[HN Gopher] Bitcoin's fungibility graveyard ___________________________________________________________________ Bitcoin's fungibility graveyard Author : yamrzou Score : 135 points Date : 2022-02-05 19:08 UTC (3 hours ago) (HTM) web link (sethforprivacy.com) (TXT) w3m dump (sethforprivacy.com) | trixie_ wrote: | Dollars have serial numbers does that mean they're not fungible? | Does the author know what fungible means? Banks block | transactions all the time to/from flagged sources. | mikewarot wrote: | If you want to be that pedantic, you're right. However, at | present most dollar cash transactions don't record serial | numbers or ownership. It is possible to remove all tracking of | your cash by getting dollar coins instead of bank notes. | | In fact... I made an NFT on this basis (the non-fungibility of | US Dollar Notes) a while ago, here's the blog post about it | | http://mikewarot.blogspot.com/2022/01/whats-all-this-nft-stu... | hammyhavoc wrote: | Can't help but feel like this is a puff piece for Monero. It's | just how quickly it jumped into beating the drum for Monero. | matheusmoreira wrote: | To be fair, Monero _is_ a fungible privacy coin and a valid | answer to all of those concerns. | fshbbdssbbgdd wrote: | I'm constantly surprised Monero's market cap isn't higher. It | works better for all the use cases of crypto that genuinely | add value, yet has a small fraction of the value of many | coins that are used for nothing at all. | matheusmoreira wrote: | Good question. Monero is essentially everything bitcoin was | supposed to be. Private, anonymous, more decentralized, you | can actually mine it using general purpose computers, it's | actually usable as a currency due to low fees and fast | transactions. I've actually gotten paid for code in XMR, | it's awesome. | | It's not even a good investment since it doesn't increase | in value as fast as bitcoin but gets slaughtered whenever | the market goes down. Would be nice if it stabilized in the | $200 range. | Yizahi wrote: | Why should it be? Dollar genuinely adds value for most of | human population and yet a single dollar "token" costs 1 | dollar. If anything, the flat price of a token I would | consider a very small but anyway a sign of maturity and | usefulness, as opposed to speculation tokens. (stabletokens | excluded of course) | wackro wrote: | I bought into monero hoping it would be the next big thing. | Fungibility/no public ledger made it seem like it had way | more utility, but it turned out 1) virtually nobody buys | crypto in order to spend it, and 2) its only real world use | was on the dark web. | headsoup wrote: | So you bought it as a speculative investment? | wackro wrote: | Yes. The same as almost everyone buying crypto. But | hoping that it would become a usable currency. | simias wrote: | I agree, but it just confirms what we already know: | fundamentals have no importance in the cryptocurrency | world, it's all about hype and speculation. | | Now if they had a cute dog mascot maybe you could get Elon | Musk to tweet about it... | beaned wrote: | Because it actually works, Coinbase never added it. | Regulatory pressure. | acdha wrote: | Cryptocurrency has this nasty conflict of interest built | in: the early adopters and their investors are rich on | paper but ALL of that value goes away if people switch to | something else. You can still find Bitcoin holders lying | about it being private or uncensorable because they stand | to lose a fortune if everyone switches to Monero. | | I think this combination of looking like tech but being a | financial instrument makes it hard to talk about on tech | forums because we don't have anything with close to that | level of conflict built-in. If you were a PHP developer who | switched to Python, the value of your past experience | wouldn't drop to zero (often it goes up); if your Rails app | was bought by a Node shop it wouldn't be seen as worthless | and they'd probably keep it running for many years. The | closest comparison I can think of for weak fiat currency | like Bitcoin would be Flash after Adobe threw in the towel | and everyone knew they'd need to migrate, and even there | the value had a higher floor because you had working code | and a path to HTML5. | magicjosh wrote: | Agreed, a simple disclosure "I own Monero" is needed. The lack | of this* hurt the credibility. On the about page the author | says they run two Monero nodes. | | That said, the article is pretty much a list of links so not as | much credibility is needed. | | *this: edit - this being a disclosure that they do or don't own | Monero | | Disclosure: I own crypto but not Monero | Hendrikto wrote: | > On the about page the author says they run two Monero | nodes. | | Running a node is not the same as mining. You are not | rewarded financially, and you don't need to hold Monero to | run a node. Nodes just maintain the ledger and transaction | pool. | | Running a node supports the network through decentralization | and participation in consensus. | magicjosh wrote: | It seems a reasonable enough leap to think that someone who | runs a Monero node owns Monero. And even if they don't, | that possibility is enough reason for a disclosure | statement, either that they do or don't own Monero. Like | the parent poster said, mentioning Monero in the intro of | the article stands out. | matheusmoreira wrote: | Yeah, it's a privacy nightmare. The exchanges refuse our money if | it has ever passed through a privacy service and they continue to | track what we do with it even after it's been withdrawn from our | accounts. Nice to have a collection of examples I can point to | whenever someone says bitcoin is fungible. | | It makes no sense to me how bitcoin is still number one | cryptocurrency despite it's garbage fundamentals. Failed at | everything it was supposed to do. | itvision wrote: | > It makes no sense to me how bitcoin is still number one | cryptocurrency despite it's garbage fundamentals. Failed at | everything it was supposed to do. | | It hasn't failed at not being controlled by people which fiat | currencies have failed completely. Do you control the inflation | rate? Do you control how much currency is being minted? And | tons of other things. | lottin wrote: | > Do you control the inflation rate? Do you control how much | currency is being minted? | | You don't control any of that with bitcoin. | matheusmoreira wrote: | > Do you control the inflation rate? Do you control how much | currency is being minted? | | Exchanges are essentially banks. They offer bitcoin loans, | essentially creating new coins out of nowhere. Fixed money | supply is utterly powerless before the inflationary power of | debt. | JumpCrisscross wrote: | > _hasn 't failed at not being controlled by people which | fiat currencies have failed completely. Do you control the | inflation rate?