoral to have the right to privacy?
I have refused to shop at numerous stores because they make a point of not accepting cash. Cash is incredibly important for modern society due to actually being untraceable and allowing for private transactions. Plus, a society without cash is one where you are forced to use central banking. Blockchain is just trying to imitate cash digitally, which as it turns out is really hard to do. So it just ends up that people use central services anyways.
The point is, cash is hard to trace. And that's a good thing. I personally refuse to shop anywhere that refuses cash, and I encourage you to do the same if possible.
I don't understand how it's legal for vendors to actually refuse cash.
I get it that there's multiple reasons they wouldn't want to and they can say it's their policy, etc but it's on the paper money itself "LEGAL tender for ALL debts public and PRIVATE".
It's like when you hear the stories about people paying debts with buckets of coins. Obviously a huge PitA but technically allowed.
> Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues." This statute means that all U.S. money as identified above is a valid and legal offer of payment for debts when tendered to a creditor.
That taco shop that doesn't want to deal with cash isn't a creditor.
True, but that taco shop m̶u̶s̶t̶ may have to accept cash if they want to operate in Arizona, Colorado, Connecticut, Delaware, D.C., Idaho, Maine, Massachusetts, Michigan, New Jersey, New York, North Dakota, Oklahoma, Pennsylvania, Rhode Island, or Tennessee. Or Berkeley, Chicago, or San Francisco.
And everywhere else in the U.S. if the Payment Choice Act passes.
Edit: Those jurisdictions have "pro-cash legislation" according to the ATM Industry Association Stateside Monitoring Service, but the source appears paywalled:
Are you positive about Michigan? My most recent interaction with a cashless store was during a trip to Detroit, where a convenience store attached to a very large bank building made a very public point about not accepting cash. To include a large banner at the entrance of the store remarking about them being proudly cash free.
I'd 'unofficially' add NM to the list. While perhaps not a law, not accepting cash here would be an instant business death sentence. -Everyone- runs on cash.
Well, paper cash isn't the only way to pay for goods. The spirit of the "legal tender" statement is that that it applies to U.S. Dollars broadly, not necessarily the paper. After all, a Treasury Bond is exactly as good as paper cash.
If you look at the edge cases, it becomes more clear why the federal government doesn't require businesses to accept paper cash. Imagine someone attempting to purchase a sky scraper in Manhattan with cash. That would be a mountain of bills which would be unwieldy to carry, transport, and count. Or what about if someone insisted on buying your house with all pennies. Would you like being required to accept that payment?
The idea that cash shouldn't create an undue burden to a business is an important one. And that's why the federal government doesn't require the acceptance of cash for transactions. It's best to let the parties involved decide what method of payment is most appropriate.
It would be entirely reasonable to limit such a requirement with "for all transactions under $X". Similarly it would be reasonable to put in a clause about using banknotes for whole dollar parts of the total due.
As for the burden: if taking money is a burden, why are you in business to begin with?
I always considered it as a debt which only exists for a few seconds. You agree to purchase something, cashier rings it up, and in those few moments before you pay you have a debt to the shop.
That's still not a debt. If the cashier rings it up, and you try to pay with credit card and your card is declined, you can leave without buying anything. Whereas with a debt, you couldn't just change your mind like that.
My understanding is that it can't be refused to settle a debt, for instance your restaurant/bar/hotel tab or for paying your car note, mortgage, taxes etc.
However, a store owner can choose to only accept bottle caps or conch shells in exchange for their goods if that's what they want to do. If you go up to the register and you tell them you want the widget, you have to pay whatever they're asking in exchange. Doesn't have to be cash, credit or even money of any sort.
I wonder if this means I can use treasury bonds as payment at a restaurant (of course practically they would refuse, and I don't suggest trying this, but an interesting thought)
Hadn't thought of that, but I don't believe Treasury Bonds are considered legal tender nor do they instruct the bearer on it that they have to be accepted "for all debts, public and private".
As an aside, our currency used to say that they could be exchanged for the denomination in Gold (or silver, depending on the note) on demand at the US treasury.
Other people have pointed out that there's no federal mandate to accept cash. However, several states do require this: New Jersey, Rhode Island, Connecticut, and Massachusetts. This also appears to be true in New York (city), San Francisco, and Philadelphia.
Funny, I'm the opposite. I'm a tech guy and by this point I refuse to deal with grimy dirty worn pieces of paper in order to pay for anything.
If a place is cash only, they simply lose out on my business. I'm done using their shitty ATM in the back with its $5 fee, never again. And I'm done helping these cash-only businesses evade their taxes.
My communications are digital. My calendar is digital. My concert tickets are digital. Even house keys are turning digital. Physical cash is an anachronism.
If you need privacy, the solution needs to be encrypted value on refillable cards or a blockchain or whatever it is. But not grimy pieces of paper. Digital-only, please.
Edit in response to comments: thanks, but it's never been a problem. I have multiple credit cards and I can call 24/7 to resolve an issue with one and use another as backup.
And then there's also my debit card, Venmo, and PayPal to be able to fall back on.
And if the internet is down for days across my whole city then there might be even bigger problems to be worrying about...
So just never had a bank holiday as any problem, not even remotely.
Their point is that depending on the type of non-cash transactions that if the banks are closed, internet is down, etc — banks and related methods of transferring funds are on hold or not possible until banks reopen.
Recently happened to be in a bank and teller randomly mentioned that they had just updated their systems and if internet goes out they are no longer able to do any transactions, including distribute cash.
In my country, there are holidays when bank offices are unavailable.
While you typically are still able to use ATMs and pay by card, any glitches you encounter can only be resolved after the banks open again.
In the past month I've encountered two such glitches: once the ATM debited my account but did not give me the cash, and another when my card payment errored out repeatedly and I had to pay cash.
Having some cash on hand can be prudent under these circumstances.
Holidays, basically. The branch is closed and nobody really cares if your card cannot be processed for whatever obscure reason. No chat or phone support, obviously, you have to go to your own personal banker, who is on holiday.
Happened at least once with a major country-wide bank in EU this year with some of my friends, and I doubt it's either the first or the last occurrence.
> if your card cannot be processed for whatever obscure reason
That's why I carry at least two (physically _and_ in Apple wallet). One Visa, one Mastercard, one is issued by my credit union, the other by a large bank.
If both Visa and Mastercard are down and both banks are unreachable then there are bigger issues. Connectivity issues where more common when transactions relied on landlines. It's pretty rare now.
I also carry some cash as last ditch backup. Some places may be temporarily not accepting cards.
In the states it's typical for credit/debit card support lines to still be open on bank holidays. They want to be able to nip fraud in the bud. Additionally bank holidays typically being heavily commercialized here means that large consumer transactions tend to cluster on them.
I think it's illegal in NYC to not accept cash and I fully support that. There are a lot of unbanked people here that have enough on their plates without further discrimination.
And also cash is king and coins and bills are very neat.
Would you support removing cash if everyone was given a bank account? Perhaps with the government?
OPs point was that cash not being accepted means you have no privacy in a place you might want it. Governments love credit cards, easy pay, etc. Especially in the case where your transactions are kept with you forever so that future governments can punish you.
> Would you support removing cash if everyone was given a bank account
... that couldn't be closed, limited, frozen, or surveilled?
Sure!
But otherwise, not a chance.
Giving somebody "a bank account" is just giving them a pretty piece of paper. All the useful properties of that pretty piece of paper are revocable at a whim.
"The New York City Council has approved, by a vote of 43-3, a bill that would make it unlawful for most businesses to refuse to accept payments in cash, with limited exceptions."
It was supposed to go into effect November, 2020. I don't know if COVID concerns about handling cash meant that businesses were formally or tacitly allowed to require cards since they could be touchless (tap) or close to it (wipe down the hard plastic keys).
My understanding is that much like tracing blockchain transactions, cash is much easier to trace for governments than most people realize.
For example, it is my understanding, most banks and ATMs scan serial numbers when receiving or distributing cash; oddly, banks will not give you itemized list of serial numbers of the bills they distributed, which would be useful in cash seizures. Also my understanding that most cash withdrawals are spent with vendor that deposits the larger bills back on receipt and do not recycle them back into circulation. As such, not sure what percentage of cash transactions are traceable, but not an insignificant percentage and per person, given largest enough cash flow, would be very hard to stay anonymous; which is not even account for tracing asset flows themselves related to the transactions.
