Hacker News Reader

Comment by falcolas | Hacker News Reader

And this is where the "promise" of anonymous currency/assets falls apart. Some folks might be able to obtain or sell it anonymously, but so long as these exchanges exist and given the ease at tracking coins through the publicly visible blockchain, it only takes one transaction at a broker who can be raided/subpoenaed for the government to track your assets.

Much like any other form of anonymity on the internet - it often only takes one tie between your physical and digital identity for the whole thing to fall apart.

View on HN

Bitcoin is not much of an anonymous platform. And anyone using it expecting anonymity is bound to end up disappointed.

Ok, so we can forget it was initially sold as anonymous currency.

The current spin that passes my twitter timeline is that it is state independent. Technically it is, but the sense it conveys is 'out of the reach of governments'. (c.f. "Prince Ibn so-and-so should have put his money is bitcoins. haha".)

It is always helpful to take the old history books out of the dusty shelves and read up on e.g. The Opium Wars to have a 'better' understanding on the er 'softer' aspects of "money".

People keep saying this but it is very possible to stay anon while using Bitcoin. It's just complicated and people are lazy.

Like most other security features, laziness is a great defense. Most things can be cracked, but it's too tedious to.

The same thing is technically true for cash... it's just that people are lazy and there are lots of "gotchas".

Just tumble your coins, you'd need a super computer to find where they go. That's what things like Monero automatically do.

For tax purposes, it doesn't really matter that you laundered the money. They'll get you when you use it.

not for monero.

The anonymity of bitcoin is a design artifact, not a feature. Think about the opposite problem -- how would you design a cryptocurrency to not be anonymous? Bitcoin implements the simplest identity scheme possible -- possession of the private key will allow you to transact. Whether you hold that private key, or a group of people does, or the private key is just based on the final clue of a treasure hunt.

> The anonymity of bitcoin is a design artifact, not a feature. Think about the opposite problem -- how would you design a cryptocurrency to not be anonymous?

Speaking in terms of cryptographic assurance, Bitcoin is not anonymous. When we're talking about blockchain technology, we're talking about byzantine fault tolerance and consensus algorithms. It's not productive or meaningful to talk about anonymity outside of the context of cryptographic assurance, because you're introducing reliance on non-determinism in human behavior. That's no longer a quality of the protocol, it's a quality of the individual's caution and identity hygiene.

Stated another way, in order for Bitcoin to be anonymous, it must be anonymous by default, or have such a meaningful feature that can be "turned on", so to speak. Cryptographic anonymity is fully possible, and we have it with Zcash. But you don't get there just by divorcing your offline activities from an online public/private key.

> And this is where the "promise" of anonymous currency/assets falls apart.

The "promise" (future vision?) of cryptocurrency is that you won't have to sell it, ever. Do your business, buy your groceries, pay your mortgage and taxes in it.

Whether that's realistic or not I haven't the energy to debate on HN. But it is certainly incorrect to say that bitcoin/USD exchanges have any sort of place in the cypherpunk utopic vision of a cryptocurrency future.

I generally agree with you, but what about this argument:

Someone transfers their bitcoins to a paper wallet then meets someone in person for a cash exchange. When the IRS comes by, other than say, the Lambo in the driveway, how are they to know whether or not to believe the man claiming that the coins were stolen?

Generally, the burden of proof would be on the individual, especially if there is a Lambo in the driveway (or more generally, altered spending patterns without obvious sources of income).

Technically, the burden of proof is in the IRS, but if not it's just a claim that tax is due (and not one of criminal evasion) then it's a low burden of proof and very easy to meet it in the absence of counterevidence, putting the individual in the position of needing to rebut the IRS’s contention.

Exchanges have ALWAYS been a known risk. People who actually care about privacy don't use coinbase.

Interestingly enough, people are working on decentralized exchanges through smart contracts. Good luck shutting down a smart contract or stopping atomic swaps between cryto currencies.

>Some folks might be able to obtain or sell it anonymously...

This is wrong. Anyone with access to the equipment to use it, can obtain it anonymously by mining it. The fact that people choose convenience over security is not an inherent problem of cryptocurrencies.

But with Proof of Work arms race, your chances of hitting the lottery are very low now.

These days mining crypto is not a feasible option for the vast majority of people.

That promise is only satisfied if you can transact for real value with the anonymously-mined currency.

Both mining and transacting are impossible (or at least very difficult) for many people/in many areas. Mining requires too much gear/power. Transacting for most goods with real value without de-anonymizing the currency (converting it to fiat and associating it with your name) is also extremely difficult without money laundering or access to a no-identification-required, crypto-to-physical-cash ATM-style conversion point.

>Both mining and transacting are impossible (or at least very difficult) for many people/in many areas.

This is just not correct. You can mine with the same equipment you use to transact (something with a CPU and memory and internet access). Is it expensive to do so? Yes. But it is possible. Your argument could be "anonymity is expensive".

>Transacting for most goods with real value without de-anonymizing the currency [...] is also extremely difficult [...]

That is a "how I give you what you bought" problem and not "how I pay you for what I have bought" problem, i.e. it is not solvable by changing payment technologies. If I pay you a dollar over paypal, paypal automatically knows who gave what to whom. If I pay you bitcoin, I would have to give out this information voluntarily (it does not come with the money).

> You can mine with the same equipment you use to transact (something with a CPU and memory and internet access). Is it expensive to do so? Yes. But it is possible

That depends on the definition of "possible".

Most people wouldn't be able to mine a block within a million years, which i'd argue means it isn't possible

> Is it expensive to do so? Yes. But it is possible.

That's a fair point. Perhaps I should have said "impractical" or "cost-preventative" instead.

> paypal automatically knows who gave what to whom.

Correct, but my point was that the number of opportunities to directly pay someone bitcoin for a physical good are so limited as to make using it for what most people need a "currency" for impossible.

You have to mine in a pool. A typical person in a developing nation isn't going to be able to mine alone and have any reasonable chance of ever mining a block. For most people, you are looking at a big fat zero coins mined on local machines without working with some centralization.

Monero is fully private/anonymous and cannot be tracked.

Can't be, it's illegal to handle financial transactions without knowing who your customers are.

If they don't bother to do due diligence, they will be shutdown by the police soon enough.

Monero is a cyptocurrency.

How will the police shut down Monero miners in Russia and China?

How will the police shut down ALL of the Monero botnet miners?

If you are already running a botnet, you aren't worried about the 'extra' illegality of the currency. If police could shut them all down then they would have already done so.

Also, people are working on decentralized exchanges run through smart contract atomic swaps.

It isn't really possible to shut down an exchange that nobody is running in the first place....

Unless you are arguing that the government is going to shut down all cyptocurrencies now and for forever?

Russia and china have a police too.

Monero has zero value. The money is in the hands of the exchange who swap coins for real money. These ones have people running them and can be tracked and shutdown.

monero.

Reply on news.ycombinator.com