_ | | Bitcoin has proven to be a worthless dollar inflation hedge. | It's more correlated to the stock market than any real | dollar. | trhway wrote: | Like a marshland for tidal water, stock is best inflation | hedge working by sponging the overflowing inflational | liquidity, and no wonder that Bitcoin behave similarly. | JumpCrisscross wrote: | > _stock is best inflation hedge working by sponging the | overflowing inflational liquidity, and no wonder that | Bitcoin behave similarly_ | | Agree on the mechanics. Equities _are_ a classical | inflation hedge. But the reality is that if three people, | in the last year, attempted an inflation hedge, one with | TIPs or Series I bonds; one with equities; and one with | Bitcoin, the last gained little over the middle. Both | likely lost value relative to the first. | | If your inflation hedge loses value during inflation | because the Fed will raise interest rates _because of | inflation_ , yes, there were external factors at play, | but no, you don't get to blame them, you hedged badly. | notRobot wrote: | > The exchanges refuse our money if it has ever passed through | a privacy service | | I'd love to learn more about this, does anyone have relevant | links or info? | magicjosh wrote: | Here's a relevant episode of the ZK Podcast about | cryptocurrency mixers: https://zeroknowledge.fm/111-2/ | shubhamkrm wrote: | It's called "tainted Bitcoin". Basically, you can get a list | of all transactions a coin was involved in since it was | minted. If any of those transactions contain a blacklisted | address, exchanges would refuse the token. | analognoise wrote: | It's Pokemon cards, but for tech bros. | can16358p wrote: | Even though Bitcoin failed at many things, I don't see it as a | failure as it literally started it all. | | All the other cryptos are created after Bitcoin and learned | from its shortcomings to build something better. | Brian_K_White wrote: | It did create and then prove an incredible and utterly novel | and important concept. | | Your downvotes are invalid. | | I don't own and never have owned any btc, or any other | crypto, and at this point wouldn't touch btc in particular | with a 10' pole for several different reasons. | | But the very concept of a distributed ledger that may | actually be trusted is both revolutionary and proved. | | It's collossal despite all the current degenerate uses and | wasteful implementations. | z3c0 wrote: | Agreed. When the integrity of the chain is compromised, I'll | call it a failure. | | In the meantime, I'll leave it to the opinionated pissants on | both sides to continue acting like they understand anything | about what's to come from a system with so little precedence. | delusional wrote: | Because the intersection of the stated goals and the actual | goals is essentially empty. The actual goal isn't to be useful, | it's to make the early adopters rich. | Geee wrote: | If you compare to Monero, you see that Monero isn't even | allowed on these exchanges. So, it seems that you can't really | have privacy combined with high exchange liquidity. | matheusmoreira wrote: | I was under the impression the exchanges chose not to list | Monero voluntarily. After all, Binance does have it. | magicjosh wrote: | Can you explain what you mean by "high exchange liquidity"? | My understanding is it's a policy issue not tech. | | Automated exchanges like Uniswap have Monero. | | edit: Uniswap has Wrapped Monero, not actual Monero. | popol12 wrote: | Not answering to the question, just correcting your last | phrase: Uniswap has wrapped monero (WXMR) which is not | quite the same as Monero, and with a ridiculous liquidity | of ~200k$ currently (https://geckoterminal.com/eth/pools/0x | 14c10b4bdccd9d3f8940fb...) | matheusmoreira wrote: | How does wrapped monero work? I've seen a lot of wrapped | coins but I'm not sure why they exist or why I would want | to use them. | shubhamkrm wrote: | From what I've understood, coins are wrapped to enable | cross-chain movements. Let's say you have X BTC, but you | want to take advantage of ERC-20 features. You can "move" | your BTC to Ethereum blockchain by depositing your X BTC | in Wrapped BTC (WBTC) smart contract. It'll lock your | BTC, and give you the equivalent amount of WBTC tokens, | which are ERC20 tokens on the Ethereum chain. | RileyJames wrote: | Wrapped tokens enable use across otherwise incompatible | blockchains. | | Wrapped tokens are facilitated through a bridge. The | bridge contract(s) lock the tokens on one blockchain, and | re-issue wrapped tokens on a second blockchain. At a 1:1 | peg. | | That way the wrapped tokens can be used in Defi or Dapps | on the second blockchain, and later (if desired) sent | back through the bridge to be "unwrapped" into their | original form, on the original blockchain. | magicjosh wrote: | Ah my mistake! Wrapped Monero isn't Monero, got it. | magicjosh wrote: | It really does seem like the main purpose Bitcoin is succeeding | at is sort of a digital gold. It's not good as cash, privacy, | or anything else. Lightning seems like a joke compared to the | types of efforts happening on Ethereum. | | Appreciate this thorough analysis of problems with | cryptocurrency. | | Disclosure: crypto owner | dmihal wrote: | One project I'm following is Aztec Protocol. It's an Ethereum | L2 (so faster & cheaper transactions, similar to Lightning) | but it supports any Ethereum asset (ETH, USDC, WBTC) and is | fully private. | itvision wrote: | The only thing that goes for Ethereum is the fact that it's | used for creating worthless numerous other pump and dump | crypto currencies on top of its blockchain where Shiba Inu | is the latest glorious example. Solves nothing, serves no | purpose but increases the demand for Ethereum transactions | which ultimately drives the cost of Ethereum. All those | poor sods who have invested in Shiba Inu? Plain idiots to | put it mildly. | | Oh, and NFTs as well. Another worthless crap just to create | more Ethereum transactions. Why worthless? Because ... | Ethereum is just one of multiple crypto currencies/block | chains and tell me again why your particular NFT on top of | Ethereum is worth more than the same object on another | blockchain? And how many times can the same object be | (re)sold on all other blockchains? Do you need to own all | of them? Or