> most banks and ATMs scan serial numbers when receiving or distributing cash
That is potentially a clue. But in itself would not answer to a legal certainty (that one fact) that a bill with a serial number in a nefarious transaction means the person who withdrew it (from the ATM) made the transaction.
1) I can withdraw $300 from an ATM and purchase a coffee (using $5 of that). That $5 might be refunded as change to someone who then uses it (to buy chinese food) and then as change to another person. And that person purchases something that they shouldn't.
2) Of course at scale with large amounts (say $300 withdrawn 10 times to equal $3000) used in a nefarious transaction yes they could trace back but they still wouldn't have proof that the person withdrawing it didn't pass it to someone else (who then used it). Further they can't require you (in the US) to disclose what you did with the money after you withdrew it. However they might try to convince you you have to answer and tell them.
3) That said of course like with anything again yes it would point them in some way to you and then might be able to find another way to then focus on you and get what they need (in order to get a warrant to do a search or get other records released).
You’re expanding way beyond what’s necessary to track significant amount of cash transactions; also, not claiming 100% of transactions are able to be tracked, just that significant percentage of cash transactions are not anonymous and average person assumes they are.
My assumptions include:
- Knowing how cash is flowing is extremely valuable to governments for a number of reasons; economic, investigations, counterfeits, etc.
- Cash management businesses scan 100% of their cash received or distributed, voluntarily provide that data and meta data to governments, and majority of cash transactions are non recirculated, but withdrawn, used, deposited.
- Governments have a wide-spectrum of resources to trace cash on a bill by bill basis; likely key methods include face scans, serial numbers, and location data via apps/cell.
- Assumption that if you combined all the prior assumptions and fact that many governments have millions to research topic, often leverage their authority, etc — and it is not a stretch to believe governments are able to identify significant percentage cash transactions if prior assumptions are true.
You can track where a bill was distributed, what bank it came from, who withdrew that cash, but past that you can't track any of the transactions that happen. The transactions being tracked is the important part here.
As mentioned in comment you replied too, both cash withdrawals & deposits are scanned — and most cash is only used once between receipt and being spent before entering banks again. For small volume of cash, might be possible to remain anonymous, but for large volumes, it would be extremely hard without there being a cost to doing so and might even be technically money laundering, which is illegal. Most retail locations will not break bills without transactions and will not take unusually large bills for transactions. When combined with other methods of surveillance, such as asset tracking, location-data, security cameras, etc, it’s virtually impossible to stay anonymous at any significant scale.
Core point is like blockchain, people do not realize how traceable cash is and many falsely assume it’s completely anonymous, which it is not.
If a store makes daily deposits and those serial numbers are scanned, you can narrow down the transaction to a day. Security footage will show the transaction happening. It's a bit of work, but if that happens to you twice there aren't too many people who visited the same two stores those two days. They now know what you look like and can find your other movements across other security cameras. Bingo, you were tracked via your cash.
Unless you're also an expert at disguise and also avoiding security cameras to and from the stores. Every time you buy something.
Volume of work required really depends on where money is spent. Many retailers not only scan all faces, but if another method of identifying the customer is not available will use third-party services or government partnerships to identity the customers and tie them to a cash transactions. Few retailers even scan large bills real-time at the point of sale.
They said said the blockchain is "easier", not that cash is untraceable. It would require the participation of innumerable businesses to properly track cash; as it is, they function as a huge network of crypto tumblers.
You can't track all transactions done with cash, you probably can pick a bill from 10 years ago and locate the bank it originally came from but you can't know all transactions done with that bill.
It's very easy to say that "cash can be used outside of the law" is a strictly bad thing when you agree with most of the laws. But assuming that we will always be in a happy democracy is a grave mistake. We've lived in mostly peaceful times (at least domestically) for a long time, so I think people forget that.
Cash can be used outside of the law. That's exactly WHY it's important to have in a free society. To say otherwise would be saying that morality and legality are one and the same.
Those two are not even remotely equivalent. Tax evasion through cash transactions is rampant, and there is very little actual reason for most law-abiding people to keep their transaction secret. Keeping a smartphone with your secrets locked is just good security.
Exactly. The number of people who NEED to keep their transactions private for non-criminal purposes is miniscule compared to the number of tax evaders.
It pains me every time I go to Costco and I see contractors dressed in their work clothes pull out a wad of cash to pay for their groceries. They are effectively getting a 30% discount on the price I pay by not processing their income through the banking system and not paying their fair share of tax on it.
If you're in a sketchy area it's possible that a lot of your customers are.... ahemm..... engaging in questionable activity with the cards they happen to have. This can skyrocket the premiums or even result in your processor dropping you.
Or something similar. There was a brewery in town that only took cash that everyone knew was acting as a bank for the marijuana dispensaries since they couldn't access traditional banking services and had to deal with large amounts of cash.
I have not found a shop that refuses cash, but if I did I would also refuse to shop there.
It shouldn't even be legal for a shop to refuse cash. I understand the grey area of some asshat coming in with $300 of pennies, but outside of those edge cases, it should be illegal to operate a physical store without accepting cash, and without putting in limits to convince people not to use cash.
Stores should be perfectly free not to accept cash. While our money says "This note is legal tender for all debts public and private", that assumes there has been a meeting of the minds who agree to conclude a transaction. But up until that point I don't see an obligation. And I don't see using the force of government to compel people to do something increases their freedom.
Which means the unbanked cannot do business there.
How do the unbanked pay their electric bill?
1 of three ways.
1. They walk into the electric company directly and pay directly (no fees)
2. They walk into a store that "supports" said electric company and pay (with fees)
3. They find a kiosk that accepts the cash and pay (with fees).
1 implies they have access to a vehicle or that they take public transportation. The problem is that public transportation is trading their TIME for money, the other problem being, public transportation only exists in cities.
These sorts of policies have an adverse effect on the poor, making them poorer and increasing the likelihood that they cannot exist in our society.
The question is, what are the benefits of not accepting cash?
The answer is that it's cheaper for the business.
I'm ok requiring businesses to pay that expense if it means people can walk into a physical store and be guaranteed to purchase something.
> The question is, what are the benefits of not accepting cash?
Credit card processing fees, cash collection services (ie hiring armored trucks), theft concerns (both from employees and robberies), and the accounting headache of dealing with cash are all valid reasons depending on the area and business.
There are trade offs on both sides of accepting/not accepting cash.
Which all translates into higher expenses for the business, and I'll repeat myself that I'm ok with the business being required to take on that expense.
My partner gets a little embarrassed when I make a scene about this, but I persist. My bar tab is one of the last things I want going on my permanent record.
Yeah, it's entirely built on the idea that every transaction is known by everyone. I think Lance is a bit confused. Maybe he should look into Monero.
The point of Bitcoin is to enable anyone to exchange value with anyone. And it does that very well. When the US justice department declared that credit card companies had to stop processing donations to wikileaks I could still donate through bitcoin.
I don't think they're confused, I think the vast majority of people involved in crypto or who are spectators of crypto are confused. I have repeatedly heard that crypto enables "anonymous" transactions for years.
Also he literally links the original paper, quoting the part where it talks about transactions being harder to trace. "without telling who the parties are".
The "without telling who the parties are" is more about non-personal identifiers. Similar to how knowing your IP address doesn't really identify you by itself, you need to go through (often several levels of) other parties to get that info. Which in addition is ephemeral, others will be assigned your IP and tracing which requests were made by you vs. someone else is a lot harder than tracing a credit-card.
This seems to be lost on a lot of folks, which I find strange in a tech-centric forum. Bitcoin is perfectly pseudonymous, as it strives to be, and not anonymous, which it has never attempted to be.
The Bitcoin designers did not pretend it was anonymous – it’s obviously not to anyone who looks at the architecture! - but the people selling Bitcoin have loudly lied about this since the beginning, however. If you search here you’ll find like 14 years of people pointing out that it’s easily traced and getting a bunch of word salad from the sales guys in response.
And some wallets do this automatically. But if you send a transaction and the change flows directly from your previous wallet to your next wallet, you're not accomplishing much.
Well, "crypto" does allow that--and has for years!--using zero-knowledge proofs (as in Zcash), at least within some bounds (that I would say are quite reasonable for conversational purposes... hell: someone in the government seems to think this stuff works, hence the sanctions on Tornado Cash); Bitcoin, one very specific technology from crypto, however, does not.
> When the US justice department declared that credit card companies had to stop processing donations to wikileaks I could still donate through bitcoin.