Ethereum NFT is somehow better? | stavros wrote: | Aren't NFTs very very useful for money laundering? | magicjosh wrote: | Neat can you talk more about what makes it fully private? | How does it work? | opportune wrote: | Lack of fungibility makes Bitcoin worse than gold in that | area. Gold doesn't have a "permanent record" like Bitcoin. | It's more like a virtual deed to a plot of land that you | can't rent or use | tomcam wrote: | > It's more like a virtual deed to a plot of land that you | can't rent or use | | Or, you know... gold | giaour wrote: | Gold often has distinguishing markings on it, but in the | end, a bar can always be melted down and recast. | billions wrote: | Can you expand on "Lightning seems like a joke compared to | the types of efforts happening on Ethereum" ? I was just in | El Salvador and Lightning was a faster and more convenient | experience than credit cards... | magicjosh wrote: | Happy to hear more about your experience! | | To answer your question, what I've read about Lightning it | sounded convoluted. The need to have a watcher keeping a | channel open, invoices, just seems overly complex. I have | tried receiving sats from online Lightning faucets and that | part was impressive. | | Ethereum's L1 growth and improvements seem more logical to | me. | | Is there a good place to go to track the adoption of | Lightning? | [deleted] | itvision wrote: | > Bitcoin is often touted as a fungible and private asset | [skipped] | | By whom? There's nothing like that here | https://github.com/bitcoin/bitcoin | https://bitcoin.org/bitcoin.pdf | | > and digital cash alternative | | That was the case from the beginning but it hasn't worked out. | | > Each bitcoin in circulation has a distinct history attached to | it ensuring that 1BTC != 1BTC. | | What? The value is the same. Paper bills also have a distinct | history. | | > While coin histories can be somewhat ofuscated with tools like | CoinJoin, the fungibility of Bitcoin remains distinctly lacking. | | What? How's 1 BTC is not fungible [to another BTC] unless you're | wanna hide your bitcoin transaction history? Is this what it's | all about? Sorry to break it to the author but he seems to imply | that Bitcoin is a privacy oriented electronic currency. It has | never been "private". The whole ledger is public. If you don't | like it, don't use it. You have Monero, Dash and Zcash and | Bitcoin mixers if you wanna deal with ecurrencies without anyone | being able to trace you. | zepto wrote: | > Paper bills also have a distinct history. | | No they don't. Nobody records the serial numbers of each bill | they receive and pass and who they got it from and gave it to, | in a publicly accessible ledger. | PragmaticPulp wrote: | > What? How's 1 BTC is not fungible [to another BTC] unless | you're wanna hide your bitcoin transaction history? | | I think you're deliberately ignoring the entire point that the | article is making. The fact is that tainted transactions are | becoming a thing as exchanges realize that they need to do | something about addressing theft and fraud. | | It's not even about your own transaction history. Assets | acquired illegally, including Bitcoin, and and will be seized | even after they change hands several times. | | Unless you mined the Bitcoin yourself (not through a pool, | literally generates the block yourself) then it has a history | attached that involves other people. | toolz wrote: | > that involves other people | | well if we're going this abstract then everything everywhere | involves "other people". | | Pragmatically mining, even through a pool does not show who | you are or who you are associated with as no one can | associate you with anyone if they can't associate your coins | with you. | | This idea that exchanges will stop handling coins from | flagged addresses is nonsense - DEXes already solve that | problem anyways, so an exchange will be willingly giving up | business for legit customers who may have happened upon a | coin with a less-than-legit history and they'll do nothing to | prevent money with illicit history from making its way onto | their platform. | vintermann wrote: | Distributed exchanges by their nature only trade one type | of crypto-asset for another. The problem always comes when | you try to move value out. Whatever you trade for in your | DEX, if you want to buy a house with it you'll need to be | able to account for how you got it. | | Those who enforce money laundering laws don't mess around: | If your money is clean, you're just shooting yourself in | the foot by erasing the record of how you got it. | toolz wrote: | I'm in the process of buying a house, haven't had to | prove a single thing after I traded into fiat and if I | had really wanted to I could have traded into fiat via | direct trades using sites like localbitcoin.com or | similar. | | Guilty until proven innocent is an untenable practice if | you want to run a profitable business. The market will | sort out any ridiculous practices that makes you prove | you haven't laundered in order to participate in a market | and as I've said, the alternatives already exist. | | edit: as for DEXes that's my whole point, you trade a | crypto with "bad history" for a crypto without bad | history and just like that even the strictest exchanges | will happily give you an off ramp into fiat | vintermann wrote: | > haven't had to prove a single thing | | Even in your jurisdiction, you may soon have to. From the | linked article, you can infer that you got lucky - your | attempt to cash out might have been stopped by an | exchange, if you did it a little later or with a little | dirtier coins. | | > and if I had really wanted to I could have traded into | fiat via direct trades using sites like localbitcoin.com | or similar | | Good luck meeting random strangers and trading BTC for | cash with them safely AND anonymously. You're lucky if | you get even one of those two. | | > Guilty until proven innocent is an untenable practice | | Tell that to financial crimes investigators, whatever | they're called where you live. As I said, they don't mess | around. They're not reasonable. The price for operating | in the legal economy is that you have to be able to | account for your assets. The exchanges don't do this | because they want to, but because they have money | laundering cops breathing down their necks - and you will | too, if you're silly enough to try to cash out | significant amounts through localbitcoin or similar. | toolz wrote: | > Even in your jurisdiction, you may soon have to | | and as I've stated, using a DEX to trade from dirty coins | into clean coins is cheap and simple. I think this whole | thing is just paranoia, but in the event it actually does | become an issue for law abiding citizens (such as myself) | the market has already accounted for the nonsense and | given me an avenue to continue to operate effectively and | legally. | | > Good luck meeting random strangers and trading BTC for | cash with them safely AND anonymously. You're lucky if | you get even one of those two. | | I've done both frequently and with nothing but success - | I'm wondering if you've had experiences otherwise as I | know plenty of people who use that site and have had | nothing but success. | | > if you're silly enough to try to cash out significant | amounts through localbitcoin or similar | | I'm sorry, what are you talking about? Legitimate | services with legitimate clean money is not silly. | vintermann wrote: | > using a DEX to trade from dirty coins into clean coins | is cheap and simple | | Cheap, but not free. You're paying a premium. Which | illustrates the article's point. | | As exchanges are reined in, and off-the-record bitcoin | for cash trades are cracked down on (google "localbitcoin | arrests" to get an idea - that should also answer your | two other lines), this premium will grow, and it may well | grow enough to make the whole thing impractical. | toolz wrote: | so if trading USD into other currencies isn't free then | USD isn't fungible? I'm not following your point | telomero22 wrote: | Ok, but you have the same thing with gold or any other | "fungible" asset that will be traced to you if you don't take | measures to obfuscate the trace. | | Gold has a real world trace that can be found out by simply | asking intermediaries and numerous other means, Bitcoin has a | digital trace, it's not that different. | | It's very difficult to make sure that the history of where | that gold you got came from and to whom you sold it to is | 100% erased. | ricardobeat wrote: | It's completely different. If no exchange will let you | withdraw or accept coins from a mixer, how do you "take | measures to obfuscate the trace"? | | Gold is literally untraceable. Nobody can stop you from | smelting and selling it as you like. | everfree wrote: | In practice, there will always be at least one exchange | that lets people trade coins that are tainted by some | measure, because that particular exchange's idea of taint | does not implicate the history of their coins. | | Once a person trades coins at that exchange (perhaps even | into a different cryptocurrency for additional | obfuscation), then in the eyes of the other exchanges | those coins will become disconnected from the activity | they are trying to hide. | twic wrote: | > By whom? | | By hyperhopper, for one: | https://news.ycombinator.com/item?id=30156253 | | I think it's a pretty widespread belief amongst people who | haven't yet learned about tainting (as i myself only did a few | weeks ago). | matheusmoreira wrote: | > What? The value is the same. | | Nope. It's impossible to cash out a tainted bitcoin since it | cannot be deposited at exchanges. Its value is essentially | zero. | | > How's 1 BTC is not fungible [to another BTC] unless you're | wanna hide your bitcoin transaction history? | | Every bitcoin can be distinguished by its transaction history. | If you try to use a mixing service, that fact will be known and | the resulting bitcoins will be tainted. Exchanges will assume | they are laundered funds. | everfree wrote: | > It's impossible to cash out a tainted bitcoin since it | cannot be deposited at exchanges. Its value is essentially | zero. | | Given the limitless number of cryptocurrencies coupled with | the limitless number of exchanges, there will always be some | series of hops that someone can make between cryptos such | that by the end, there is no amount of algorithmic analysis | your exchange can perform that will automatically connect the | coins and block them. Manual intervention would be required, | by a privileged law enforcement expert who is personally | tracking that value across novel and disparate networks using | domain-specific knowledge. | ahtihn wrote: | > Its value is essentially zero. | | No it's not. It's worth a bit less than face value, but you | can cash it out by swapping to other cryptos. | matheusmoreira wrote: | And why would anyone ever accept tainted bitcoin in | exchange for anything? | everfree wrote: | Because everyone's definition of taint is different, and | coming up with a globally recognized universal definition | of taint is logistically impossible. | | To you, you might be trying to break your link with a | Bitcoin mixer by wrapping those bitcoins and uniswapping | them for a different asset on Ethereum. | | To me, I simply went to Uniswap and bought some wrapped | bitcoins, then deposited them on a traditional exchange. | vintermann wrote: | The cryptocurrencies that "fix" this problem vary in the | cryptographic tricks they use, but it all boils down to drafting | everyone to act as fences as a condition of partaking in the | system at all. | | It's a technical solution to a social problem. It won't work. You | can always move value in, but out is another matter. Trading your | Monero (or whatever) for legal-economy assets or currency may be | criminalized any day. | matheusmoreira wrote: | > it all boils down to drafting everyone to act as fences as a | condition of partaking in the system at all | | Indeed. Monero uses ring signatures: every transaction is | signed by 11 users and it's impossible to know which signature | was responsible for the transfer. | | https://www.getmonero.org/resources/moneropedia/ringsignatur... | | https://www.getmonero.org/resources/moneropedia/ring-size.ht... | | > You can always move value in, but out is another matter. | | The ideal outcome is we start using Monero for everything. | There should be no need to ever move value out. | zozbot234 wrote: | Isn't that the _definition_ of fungibility? Every user of | currency is implicitly a "fence" for every other user. | vintermann wrote: | No. Oil is fungible too - any barrel of a given grade is | treated the same any other - but that doesn't mean oil buyers | and sellers are fences for each other. | | What you're thinking of is the "current" aspect of currency. | That when I take payment for a bagel in my shop, I don't need | to worry that the money used to pay me was stolen, I still | get to keep it. | | But this is a social, legal concept, not a technological one. | Calling it a currency won't make it current. Fungibility | doesn't make