If any appreciable amount of money was sent this way you would see blacklisting of bitcoin addresses where sending / receiving money from that address would get you in legal trouble. Bitcoin creates a situation where you cannot be physically prevented from sending the money but everyone including the gov’t will know you did it so it’s so it’s not censorship resistant to any gov’t that cares to get a wrench.
Right. It calls their bluff and makes them actually present a case in a court of law. There are no regulations or laws involved when the DOJ tells payment processors to blacklist journalists they don't like and the payment processors are happy to comply without it.
Ask anyone outside your tech circle to explain Bitcoin and it will be something like "It's an anonymous digital currency that can't be traced, unlike bank accounts."
The problem is also one of credibility, Bitcoin was supposed to be private and breaching privacy has proved to be pretty trivial. Encryption is hard, but maintaining anonymity is much harder.
Theory vs. practice. When there's a DoJ case with a web that's all unified through Monero, then you have proof Monero has been busted.
Monero hasn't been busted.
From the paper - "Our techniques show that Monero is not necessarily a dead end for investigators."
And then offers zero evidence to demonstrate that investigators were able to use anything from the seizures.
This is not evidence - "They (mistakenly?) advised their hopeful subscribers to publish their email addresses (hexencoded, but publicly visible) in the Monero blockchain, leading to these transactions being identified" [31]
That paper is from 2018. I expect they've been remediated by now, though everything is going to be vulnerable at some point in some way. What matters is for how long.
I found this article to be poorly-written and deliberately inflammatory. I'll gloss over the regular criticism of "stop conflating cryptocurrencies with blockchains".
It makes continual leaps from Satoshi Nakamoto's intentions to short-comings of non-BTC cryptocurrencies, and then snowballs this into the tremendously non-sequitur subheading Bitcoin has failed. Cryptocurrencies and DeFi platforms are now more vulnerable to privacy breaches and hacking than traditional banking.
Personally, all I see are a string of obvious scams collapsing. These scams were perpetrated by imposters pretending to be a part of a movement so that they could better tug on their victims' heartstrings. But I fail to see how the goals of these imposters should be conflated with the intentions of Satoshi Nakamoto, purely because the imposters bastardized Nakamoto's tech.
Also - the title is barely the subject of the article, but even if it were, I don't think that it, in any way, stands contrary to the goals of Bitcoin. I could see it being an issue for a blockchain meant for privacy, like Monero, but I didn't see any such reference in the article.
The modern monetary system used to have all of the same obvious scams. They made participating in any economic activity risky and depressed local as well as global economic activity as a result. None of these scams are new and the regulations and tools that crypto is attempting to get away from were created as a response to these scams in the past.
To my mind Crypto has not yet made the case that it is better than the current system and the extreme impact that all these scams have on the currencies they are run on, e.g. high volatility in price, indicates that they are substantially worse as a currency than the US dollar.
This argument pops at least 10 times everytime crypto is mentioned but I'm not sure it holds water when you compare Bitcoin and the traditional system.
The traditional monetary system prevents fraud by relying on trust and reputation of participating entities. Frauds can happen naturally but also can be reverted by making a few calls.
Of course this system suffer from its own problems specially being prone to corruption. You need permission to participate on a monetary network that is controlled by few. I'm not even talking about underground gray black market activity because unless you were living in a cave it wasn't long ago that Robinhood and others were blocking, reverting and force selling stocks from Gamestop and AMC.
Such things are rooted on the creation Bitcoin: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" is written on the genesis block.
Bitcoin transactions are final and do not depend on trust. You don't need permission to participate. Bitcoin won't kick you because you spoke some wrong on social media or is trying to raise money from a cause your government doesn't like like Belarus or Nigerian protests.
As many things in life the alternatives have trade offs. Personal responsibility is important. Keep your keys safe and do not participate in scammy or bleeding edge experimental defi or meme coin schemes.
I'm pretty good at stuff like keeping keys safe and personal op sec. But even I have issues where I need a key reset or some other escape hatch at least once every couple years. The level of care required to participate in the crypto world as you describe means it's effectively a non-starter for me beyond the occasional speculation.
Everything you said above is true and as a result crypto is fundamentally unsuited for the vast majority of the human population to use and always will be. Unless they begin to adopt the same safeguards that the current monetary system uses.
>Personally, all I see are a string of obvious scams collapsing.
I think you and rational people agree, it's just the rational people see the whole space as a scam, and they're not wrong.
It's been, from it's very start, a Dunning-Kruger trap sold on lies. First it was supposed to be a currency, but was created from the ground up to be deflationary, which is a death knell for a currency and leads to perpetual recession.
Then it was an asset that can only go up, until the price crashed and people realized its intrinsic value is 0 and there is no floor.
Then it was an inflation hedge that would keep you up when markets went down, except it turned out to be largely correlated to the market.
Every use case they come up with is a bag of magic beans with the sole intention of getting you to carry their bags. I've heard it described as digital beanie babies and that moniker is more apt then most could have imagined.
>Then it was an inflation hedge that would keep you up when markets went down
All of these are just random narratives that you sometimes see being pushed on reddit or twitter. No credible person would make the last two claims.
I get it, shitting on crypto has become hip especially in the last couple of years. But it doesn't change the fact that the general trend for bitcoin has been a steady increase in value, and given how much money is currently being invested to crypto adjacent businesses I don't see the trend changing anytime soon.
So can you tell us what the use case is? Because I've been watching for far longer than the last couple of years, and I've seen those three narratives being pushed exactly as GP described. If there's someone credible who knows, they're not making themselves heard and it's certainly not clear to me right now what it's for if not those.
> I get it, shitting on crypto has become hip
To be honest if GP was trying to shit on crypto they would've mentioned the ridiculous NFT craze and multitude of shitcoin grifts of the last few years. They're being very charitable by sticking to some very simple things.
> the general trend for bitcoin has been a steady increase in value
There has been nothing steady about Bitcoin's value, wild swings up and down are the norm. I mean if you look at the exchange rate to an actual currency 10 years ago vs today then pretend nothing happened in between, then yes that's a nice steady rate of growth. However that would be ignoring multiple huge, sudden spikes and falls that have happened during this period.
There is no usecase just look at RAI or maybe the unlaunched Nuon, they are cryptocurrencies that try to minimize volatility. That turns the rest of the ecosystems into a bad joke. The point of these cryptocurrencies is to beat the central banks at their own game.
I mean, I would argue that the use cases people come up with simply pre-suppose the idea that "absolute power corrupts absolutely" and that there will be at least some people out there who would--or at least should--value avoiding giving those players such power.
If, tomorrow, everyone suddenly forgot what e-mail was and someone suddenly tried to invent it there would be a ton of people angry that it served no purpose and would ever catch on because it would be full of spam and people would have to run their own email servers instead of using centralized messaging servers and all the same arguments people make about crypto would re-surface ("well, maybe people could run servers on behalf of other people" "well doesn't that undermine your precious decentralization?" "somewhat, sure, but federation is still valuable" etc.).
1. Bitcoin addresses are 100% traceable from the first to the last transaction that's ever taken place.
2. Tracing a Bitcoin address to an individual depends on the individual's OpSec.
For example: bank account to exchange to Bitcoin is traceable with the help of the exchange's KYC records, assuming they have them. From there, any further Bitcoin transactions can be traced to an individual. Buying Bitcoin with cash in person may make traceability to an individual more difficult, but then you'd have to trust who you're meeting in person to not take photos / videos or have a meeting place swarming with CCTV, and both parties not already be using individually traceable Bitcoin addresses.
Monero and / or exchanges with little to no KYC (therefore, use at your own risk) may allow for some level of 'cutout' in the traceability. Or tumblers or coin mixers or other shady, questionably trustworthy services.
> Unfortunately, this aspect of his brilliant design was one of the first things to be undermined by subsequent blockchain operators. Many cryptocurrencies that have been created since are unlimited in supply, including some of the most heavily speculated ones like Solana, Dogecoin and Shiba Inu.
> This is worse than what the central banks have done.
No, it's not. Even a coin that is emitted one per second forever is disinflationary. Not only is the yearly supply inflation rate perfectly predictable (unlike fiat), it also steadily converges toward zero (again, unlike fiat).
In the long term, the difference between finite and infinite supply is negligible as long as the yearly supply never increases [1].
Yeah, that one in particular was a pretty bad take. Who cares how many shitcoins people create? Just ignore them. That's like me claiming that the stock market has been undermined because people can start an unlimited number of companies.
It is a good take but it doesn't apply to random L1 currencies. It applies to L2 scaling layers with poor interoperability. Bridges create a wrapper of the bridged token. Once you have multiple bridges the ecosystem is fragmented. This means bridges and L2 scaling are a dead end.
If I print a trillion schrute bucks, have I devalued the US dollar? If I print another trillion schrute bucks, does the US dollar suffer inflation, or does the schrute buck?
Yes people can make an infinite number of currencies, but they are all parallel systems. Making a new coin doesn't inflate the supply of bitcoin, it is just one more thing that bitcoin could potentially be exchanged for. And in practice it seems unlikely that more than a few thousand could be adopted by enough people to have a value appreciably different from zero.
Indeed, there are tens of thousands of various coins created, but 74% of wealth stays in just two of them - Bitcoin and ETH (if we exclude centralized tokens USDT, USDC, XRP, BNB etc). It's something like geometric series.
Here's an amusing exercise: count up how many top FBI executives over the neoliberal period (roughly beginning in the mid-1970s under Ford/Carter) have gone to work for various Wall Street-linked investment banks, hedge funds, law firms, etc. after 'retirement' (the number is comparable to that of generals and admirals who migrated to the corporate boards of defense contractors post-'retirement'). This reality supports the notion that the FBI's central role is to serve as the enforcement arm of the organized white-collar crime cartel known as 'Wall Street'.
A competing monetary system relative to the Federal Reserve isn't something these interests are all that thrilled about. Hence, regardless of the soundness or unsoundness of various cryptocurrency approaches, ex-FBI officials should hardly be viewed as independent credible third-party voices on the issue.
That's a lot of words to levy a simple ad hominem.
Regardless of the truth or falsehood of your observation, publicly-verified blockchain-backed currencies are easily traced (especially now that they've become valuable enough for companies with money to invest in solving the problem). The possibility that the messenger has a vested interest in amplifying this message is orthogonal to the truth of it.
I'd also note that the qualifier easier to trace than paper money is a kind of misdirection tactic. Is crypto also easier to trace than electronic $US funds hidden behind a web of shell companies and offshore accounts, and with ownership further obfuscated by various cut-out strategies? For example:
Well, that's the point at which the USA really began migrating from a fundamentally industrial-centric economy to a fundamentally financial-centric economy, in terms of where the profits and power accumulated.
Go to GBTC ATM shops in Barcelona, they'll do KYC-less $100K transactions for 4% transaction fees. I was shocked and walked out of the shop.
If you come to South Florida, you'll find that there was an era where cartels would pay high schoolers to roll up to ATM's and empty them of cash one by one.
Crypto ATMs have 7%-15% fees with no KYC up to 1k USD and have grown about 5x-10x in the last 5 years in the USA.
Ask yourself, do Somalis in Minneapolis care about cryptocurrency or did the proliferation of Crypto ATMs in the city and subsequent drought of court cases around Al Shabab money laundering in the region have some sort of relevant relationship?
If you go to China, from what I've been told, there's private OTC massive wechat groups that have coded words for crypto transactions.
In India, it's the same now, you can liquidate crypto on the street with ease.
The real problem now for the market cap of cryptos is the ultimate draw down in the growth rate of KYC'd accounts in demographically high gdp growth countries.
India implemented 1% per trade, zero loss deduction, 30% cap gains taxes on crypto...essentially incentivizing indigenous stock ownership over any and all crypto assets.
Portugal implemented crypto short term capital gain taxes as well.
It might be easier to trace than paper money, but it's still a world class indefatigable money laundering substrate that trades well with watches and other asset classes.
Customs agents at major ports of entries have not been checking watches. Miami etc...
> Crypto ATMs have 7%-15% fees with no KYC up to 1k USD and have grown about 5x-10x in the last 5 years in the USA.
FWIW, "Crypto ATM" is sort of a misnomer.
AFAIK, no crypto ATM in the USA allows you to sell cryptocurrencies and pull out cash. You can only buy them, which as far as I'm concerned, is the easy part.
> The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the "tape", is made public, but without telling who the parties were.
> Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
- Satoshi
The reality is that Satoshi envisioned bitcoin very differently from how things are currently implemented. They envisioned public keys being rotated, single use addresses, etc.
The current systems don't provide any of the privacy that the original paper sought.
> It is high time for blockchain enthusiasts to ask this question: Have the primary principals underlying bitcoin’s design — privacy, fraud proof, non-inflationary— been completely destroyed by today’s blockchain operators?
You can pick apart this Medium post if you'd like but I think it's really an excellent question. Read the original paper and ask yourself if what we're seeing in the market is really the "Satoshi vision".
Satoshi+in their writings) didn't understand the side channel attack of the Blockchain-meatspace bridge. Bitcoin only meets its design guarantees in a purely virtual world or with anonymous terminals. Bitcoin is already expensive enough to transact in, are you also going to move to a different location every time your transact?
The fees increase with demand, but throughput does not. Bitcoin's current incarnation cannot scale. If it is cheap to transact now, it is only because the demand for its use as an actual currency has been reduced since the last fee explosion.
If everyone in the world tried to use bitcoin as a replacement for bank transfers, etc. then the fees would be astronomical
I don't think it even really gets to the point of side channels. People sign up with their github account and a photo ID so that a 3rd party can store their private key for them.
> The reality is that Satoshi envisioned bitcoin very differently from how things are currently implemented. They envisioned public keys being rotated, single use addresses, etc.
That’s literally how all wallets work in 2022, no?
Public keys are constantly rotated, addresses are single use.
Not to my knowledge? I believe Coinbase lets you manage any number of public keys but there's nothing enforcing a "burn on use". Also, obviously, there's a central authority that has your name, government id, and keys.
Proof of work was invented from the start, as an anti-spam measure. The user sends data to a server and alongside of that, sends some proof of work data. This simple system has a downside though, that is ASICS. A specialized ASICS hub of servers, can create as much spam as they wish, because proof of work for the specialized system is trivial to compute. One solution to that problem, is for ASICS hubs, to create the proof of work, and sell it to users. Add on top of that a public database of what ASICS proof of work was sold to who, and you've got Bitcoin. It is really that simple. Instead of fighting the ASICS hubs, you work with them.
This technique, is so simple it should not be even be considered a technology, it is just a technique. A myriad of technologies can use this technique to add some additional properties, to an already existing technology. For example, in the IOT world, an oven connected to the internet, could be used only by a particular key in the blockchain, thus proving ownership to control the oven. One microtransaction can turn on the oven, or turn it off.
The most important aspect of bitcoin, is of course spam prevention. Gmail servers just block any unknown mail provider, just in case they are spammers. When spam was limited to email messages, that was a viable solution for the internet. This however is gonna change.
Synthetic data, i.e. deepfakes, are really gonna take off right now. Synthetic faces of people can be uploaded by the tens of millions to facebook each day. Synthetic photographs of places can be uploaded to Insta. Synthetic conversations can can be uploaded to twitter by the billions. Synthetic songs can be uploaded to bandcamp, terabytes of them every day. Synthetic videos can be uploaded to youtube, or tik-tok, petabytes every day.
The advertisement based free model of posting information on the internet, will go down in flames in less than 4 years.
A new technique is going to emerge, in which we send value to the hosting providers, for our information they are willing to host for us. That value, trillions and quadrillions of microtransactions, less than a cent each per day, it is difficult to track, but it can be done, the question which arises is, what can someone gain doing that?
I’ve not read the paper, but was the original intention that Bitcoin would be almost immediately transferred to an external store of value? How are single use addresses funded without the transaction being recorded?
Got examples? I can't see how an untraceable blockchain could still be considered a blockchain (or what use it would be). Isn't the whole point to be perfectly traceable?
Every UTXO is also randomized as far as input selection and distribution and also the way they're labeled as they travel through the system. For the simplest example, reference early monero code (at the time BMR, and MRO) where Borromean Ring Signatures were used, where the same operation is performed multiple times per-input effectively mixing inputs at the atomic level, rather than in later iterations (RingCT, Arcturus, etc) that extended this further to obscure also the amounts of these inputs and to trim some of the inefficiencies of Borosigs.
I think I got the below right, correct me if wrong:
What's stored in the blockchain that makes it work are public keys, and how you can talk to nodes who can append to the blockchain have to work over a network. You can always walk the whole chain at any time and account for all the activity of all public keys, and that is actually required because it's the primary way that the network knows "who" has what.