anything current either (if I was stupid enough | to take payment for a bagel with a barrel of oil, I WOULD | have to return it if it turned out it was stolen. I should | have known there was something fishy!). No amount of | cryptographic cleverness can force society to treat it as | current. | ineedasername wrote: | I'm pretty sure cash falls into the "stolen goods" | category, and you don't get to keep them even if you didn't | know they were stolen. You'd have to give the bagel cash | back just as much as the barrel of oil. | | (Well, in my jurisdiction. Source: family member is a | lawyer) | vintermann wrote: | Traditionally, you wouldn't have to, though - that's why | they called it "currency", because it is "current". | | I believe it still works that way for bagel-level money | in most parts of the world. If it's higher amounts, I'm | not sure - you certainly have a lot of due diligence | obligations, and if you didn't do them you certainly lose | it (and you will be in trouble, too). | ghostly_s wrote: | You actually can be compelled to forfeit money paid to you | if it is found to be stolen (in the US, anyway). | Brian_K_White wrote: | Cash has serial numbers printed on it. | pyrale wrote: | No, that's a consequence of fungibility in the context of | some privacy uses, not its definition. The definition of | fungible items is that you can mix them without altering | their properties. | | Fungible items can be used as a commodity, for instance: if | two people buy cereals, they may use the same silo to spare | on warehousing costs. | | Fungibility is always true within a limited context, though. | Examples of failed fungibility include Amazon comingling | genuine products with fakes, or, to draw from the previous | example, cereals from different areas will likely have | different gluten or humidity rates, and while producers from | an area may share a silo, the buyer may keep the same cereal | from different geographic areas separated. Another example is | electricity, with power being fungible in terms of who puts | it in, but absolutely not when it comes to when power is | provided. | [deleted] | lifewallet_dev wrote: | Well, this argument falls whenever you try to use Bitcoin P2P | (user to user shouldn't care where the coins come from) or with | P2P exchanges like Bisq or Local Bitcoin. | | Now that's a different universe than what OPs lives (just by the | fact Bitcoin goes up and down in fiat value would be enough to | make it "non-fungible" by that logic), but I can assure you many | of us exists. | | And I'm not even mentioning how Lightning Network fixes this as | well, making coins very hard to impossible to track. | magicjosh wrote: | Got an article on how Lightning fixes this? | | This article is alarming to me as a normie user. I'm curious | about going off the big exchanges and using my coins. What if I | receive crypto through OpenSea that Coinbase deems soiled? | | Although I don't like it, I could see private verification | service popping up for P2P. "We make sure the coins are good | before the transaction goes through". | | Makes me wonder how much of a "walled garden" Bitcoin is. Sure, | hold it on exchanges all you want, but don't try to use it or | we lock your account. | therein wrote: | It is no different than depositing to an exchange that | doesn't do this and then withdrawing. Or some other service | with a centralized wallet. | | That being said, those outputs will simply become someone | else's problem later on, in limbo created by the uncertainty | on whether them being held by an exchange clears their past | history or not. | darawk wrote: | That would stop being true for P2P if exchanges started | blocking tainted coins, though. If that happened at scale, then | P2P users would have to start validating themselves before | accepting them, which is a real privacy nightmare. Of course, | eventually exchanges will start blacklisting anyone with a | mixer in their history, too. | advisedwang wrote: | I think it basically still holds - I wouldn't want the bitcoins | from someone I suspect got them from crime, knowing they could | be traced forward and cause problems for me. | rglover wrote: | For the sake of consistency, would you say the same thing | about paper/fiat currency? | mypastself wrote: | I'm not the person you're responding to but yes, if the | transaction history of tainted cash was publicly available | and easily traceable, I'd be vary of receiving it. | wmf wrote: | At least in the US, paper money is exempt from _nemo dat_ | but crypto isn 't. | https://en.wikipedia.org/wiki/Nemo_dat_quod_non_habet | advisedwang wrote: | If I sell my couch for paper money to a someone that got | that money through a crime or in violation of a sanction, I | don't realistically have to worry that someone could try | and claw back that money from me by tracking the payment. | | Paper money has serial numbers, but likely nobody record | them during the criminal transactions. Even if they KNOW | which serial numbers are involved in a crime (maybe they | robbed the mint), there's no database that tells them I | have that note now and no infrastructure to catch someone | from spending it. | | (Of course perhaps the money is clawed back because there's | text messages on the criminal's phones about buying the | couch. But that's another story) | danlugo92 wrote: | Web3 + Lightning fixes this. | Brian_K_White wrote: | This aversion to "mixing" is interesting. | | When my pile of $20 bills with serial numbers on them gets | converted into $100 bills with other serial numbers, and my $100 | came from some place that collected $20s from other people, is | this not exactly the same mixing? | | I feel like there are people in all governments who are thinking | all day every day "Yes, and we are working on this insane hole in | our control as hard as we can and the day is coming close when we | can finally outlaw cash." | capitalsigma wrote: | I imagine it is very hard to launder, say, $320 M | (https://www.cnbc.com/2022/02/02/320-million-stolen-from- | worm...) in cash. Google says that a $20 bill weighs about 1 | gram, so 320 M / 20 = 16,000 kg or ~3.5k lbs. About the weight | of a car. | acdha wrote: | I think it comes down to scale & other means of controlling | illegal activity. They don't need to ban changing $20 bills if | they're fairly comfortable that e.g. banks are going to ask | questions if you show up with a suitcase full of them. | | Scale also matters because it's hard to ramp up businesses: the | mafia can't claim that their restaurant is doing $100M/year in | sales so there are going to be more people involved (i.e. | chances for the police to find an in) and they can focus on | businesses which do tons of anonymous transactions. | skybrian wrote: | It seems like a matter of degree. To what extent do people treat | it as fungible? Will that change? | | For example, paper money has serial numbers. In theory, it could | be tracked. ATM's could record serial numbers with accounts for | any cash they give out. Stores could scan all the money they get | for serial numbers, looking for counterfeits. Maybe they could | share data to discover interesting trends? | | In practice, it would be hard with banks and stores acting as | mixers as part of ordinary business. It's easier to track things | with Bitcoin. | TekMol wrote: | Can Bitcoins still be tainted now that the Lightning Network is a | thing? | | Sending them through a Lightning Channel would make them | disappear without a trace, right? | javert wrote: | I don't think so. I think you're likely to get tainted coins | out of lightning, even if the coins you send in are untainted. | jonathan-adly wrote: | Monero is too good at evading government surveillance. It will | never be allowed to reach critical mass of usage to survive as | the premier cryptocurrency. | | It will continue to have a role and prosper next to Bitcoin | though. We need both. One to decouple from government control, | and the other to evade surveillance. | | It's a well-known secret that you can change your Bitcoin to | monero, then the Monero back to Bitcoin to "wash" your Bitcoin. | Also, with enough time, all the Bitcoins would be dirty. | | P.S. don't bother responding if you are coming from the privilege | of never having lived under a terrible government. | magicjosh wrote: | For those interested in mixers, I'm just starting this episode | of the Zero Knowledge podcast myself: | | Mixers with Tornado.cash | | https://zeroknowledge.fm/111-2/ | matheusmoreira wrote: | > It will never be allowed to reach critical mass of usage to | survive as the premier cryptocurrency. | | Why? How are they going to keep it down? | | I will keep talking about it and trying to use it. Actually | managed to get paid with it once. Ironic that the one coin | that's actually usable as currency remains obscure. | whimsicalism wrote: | Did you manage to convert that pay to fiat? | smt88 wrote: | El Salvador and China have shown us that Bitcoin is not | sufficient to evase government control. | | Also, exfiltrating value via crypto is not sufficient for most | people in oppressive countries. The overwhelming majority need | to be able to spend the money locally, which isn't possible in | any oppressive country except El Salvador. | mathverse wrote: | Crypto is de facto banned in China and yet I see an | incredible amount of chinese even those working for state | owned corporations trading crypto. Even openly with their | profile pics on Twitter. China is sometimes too ridiculous | for me to understand. | jonathan-adly wrote: | China is a perfect example. A Chinese citizen only needs a | VPN and USB drive to exit the highly-controlled digital yuan | and put his savings in Bitcoin. When he needs to get to a | local currency or USD, a P2P exchange like Bisq would do it. | | The other person at Bisq would simply wash his bitcoins | through monero - and that would be that. | | Not only its good for Chinese citizens, it is very good for | western democracies to funnel money to opposition figures in | hostile countries (or plain old spies). In a world where the | digital Yuan reigns supreme (where everything is monitored), | would the US want to pay a Chinese spy in paper USD, washed | bitcoins, or digital yuan? | kragen wrote: | How does exiting the highly-controlled digital yuan work? | jonathan-adly wrote: | I have x amount of savings of Yuan. I keep 6 month | expenses in Yuan and the rest in Bitcoin. | | When I need to make an unapproved transaction (donating | to a Muslim charity if you are a Yighur for example). I | go through the hassle of using Bitcoin, either directly | or after changing to USD by P2P exchange. | olah_1 wrote: | > It will never be allowed to reach critical mass of usage to | survive as the premier cryptocurrency. | | Monero is getting to the point where it will not need | permission. | | It will soon be added to the decentralized exchange Thorchain. | On top of that, the Haveno project is making great progress and | will be a Monero version of Bisq. | | Thorchain will be swaps that don't require specific orders, | much higher liquidity. Haveno is the traditional platform where | someone puts out an order and someone buys that exact amount. | | Oh and I almost forgot about regular atomic swaps which also | exist today. | mateuszf wrote: | > It will soon be added to the decentralized exchange | Thorchain. | | I've heard about XHV and Monero being added to Thorchain a | year ago, described as coming soon. Somehow it feels more | like marketing than a real thing. | Barrin92 wrote: | >Monero is getting to the point where it will not need | permission. | | If you're interested in actually using your currency for | anything in the real world other than swapping it for other | cryptocurrency you'll always need permission. | | If I want to go to the supermarket and pay with Monero that | will require that legislators deem Monero a legitimate | currency. | | https://xkcd.com/538/ | olah_1 wrote: | > If I want to go to the supermarket and pay with Monero | that will require that legislators deem Monero a legitimate | currency. | | A lot of people use giftcards. That's what people do with | bitcoin too. | | > https://xkcd.com/538/ | | Completely irrelevant to this conversation. | kingo55 wrote: | I've been paid for work in Monero before. It's not a far | stretch. | | As long as governments begin to accept Bitcoin, it becomes | trivial to accept altcoins because they're often easily | exchanged for Bitcoin. | garren wrote: | This is news to me. I'm not super informed regarding | cryptocurrencies, but it seems like this would also affect erc-20 | "fungible" tokens on Ethereum, wouldn't it? Do such tokens not | also have traceable histories? | scyclow wrote: | I wouldn't think so. BTC uses an unspent transaction output | model, which is like breaking up a plot of land into smaller | pieces, and treating each square inch as fungible. ERC20 tokens | are based on an accounting model, so you're just incrementing | and decrementing balances -- nothing to trace there. | olalonde wrote: | The "accounting model" is even easier to trace, I'm not sure | what you mean by that. For