So what connects the public key to a person?
If:
- private keys are never in the hands of a third party (public keys don't matter), and
- transaction processors/miners are only available over secure channels that somehow dissociate the involved keys from loggable networky things like IP address, and
- information like IP address is not stored in the blockchain,
then a blockchain would be untraceable to anyone who does not have a complete view of all Internet activity between all the participants.
Anyone with your private keys (which you can make more up any time you want) could transact under those keys as long as they can talk to enough processors/miners through any transport method, and alter "your" stuff, that's why you guard those with your life.
Private blockchains. Imagine a crime cartel with a private blockchain. Obviously they are not KYC. You can withdraw funds from the cartel, or pay for cartel services with the coin.
Ironically, a version of this was in private fiat currency - the coins in the John Wick movies were used this way.
That's still a traceable blockchain though, just privately kept. As soon as you start keeping a ledger, you make transactions traceable. With a single or low number of ledgers, network analysis becomes easier the more heavily each actor uses the currency as well, compromising anonymity.
Private blockchain is a term that refers to blockchain tech that does not divulge balances and transaction history without being a signing party to that transaction or without a delegated 'view' key created by the keyholder for the purposes of the audit. It's a confusing term which should have a better name, I agree.
For an example, most cryptonote networks function this way unless they have explicitly damaged or disabled the functions responsible, like in the case of Electroneum.
The most sensible thing to do with blockchain is to track produce from when it's picked to when it's sold for QC. Every other use suggested, like voting, is just stupid trouble.
> The most sensible thing to do with blockchain is to track produce from when it's picked to when it's sold for QC.
I don't understand why even this is sensible. Why not just use a database? The only miners/validators on a produce blockchain are likely to be agri-companies anyway.
> I don't understand why even this is sensible. Why not just use a database?
Who's gonna run it? Any individual company in the chain has a vested interest in fudging the data, and the technical means to do so. A private third-party lacks oversight (and thus could also be given a vested interest in fudging data). A government agency could do it (assuming one's government is trustworthy, which is often a poor assumption), but that would likely preclude international cooperation unless it's something like the UN running it (and even then).
> The only miners/validators on a produce blockchain are likely to be agri-companies anyway.
Preferably you'd use an existing public blockchain rather than spinning up an entirely new one.
Even if there was such a blockchain solely for tracking produce, the fact that no individual agri-company has control over its data makes it more trustworthy/impartial than some centralized database.
The problem is that blockchains cost more and add significant performance reliability problems without adding trust. You could solve this problem using PKI with orders of magnitude lower computational and storage cost, and that'd remove the requirement to have an always-on network service.
However, that's still missing the point that this is fundamentally a problem about humans in the real world and the technology can't magically change that. The problems with supply chain authenticity aren't a question of record keeping but whether those records are accurate. If my inspector is being paid off, he'll do the same thing for the blockchain record that he was doing with paper. If things are being tampered with in shipping, the same people will do the same things and you'll have the same dodgy goods arriving at their destination except they'd now have valid but inaccurate blockchain records.
As usual, the blockchain solution isn't adding anything except creating a market for the people selling it. It doesn't solve the real problems and if you spend time tackling those, you won't derive any benefit from diverting more your revenue to some VC's yacht fund.
From each participant's perspective they cost far less, both in terms of implementation and ongoing maintenance, than attempting to build and run a centralized database oneself (and if you're gonna match a blockchain's trustworthiness, every participant would indeed need to run a database oneself).
> and add significant performance reliability problems
1. Nothing beats the performance of /dev/null.
2. They do the precise opposite of adding reliability problems; they're in fact notoriously difficult to bring down given the sheer degree of data replication.
> without adding trust.
The comment to which you replied describes at length how they add considerable degrees of trust. They only "don't add" trust if - again - every participant is running one's own database, at which point - if they're expected to agree with each other - you've got an ad-hoc, informally specified, bug-ridden, ludicrously expensive version of half of a blockchain.
> If my inspector is being paid off, he'll do the same thing for the blockchain record that he was doing with paper.
Which would then be public and uncensorable evidence against that inspector.
> If things are being tampered with in shipping, the same people will do the same things and you'll have the same dodgy goods arriving at their destination except they'd now have valid but inaccurate blockchain records.
And that inaccuracy would - upon detection - become public and uncensorable evidence against those tamperers.
> From each participant's perspective they cost far less, both in terms of implementation and ongoing maintenance, than attempting to build and run a centralized database oneself
This comparison isn’t valid: you’re using a shared blockchain service with high transaction costs but then saying the comparison can’t use a shared service.
> 2. They do the precise opposite of adding reliability problems; they're in fact notoriously difficult to bring down given the sheer degree of data replication.
So you’re saying I can process blockchain transactions without a reliable, high-speed network connection? I never have to worry about fee increases or high volume impacting my clearance time?
> The comment to which you replied describes at length how they add considerable degrees of trust.
It describes a number of distractions from the core problem but doesn’t solve any of the hard ones. The fundamental misunderstanding you and the poster are operating under is that this kind of system is based on anonymity. Since the real world is not, you don’t need anything which PKI doesn’t give you far more efficiently.
> > If my inspector is being paid off, he'll do the same thing for the blockchain record that he was doing with paper.
> Which would then be public and uncensorable evidence against that inspector.
Just like it is currently, except with hefty transaction fees. The problem here is that you need someone to figure out where things are being faked in-person. A blockchain can't solve that because the problem happens in the real world and if you setup an oracle to inject that information you're just renaming that existing trust relationship, not removing it.
> > If things are being tampered with in shipping, the same people will do the same things and you'll have the same dodgy goods arriving at their destination except they'd now have valid but inaccurate blockchain records.
> And that inaccuracy would - upon detection - become public and uncensorable evidence against those tamperers.
Just like it is currently, except with hefty transaction fees. Again, “public” isn't relevant — all of the parties already know each other and if it goes to court they're going to produce records — and “uncensorable” is just meaningless blockchain marketing fluff because that's not a relevant problem or one which a blockchain effectively prevent.
In all of the cases I outlined, the problem requires real world checks to find who is faking the records. Whether those records are paper, actions tracked on a website, PKI signed documents, or transactions recorded on a blockchain is a rounding error on the difficulty of setting up the real world legal system and monitoring which actually prevent cheating. If I have a problem with counterfeit goods showing up, everyone involved is going to say that their records were accurate and the problem must have been somewhere else – all a blockchain tells you is that you paid more to store the receipt, not that it was accurate.
> This comparison isn’t valid: you’re using a shared blockchain service with high transaction costs but then saying the comparison can’t use a shared service.
The parenthesized bit immediately following what you quoted (in addition to other parts of the comment and its grandparent) specifically explains why the comparison can't use a shared service: who's going to run it while being trustworthy for all users of it?
> So you’re saying I can process blockchain transactions without a reliable, high-speed network connection?
You need one for any other database, especially a shared one as you suggested above. In fact, it'd need to be more reliable and more high-speed for a non-blockchain solution; even full nodes don't require continuous uptime (that's only needed for mining or staking, neither of which is necessary to query and post transactions), and blockchain transactions tend to be pretty light on bandwidth.
> Just like it is currently, except with hefty transaction fees.
1. Citation needed on "hefty transaction fees". There are blockchains other than Ethereum, in case you weren't aware.
2. You're forgetting (or perhaps deliberately ignoring) that it's considerably easier to "figure out where things are being faked in-person" when the evidence of fakery is permanently in the public record. There's also far less room for plausible deniability on the faker's part.
> “uncensorable” is just meaningless blockchain marketing fluff
You might be surprised to learn that traditional database records, unlike those on blockchains, are trivial to destroy or otherwise tamper with. The inability to cover up fraud by editing transactions after-the-fact is nowhere near as meaningless as you assert.
> Whether those records are paper, actions tracked on a website, PKI signed documents, or transactions recorded on a blockchain is a rounding error on the difficulty of setting up the real world legal system and monitoring which actually prevent cheating.
And setting up said real world legal system and monitoring is considerably easier when the digital records are auditable by pretty much anyone and effectively impossible to modify.
> all a blockchain tells you is that you paid more to store the receipt, not that it was accurate
A blockchain tells you that the receipt was not and will never be modified. If there's an inaccuracy, that makes it much easier to detect it. If there's a pattern of inaccuracies, that makes it even easier to detect it and quantify it. What would've previously taken weeks or months worth of wrangling records from filing cabinets or arbitrary databases can instead be done in minutes or even seconds - freeing up time for the actually-hard parts of such investigations.