example, here are all USDT | transactions: https://etherscan.io/token/0xdac17f958d2ee523a2 | 206206994597c... | magicjosh wrote: | I never thought of it that way. I wonder what the article's | author thinks about Ethereum's privacy. | olalonde wrote: | Yes, Ethereum is even worse for privacy because it doesn't | allow CoinJoin style mixing. | tromp wrote: | Monero pays a large price for its fungibility, by making the UTXO | set of (potentially) unspent outputs equal to the set of ALL | outputs. Whereas synced bitcoin full nodes can forget all about | spent outputs, Monero full nodes must keep some info about them, | and be able to efficiently index this info. | | For its initial block download, a node must download and verify | rangeproofs for all outputs, not just the unspent ones. | | Wallets must be able to sample decoys from a large fraction of | all historical outputs. | | This makes Monero much more bloated than Bitcoin. | | A more detailed comparison between Monero and Bitcoin can be | found at | https://gist.github.com/phyro/ec37d8bfedd36102b0ea5824580d06... | vmception wrote: | Hop into a lightning channel and then back out in a different | address. That should theoretically work to break these heuristic | models right? | | Exchanges are using software that assigns a threshold to each | address' inputs or funds. You can easily trick the threshold. | 28194608 wrote: | what if the output of lightning came from mixed coins? | toolz wrote: | What if every coin is mixed, eventually? You think exchanges | will just shutdown their bitcoin trades and throw away their | likely biggest revenue stream? | matheusmoreira wrote: | Exchanges are already prejudiced against "unhosted" | wallets. I think they'll eventually stop accepting deposits | from any source other than other well known exchanges. | toolz wrote: | I've moved "unhosted" coins into at least 5 different | exchanges at this point with zero issues. | cliftonk wrote: | Output of a lightning channel is almost certainly more likely | to contain mixed coins. The UTXO model is hopelessly | outdated. | toolz wrote: | I strongly disagree, UTXO model will be necessary to scale | smart contract platforms in the future as the account model | will never hold up with the necessarily expensive sync | operations it performs. | | UTXO model, or a derivative will win out when it comes to | distributed blockchains that can scale way beyond current | distributed blockchains capacity. | kevinak wrote: | Even better: never leave The lightning network and you'll never | really have these issues | Ekaros wrote: | Now I wonder would it be possible to taint all big players and | pool productions by some action? How much would this cost in the | end? | zozbot234 wrote: | It's not just possible, it's arguably the very threat that's | driving this unraveling of the market in the first place. | Because every large player will then seek to reject "tainted" | coin/transactions, lest they be tainted in turn. | magicjosh wrote: | The article mentions an account frozen after a deposit from a | "far-right donor". I wonder how cryptocurrencies will fill the | void left by platforms like GoFundMe. GoFundMe apparently just | locked a $10M campaign as it violated their terms and conditions: | https://www.opindia.com/2022/02/gofundme-removes-campaign-tr... | [deleted] | ferdowsi wrote: | GoFundMe is a facilitator for fundraising efforts. If someone | wanted to start a far-right crowdfunding site they could | without involving digital gold. | darawk wrote: | Or we could just have a politically neutral monetary system | in the first place. Imagine that. | cortesoft wrote: | I mean, we do? Dollar bills are politically neutral. | wyldfire wrote: | The money's pretty neutral but brokers like GoFundMe aren't | and IMO shouldn't be compelled to be. | darawk wrote: | I agree with that, except in cases where the number of | brokers is small and monopolistic. That's not strictly | true for platforms like gofundme, but it is true for | payment processors, who are the real choke points in the | ecosystem. | | My issue with Gofundme isn't that they aren't politically | neutral, it's that they took the money first, and _then_ | just decided to hold it hostage. Had they not accepted | the trucker 's money, or just refunded all the donors, or | disbursed the funds to the org and then refused to accept | anymore, any of those things would have been fine. But | what they are doing here is tantamount to theft, and that | I do believe brokers should be compelled not to do. | [deleted] | joelbondurant1 wrote: | timeon wrote: | This rules out Bitcoin. | notreallyserio wrote: | IIRC that's what Hatreon was intended to do, provide | crowdfunding for far-right organizations, but it shut down. I | wonder if it would have been successful if it went with | Bitcoin instead of relying on Visa et al. | magicjosh wrote: | I had not heard of Hatreon so went looking. | | According to a few sites, Visa shut them down. After that | Hatreon didn't (yet) get another payment processor setup. | Their homepage [1] says: "This site's services were | suspended by VISA in November of 2017." | | Kicking alt-right people off platforms is a band aid | solution. A storm is forming that will explode at some | point. You can't just silence people like that an expect | good outcomes long term. | | I imagine the next big wave of cryptocurrency use will be | by alt-right users. They're coordinated, resourced, and | tech savvy enough. | | Crypto-enabled Spotify, crypto-enabled Patreon/Kickstarter, | Crypto-enabled YouTube...basically writes itself at this | point. I wonder if there's an alt-right HackerNews out | there already. | | [1] https://hatreon.net/ | | Also the founder is the 3D printed gun guy! | magicjosh wrote: | My understanding is a lot of interesting stuff gets blocked | at the payment processor level. So far-right dildos, drug | parphanelia etc may have issues that cryptocurrencies solve. | If you've never tried to break the rules it's easy for this | stuff to be invisible. | | Here's a post from Stripe on this issue: | | "Behind the scenes, we work closely with payment networks | (such as Visa and Mastercard) and banking partners across | more than two dozen countries. Each institution has strict | legal regulations that govern them and specific rules about | the types of businesses they do and do not work with." | | https://stripe.com/blog/why-some-businesses-arent-allowed | mullingitover wrote: | "Bitcoin has these problems because coins that have been through | mixers are tainted [lists examples of coins being