I also find it to be a confusing use case. The point of blockchain is that it's useful if you assume that some parties are malicious. Who are we protecting against in the produce supply chain?
Yeah this is the fundamental problem, the only benefit you get with a blockchain is you know the data hasn't been altered from the original but there's no guarantee the data originally entered was correct. All the pitches about tracking shipments have the same issue, shipping companies already do most of that without blockchain and the main issue of people lying to the computers isn't solved by adding a chain to the mix.
Think the idea is to use economic incentives rather than legal incentives, e.g. lose a bunch of money if caught cheating. This allows new participants to compete better across jurisdictions.
It's not needed that's my point, the proposals for blockchain in most instances are best served by a WORM database and even that doesn't solve the actual issue of lying to the machine. The proponents all have a vested interest in something making their tokens worth while or at least bringing in new money so they can actually cash out. That's why NFTs exploded they were a great way to bring in new real money to allow people who were *coin rich to cash out to real usable money.
Because a blockchain can operate in the presence of even large and powerful malicious actors.
The issue here is a social/regulatory/legal one. The current international shipping game is a cartel business, and the cartel doesn't want competition - so they can use government, brand recognition, etc to maintain their moat.
It's not that the blockchain version isn't clearly better, it's that the getting there part is a very difficult and tricky process.
It’s not, but if you say that you’re also saying that the people who’ve already put a lot of money into the system won’t get rich reselling their tokens.
Putting on my conspiracy robe, I would posit Bitcoin was created by an intelligence agency. You need cryptography smarts and the ability to glue all the various components together aswell as keep it all hush, something an intel agency can do with ease. How else do you uncover vast criminal networks? It was purposefully made to ensnare cyber-criminals.
Now as for Monero, I would imagine it has them shaking in their boots.
agree, because bitcoin / silk road and tor all popped up at the more or less the same time. and they all need each other as a boot strap.
Also - Satoshi - who? no one knows, really?
Dread Pirate Roberts, name insinuates that the role (of site administrator) was handed over to him. There has been speculation that he was not the creator of the site.
Tor - created by the Navy.
Why? - Black money / create an "open source", super duper encrypted method of communicating that cannot be broken (unless you control 70% of the exit nodes, whoopsies), get people invested in using it. How many of the dealers that supplied on silkroad where "free-lance" and scooped up later (along with their product and cash)
For open blockchains, sure. Cash was the OG anonymous money.
There's a reason that neither CipherTrace, Chainalysis, nor Integra FEC got the IRS bounty for successfully tracing Monero transactions with all privacy features enabled. The latter two got a $500k grant to try, with $125k available for successfully tracing, but neither claimed that final $125k.
This also isn't an either/or where one crypto will win out. Different cryptos will continue to focus on different use cases. Bitcoin is one step removed from FIAT and just as traceable, but it's the first step you need to go from BTC to other cryptocurrencies - XMR for privacy, ETH for dApps and smart contracts, XRP to see what a CBDC will look like, LUNA for involuntarily donating your money to some south Korean guy, etc.
Functional money is built around trust and consensus.
A critical weakness of crypto is that the actors involved are *less* trustworthy than government.
And this lack of trust and transparency and oversight; combined with the fact that anyone and his brother can mint their own crypto, makes a general consensus on the value of crypto unlikely.
> A critical weakness of crypto is that the actors involved are less trustworthy than government.
If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system, based on an agreed upon protocol with cryptographic controls. It isn't meant as an improvement to an existing system, but as an alternative system, and while we often hear of people who say it is a scam, that it won't work, that it can't work, the unbiased reality is that it is being used for value transactions and has been non-stop for over a decade now.
The phrase "a general consensus on the value of crypto" is equal to "a general consensus on the value of money". Crypto (as in cryptocurrencies, cryptoassets, and, in general, blockchain based digital ledgers) is a vast subject. Nothing stops someone from creating their own paper currency or non-blockchain digital currency (Nectar points, air miles).
There are for sure questions to be asked here about how unregulated, crowd managed currencies can be integrated into existing societies were money is heavily regulated, but that is another subject.
> If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system, based on an agreed upon protocol with cryptographic controls.
Those controls only address problems created by the distributed nature of crypto (double spend), but don't touch the most common types of financial fraud which is why wash trading and rug pulls are so common. Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly.
They address more than just double spend attacks, but also ownership and control. Without a private key, in a protocol where every transaction must be signed, no changes can be made to a ledger where balances are associated with corresponding public keys.
The human issues that we have from use of the system, fraud, P&D schemes, non-custodial wallets (exchanges) etc, aren't fundamental issues with the technology itself, but with the periphery. Cash can be used to buy drugs, bank accounts can be used for money laundering, financial markets can be manipulated.
We must be cognisant of the fact that where there are people, there will be misuse. Crypto is no different.
> Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly.
Must we assume that pricing is to be trusted? What pricing is this, exchange pricing? If you're using centralised exchanges then the issue is whether you trust the centralised exchange to keep an honest order book, and whether you're able to determine whether the exchange rate reflects the value of the token/asset.
Many people have recently begun trading on financial markets, see Gamestop, wallstreetbets etc, without the proper knowledge required to ensure they're making the right decisions. This is no different from buying BTC because your neighbour told you it'll hit $100k by Christmas.
These are societal problems from people who want to get rich quick and almost always get hurt trying.
If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system
LOL!
When you buy crypto, how do you determine what price is fair? Most people turn to an unregulated "exchange" that can easily manipulate prices in a multitude of different ways.
This is called "trust" --- blind, misplaced trust --- without any oversight or transparency.
You have reiterated a common crypto fallacy --- that blockchain accounting somehow makes the overall system "trustless". Nothing could be further from the truth.
I'm not sure this is the forum for capital lols, but to answer your question:
> how do you determine what price is fair?
Well that comes down to you, doesn't it? Would you buy a litre of milk for $10? $5? $3? $2? $1? What about if you were buying some sterling to come and visit us here in the sunny UK, what exchange rate would you say is fair? £0.50? £0.75? £0.80? £0.85? What about if I was selling you a kg of Palladium, would you pay $100,000? $90,000? $70,000? [Assumed dollar currency but arbitrary to the point.]
That last question may be harder to answer without a google, as you might find it hard to determine what price is fair. If you can't determine the fair price for something you're buying, the question should be whether you should be buying it at all.
> You have reiterated a common crypto fallacy --- that blockchain accounting somehow makes the overall system "trustless". Nothing could be further from the truth.
It seems to me that you're having an adverse reaction to my comment, so I won't address the final two lines.
Sorry. At this point, hearing people still try to defend crypto as being "trustless" is kinda comical --- sorta like people who trusted and defended Bernie Madoff because he was once chairman of NASDAQ.
How many crypto rug pulls would be enough to convince you otherwise?
Tether is a centralized bank that happens to use a blockchain as a backend. When people say "crypto is transparent" that doesn't mean you can't build things that are not transparent that use crypto. Similarly, one can benefit from a fully-open laptop (with open firmware running Linux or whatever) even if it allows people to still develop closed source software that runs on it, and even if some of that software is merely a front for software that runs on it is just a client for some remote server whose behavior cannot be modeled... because on the locked down device (imagine an iPhone) you can never develop something whose behavior is transparent as you can never discount what the platform is letting the developer hide from you.
As Tether goes, so goes the entire crypto eco-system.
Tether underwrites the entire crypto marketplace. It is involved in more than half of all crypto trades. And it's unlimited supply is totally controlled by crypto market makers with every incentive to use it to manipulate the crypto market.
It's like giving NASDAQ and the NYSE control over the Federal Reserve. No possible conflict of interest there, right?
Tether is basically a bank with none of the regulations, not actually a blockchain. All transactions done in USDT are public, but the backing money isn't. But trust me, it's all there, and it's totally not in speculative Chinese bonds.
I do struggle with the "you coppers will never track me with my new cryptocoin!" mentality I see around (and on this thread).
I do not subscribe that the view that "innocent have nothing to fear". If our transactions are visible for all to see then huge amounts of privacy issues become salient.
It's just that I don't believe secrecy is the solution.
Firstly, there is no digital secrecy. But mean maybe you have years long perfect opssec, but each of your partner transactions now need to be perfect. It's just not gonna work.
Secondly, why don't live in a secret world - the people I interact with know what I am doing each day - it's just either not worth their while to exploit me, or they are too polite, or exploiting their knowledge of me is kind of the point (my regular cafe just sees me sit down and the order is in). Yes the digital world made the marginal cost of exploitation much lower so third parties have got in on the act.
Anyway, the point is that it's either not feasible, likely or even desirable to move like a ghost through the world.
Technology will not magically fix our political problems - haters gonna hate, totalitarian governments gonna totalitarian. Our politics need to be solved with politics. I remember when we thought email and the web would create peaceful communities, when facebook would free the Arab world. And realpolitik always came back.
Please - let's not hope that some clever coding will fix deep seated political problems - especially with, of all things, money.
Let's get back to the brass tacks - informed, organised mass democracy. It's hard and dirty and means talking to other human beings. Not HN ideal :-)
Edit: TLDR
Do I want the director of the FBI to track my online spending? No!
Do I want the director of the FBI to track the money laundering by international cartels and criminals? Yes!
What's the difference? Democracy, individual rights, the rule of law, transparent law enforcement, strong institutions and so on.
Oh come on! Privacy and secrecy are not the same thing. Privacy is where everybody else legally agrees to pretend we don't know what you are doing. Secrecy is ... an illusion that the CIA are struggling with.
I am reminded of a quote from Iain M Banks, where the hero was talking to a sentient nebula, and the background includes how the fleshy races would discuss if the nebula was "truly sentient", partly on philosophical grounds "but mostly because they could do immensely profitable things with a cloud of gas a million cubic parsecs in size"
Wish more people knew about Monero. It pretty much replaced Bitcoin on the dark web and other markets where private, anonymous transfers of money is essential. Every crypto on most KYC exchanges exposes every transaction on its public ledger. Monero and minuscule amount of other coins use cryptographic techniques to hide wallets and their history. Most other coins won't add this as they will be blacklisted like Monero. Monero has an added bonus of having good tokenomics (cough cough PirateChain). It is pretty much what most people think Bitcoin is without being a scam.
Crypto before going mainstream and investors getting involved was a middle finger to corrupt establishments that manipulate and steal the value of our money. Bitcoin was created and emerged as a reaction to the 2008 financial crisis and Central Banks like the Federal Reserve. Monero as a project is driven to go back to Bitcoin's original philosophy and improve on it. Also, not every law in the books is just and governments use plenty of our money for nefarious purposes.
It's more complicated than you describe. You are assuming laws are not selectively enforced and state actors and their sponsors are benevolent. Neither is remotely true.
in Seeing Like a State James Scott talks about the concept of legibility as the most important feature of any authority. An uneditable, global ledger is pretty much the ultimate bureaucratic tool. Any historic emperor would have killed for a blockchain. It is the ultimate record keeper.
Much confusion about crypto as some privacy preserving or decentralizing tool ignores the fact that increasing legibility will ultimately always enable centralization because it makes possible the creation of more sophisticated, larger structures.
That's because when most people use "blockchain" or "DeFi" they're using AML/KYC entities that post their transaction logs to public servers. Law enforcement eats this up because it saves them the trouble of getting warrants for investigations.
Bad for customers to be sure. Most have no idea what they're doing and have fallen for a scam hook, line, and sinker. They (loudly, incessantly) proclaim to their friends the benefits of a new money paradigm while deriving all sustenance through the umbilical cord of OldFi. ChromaFlair on a Model T.
The article itself is a hot mess of muddled thinking. It starts by talking about the Bitcoin white paper (not a "manifesto"), then asking the absurd question: "Why can't DeFi make good on the promise?" The reason is that "DeFi" is about as far from Bitcoin as "car" is from "carpet."
The Bitcoin white paper describes the application of proof of work to the problem of electronic cash. The vast majority of DeFi projects are just centralized ledgers operating through trusted institutions. They are the very definition of "mint" in the white paper - a single, corruptible player that sets the rules - arbitrarily if need be.
The whole article is a plug for Chainalysis, a company that sells its ability to trace crypto transactions to the US government who ironically gave them KYC, the most fundamental and lazy ability to start a business that traces stuff like this.
What I'd like to see Grigg admit to with a straight face is his companies ability
to trace monero. his company got the US Government bid for a $625,000 bounty to trace it, and its been two years...so i suspect Grigg's releasing this presser to take some of the heat off the inevitable "no, we cant" he's going to need to admit sooner or later.
> limitation to all sender-obfuscating cryptocurrencies
Only those that allow sending coins to recipients without their explicit approval. On pure Mimblewimble blockchains, the recipient must sign for receipt and is much less likely to accept poisoned funds.
Sort of, but not really. It is a very nuanced probabalistic attack. The problem is fundamentally that you need others to use your outputs as decoys in order to have plausible deniability.
Call me skeptical of any assumed ill intentions as $625,000 is not a big enough chunk of change to convince me that there is some form of grift going on here, as there's millions to be made elsewhere grifting crypto.
> Bad for customers to be sure. Most have no idea what they're doing and have fallen for a scam hook, line, and sinker.
I wouldn't call it a scam, it's written into laws we should all be pretty mad about. It's only a matter of time before KYC companies are the only way to engage legally with cryptocurrencies. While I don't think having all your transactions in a public ledger was ever a smart move for your average joe, just one de-anonymizing event and you're out to dry. I think the bigger issue is the ever eroding privacy policy in many countries.
Sounds like you've never used a DeFi application...Yes, the bridging between on-chain/off-chain still happens through centralized entities, but things like uniswap are entirely run on-chain and don't require any central authority or centralized ledger.
The traceability of very much part of design of most blockchains, starting with Bitcoin. The whitepaper makes this clear in section "10) Privacy" and the article quotes half of the relevant text.
The remaining half states: "As an additional firewall, a new key pair should be used for each transaction to keep them from being linked to a common owner. Some linking is still unavoidable with multi-input transactions, which necessarily reveal that their inputs were owned by the same owner. The risk is that if the owner of a key is revealed, linking could reveal other transactions that belonged to the same owner"
Unlike Bitcoin, account based blockchains make this extra measure of privacy harder as the receiving and sending address is one and the same, however there's no limit to how many accounts one can have, so anonymity is still possible as long as acquiring the coins doesn't reveal your identity.
Those who sign up for cryptocurrency service providers (who are required by law to perform AML/KYC checks - and do so with the consent of their customers) trade away the privacy (of some of their) transactions for the benefits (most commonly, yield and ease of use) said services offer. This is not different from use cases of cash money, where getting cash money from an ATM or most money transmitters will reveal your identity, and while one is free to make in person transactions and remain "anonymous", if one wants to have a bank account or invest legally, then some level of KYC will be in place.
The article indeed asks the wrong question. DeFi can't operate legally without KYC/AML and customers know it. Your comment on the other hand seems to me to be making an error in believing DeFi users don't know this.
> That's because when most people use "blockchain" or "DeFi" they're using AML/KYC entities that post their transaction logs to public servers. Law enforcement eats this up because it saves them the trouble of getting warrants for investigations.
Well, except for the important detail that KYC requirements don't preclude the need for warrants...
> They (loudly, incessantly) proclaim to their friends the benefits of a new money paradigm while deriving all sustenance through the umbilical cord of OldFi.
Yeah, it's almost like crypto can't possibly be a fully self-contained ecosystem, and thus it must by necessity have integration points with the rest of the world. Who could have ever predicted that...
> Well, except for the important detail that KYC requirements don't preclude the need for warrants...
Banks and law enforcement frequently share data without caring about warrants. One example: if you send a $10K wire (in the US), your bank may voluntarily submit a Suspicious Activity Report. And since they may be liable if they choose not to report, but are not liable if they do report, guess which option they typically choose?
Warrants are not a high a hurdle in practice when they are needed. The US has the third-party doctrine, so all information you've communicated to someone does not need a warrant unless otherwise protected. In the US you need to establish real probable cause (otherwise the fruit may be poisoned), but PC is a low legal standard. Non-US jurisdictions don't use the fruit of the poisoned tree doctrine and so the actual legal standard is more like "arguing probable cause for the warrant shouldn't look like an outright perversion of justice". The world's best limbo performer can't dance under that bar.
Hell with KYC a government imposed search of your papers is dictated by law without even a warrant/PC/RAS. Where I live, you can legally carry a concealed gun in a bank without ID but you can't open a damn account and put $20 even with a US passport (without some proof of address).