tanted]. So use | Monero, where the entire cryptocurrency system is a huge mixer." | pmontra wrote: | All of this is new to me. So there are almost two Bitcoins, clean | BTC and tainted BTC. If merchants can check if the history of a | coin is clean or tainted they could refuse the sale or ask a | higher price to hedge the risk of not being able to use the coin. | Is there any service like that? Is that double prices dynamic | already happening? | | Mining creates clean BTC, anything else risks tainting them. I | expect that the ratio between prices in tainted / clean BTC will | grow if the set of tainted coins increases compared to clean | ones. | toss1 wrote: | Which means that if you really want to clean dirty BTC, you | need to simply use it to pay for miners, then mine clean BTC. | vmception wrote: | > I expect that the ratio between prices in tainted / clean BTC | will grow if the set of tainted coins increases compared to | clean ones. | | I don't. I expect the absurdity will become more clear and make | the whole attempt to flag them irrelevant. | | for example, after a national or municipal government seizes | bitcoin under some semblance of due process or even an actual | criminal charge and reauctions them, we are supposed to pretend | those bitcoins are magically clean? do all the exchange | softwares update to know that? they still have the transaction | history from the event that flagged them to begin with. the | answer is easier when it involves a government you respect like | when the US Marshalls auction off a drug kingpin's seized | bitcoin. but what about a government you don't respect? welp a | sovereign nation seized it so they're clean now. If so, some | random jurisdiction with some level of sovereignty can just | become the bitcoin washer as a service, if not then exchanges | are acting too arbitrarily and are going to lose business for | no legal reason. Exchanges flag bitcoin to stay within an | imagined impending compliance burden of being able to prove | they don't accept dirty money. If they flag bitcoin with the | clearest outcome of having been seized by the state and | reintegrated into the economy, then they have made a hopeless | error. People with ambiguously acquired bitcoin already have a | dozen ways of getting it into bank accounts and cash, and will | have even more in the future. So it's just the merchants and | exchanges that have to make sure they are attracting business. | For those reasons I don't see a separate exchange rate forming, | its an average of fungibility that leads to the same result. | xiphias2 wrote: | Trezor also added KYC: https://cryptonews.com/news/trezor- | ditches-controversial-kyc... | | It's a strange thing, because I always thought of Slush as a | great guy who understands the importance of fungibility (and he | was the main reason I bought Trezor instead of something else), | but the company changed over time. | magicjosh wrote: | Wow lots to unpack there. | | For those reading, the title says "Trezor Ditches a | Controversial KYC Feature, Plans Features to 'Cut Off | Regulatory Overreach'" | | Apparently Trezor added a KYC system called AOPP. Then | backlash. Then they said they would roll it back (as of the | article). | | Have they rolled it back yet? They said it will be rolled out | in February. Edit: Trezor blog post about the rollback here: | https://blog.trezor.io/a-decision-on-aopp-789540c2930b?gi=f3... | | I always wondered what Trezor's fundraising plan is. My guess | is once they started to see the money come in from taking fees | they started to say "we'll be the next Coinbase!!!". | | Do you have any more analysis of this addition to Trezor? As a | Trezor user, this reminds me of Apple's push for on-device | scanning. That Trezor even added this feature temporarily has | me looking for alternatives. Anyone have suggestions? | xiphias2 wrote: | ColdCard is coming out with a new version, I just listened to | an interview with him by Stephan Livera, and he seems like a | person with integrity if you are looking for BTC only wallet. | | The only problem for me in practice was that the red light | was blinking instead of the green, which shouldn't have been | happening (I reflashed the software on the device in my | multisig setup, which I decreased the trust somewhat). If I | would have been more patient, I would have sent back the | device for a replacement. | magicjosh wrote: | I will check out ColdCard again, thanks! Last I checked | they were Bitcoin-only. edit: still bitcoin-only | | Seems like Trezor "blinked" here and tried to keep everyone | happy. I wonder if Block/Square is going to eat Trezor's | lunch by providing a badass wallet for people that don't | care about KYC. And then ColdCard will be for users that | are strictly anti-KYC. And Trezor gets stuck in the middle | and goes out of business. | xiphias2 wrote: | I'm Bitcoin only as well, and Block/Square hardware | wallet will be the same, so it probably won't be good for | you either. | | There are lots of features in Bitcoin that are important | and not addressed by mixed wallets because of the lack of | development time, so these two types of wallets are | getting separated by the market (which I see as a good | thing both for Bitcoiners and mixed-coiners). | wcoenen wrote: | The core bitcoin wallet has a "signmessage" API call that can | be used to sign a message with the private key behind an | address, thus proving ownership of the address. So it seems to | me that by this logic, the core bitcoin wallet also "has KYC". | | edit: in fact that AOPP thing appears to be just a thin layer | on top of signmessage. https://gitlab.com/aopp/address- | ownership-proof-protocol/-/b... | Andrew_nenakhov wrote: | I'll do you one better. Send a few tainted sats to a non-empty | address of a person you don't like, and hurray, his coins are now | tainted, giving him endless headache. | ______-_-______ wrote: | Something similar has been done trying to deanonymize wallet | owners. It's called a "dusting attack". In theory you can | protect yourself by manually choosing which outputs to spend | when you're building a transaction. | sharperguy wrote: | Nowadays most wallets will let you choose which UTXOs to spend | so you can simply choose not to spend those. | Andrew_nenakhov wrote: | That is a major pain/inconvenience, and also who knows what | setting the antitainting mechanics will look like in the | future, can very well make all your money compromised in the | future. ___________________________________________________________________ (page generated 2022-02-05 23:00 UTC)