That many things these days are called Blockchain, as if to appear secure, but they're no more sophisticated than centralised databases, while actual blockchains, like Bitcoin as exemplified in its whitepaper, is designed to be a secure and decentralised chain of transactions.
"Blockchain" has stopped meaning anything when people decided to use it for anything remotely related to internet money. It's just become a fancy word executives put on investor decks to woo venture capitalists.
But it doesn't mean that the actual cryptographic technology called blockchain, i.e. a chain of digitally signed transactions with a distributed consensus mechanism, is itself insecure.
Bitcoin is traceable due to its very implementation. Unless you know how to use it properly, it's very easy to deanonymize yourself on accident. And once that happens, all the transactions thereafter are easy to follow.
Monero, on the other hand, is designed to intentionally be hard to trace history of transactions on.
Yes, I edited it out from my comment because I knew someone would point that out and I didn't really want to go on a tangent about it. I meant it's untraceable by some very narrow definitions of tracing.
You'd know that hex address X sent money to Y, but you wouldn't necessarily know that X is John Doe that lives at 1234 Main St., nor you'd be able to tell that, knowing address X, John Doe also owns address Z.
With KYC laws you have a lot more metadata to be able to do correlations like that, but I'm specifically talking about the protocol and the technology itself.
It's important though to mention that you don't need KYC to attach a real identity to a bitcoin wallet. It's harder to do at scale, but if you're interested in finding the bitcoin wallet(s) of a specific person, or the person behind a specific wallet, this can be done with analysis of the blockchain itself and information from other parties to their transactions (which include their ISP, the ISP of some Bitcoin nodes where they advertised their transactions, and the seller sending them physical goods if they are using BTC for that). Also, if a BTC wallet is linked to a physical identity at any time, all past transactions of that physical identity can generally be discovered, often even if they are using separate wallets.
not entirely correct; if you both earn and spend all of your crypto directly as cryptocurrency, then you can fairly easily just remain entirely anonymous. This just doesn't apply to most people, at least most who do legal business.
For me and the vast majority of people that is a complete non-starter. And the primary value of a currenyc is that it gives you liquidity to participate in the economy. Until crypto can claim the same thing it only barely qualifies as a currency in my mind.
Sounds like a recipe for an audit, at least once they can clear their backlog. At which point, I'm pretty certain they're going to want to know more than "generic cap gains sale"/"revenue paid to me in cryptocurrency". They pretty clearly do not want anonymity in the flow of money.
This comment is one of the laziest ones that you can make. "No it isn't" is literally the top (least useful) strata of the argument pyramid, provides precisely zero extra information, and doesn't belong on Hacker News.
That may work if you're a known entity who is known to be an expert on the subject, but for an anonymous forum, just saying "you're wrong" without any explanation is stupid and useless.
The fact that you made a second comment, yet provided absolutely no refutations of any of the points in the original comment under discussion, suggests that you cannot refute their points.
Although, the phrase "What HN needs is less engagement with useless, time consuming misinformation, and more outright rejection of it." instead suggests that you are of the totalitarian nature that prefers to suppress dissenting thought entirely, so I'm not sure what to think.
If you don’t go through it point by point and just reject the entire comment, then how is everyone else supposed to know that it’s misinformation? Right now it’s just your word that it’s incorrect. You have to back your claims up.
> The recent spate of losses suffered by crypto exchanges and digital wallets
... have been on-going for years.
Complex systems introduce a huge amount of attack surface. Verifying systems is expensive and slow. And this was all a scam anyway.
This is mostly an article about the exchanges and gets a few details wrong but the overall gist is that the federal agencies and regulators are cracking down and finding out what the black hats knew all along.
If you own significant sums of money and its completely anonymous, or the origin is untraceable, you can't use it.
Just like drug cartels know how to collect and store anonymous money but find it very hard to use it. Every time you try to buy something expensive or normal financial assets, you have to explain where the money is from or you may lose it.
Try to buy a house with anonymous crypto and find out.
But crypto wasn't invented for rich people and drug lords to launder the money, so why would anyone give a shit about their problems in the first place?
It still would make a lot of sense for regular folks who prefer their online habits not to be tracked by corporations and sold around.
The state of the art in this is different than the state of adoption.
Ie we already have paper money backed by blockchain currencies such as bitcoin using self custodial, rotatable private keys at https://offline.cash. This gives one the benefits of paper money alongside the benefits of decentralized currencies.
Could we change the headline to "Chainalysis CTO said blockchain is easier to trace than paper money"? It's factually more relevant because that's his current employer.
This is why I don’t understand why governments seem to be against cryptocurrencies in general. And as for consumers and privacy: check the work being done with zero-knowledge proofs and stablecoins, where everything is encrypted except to the IRS or whoever should have be able to view transactions. To my knowledge this work is also attempting to replicate cash by not divulging anything under a certain threshold per day.
Lots of comments here guffawing at the lack of revelation, but anonymity is central to blockchain-related popular understanding (and endless crypto pr).
The whole point of a blockchain is that it can be traced, so this should come as no shock. Anonymity is another story altogether and imo can only be achieved if participants don't move their funds between crypto <> fiat. Of course, no one is really "all in" on crypto in that way, but maybe one day more folks will be.
I thought this was the whole point of crypto, a completely public and traceable system to stop people doing shady shit, particularly aimed at shady people in the finance world. It’s kind of ironic that it’s ended up that the biggest crypto users are also the planet’s shadiest people. I’d be interested to know how much money would be in crypto markets if drugs were legalised globally when the original Bitcoin paper dropped. My guess would be less than a quarter of what we’ve got now and that crypto would be looked at with even more disinterest than Zuckerberg’s Metaverse.
People can shout and scream about it all they want but it’s just not going to be the tech utopia people dream of. As soon as it gains any kind of significant traction, central banks will release their own coins, allow people a grace period to transfer existing Bitcoin/Ethereum into central bank coin after which they’ll outlaw transactions in coins that aren’t backed by a central bank. The elites will not simply roll over and give up control of the money supply. They’ll stop it in its tracks long before it gets enough traction to take over as a legitimate alternative.
Realistically, I’d say somewhere in the ball park of 1/3 to 2/3 of global gdp would have to be in crypto for the people to have enough power to just ignore the central banks and governments. Even then, the big players would have to be able to convince the right lawyers and military personnel to bet on crypto because it would most likely be a long and bloody takeover.
Blockchain might have other legitimate uses, but I just do not see it taking over standard currencies unless there is some kind of central authority that maintains control over it. I hope I’m proved wrong, and that we can live in a less corrupt world as a result. But I can’t see a path to getting there. Every other successful piece of tech ends up with large controlling players e.g Facebook for social, Google for search. The general public does not have the time or patience to learn the ins and outs of decentralised tech. They do not care about tech nor should they. Firefighters, nurses and factory workers do not want to be finishing 12 hour shifts to read up for hours on how to set up a mastodon account. They have bigger things to worry about like doing their jobs, keeping a roof over their heads and feeding their families. They only care about what tech can do for them. They want convenience. Which means opinionated decisions on how something should be. Which inevitably leads to the quelling of decentralisation and individuality in favour of a few big power players. I don’t see why crypto would be any different.
Largely issue is not the loss of anonymity, which average person does not care about, but economically, long-term, blockchain-based financial systems will likely create more centralized systems, not less.
If I am missing something, would be interested in understanding why.
Nothing will beat taking a bunch of cash and exchanging it for goods. Yes you could theoretically be traced by serial codes, but entirely impractical at any scale.
That’s why government and banks will push for banking apps and going entirely digital.
Honestly this almost reads like an Onion headline. You mean a publicly available ledger is less anonymous than physical paper money that doesn't require any kind of identification to use? Who would've thought?
The main problem is that in the US, it is nearly illegal to engage in a private, anonymous financial transactions - whether in Bitcoin, Dollars, or anything else. There is a loophole for small transactions in paper money, but that loophole is slowly being closed.
This is not a technology problem. It is a policy problem.
Well yes, but we still get people regularly claiming here that anonymity is one of the great benefits of crypto, so there are a lot of people out there that still need to find this out.
Wait, you mean something that literally tracks any and all actions in a literal chain of history that is immutable is easy to track?!?
You mean that pattern recognition can be applied to even “randomized” in both size, time, and destination of transactions can be done to track like how they can track burner phones?
I’m shocked! Shocked I say!