Bitcoin is a ‘boon for surveillance’, says former CIA director
decrypt.co
decrypt.co
It all depends what your threat model is. Bitcoin can be traced by sophisticated nation state actors at the cost of tens of millions per intercepted target. If I was Osama bin Laden or El Chapo or a guy who personally pissed off Putin, I probably wouldn't rely on it. But if I was a local drug kingpin in Baltimore, or a corrupt mid-level CCP official, or a Cypriot corporate money launderer, then Bitcoin deanonymization is probably a small risk in the scheme of things. Certainly orders of magnitude less risk than using the traditional banking system.
Don't you eventually need fiat? Yes, so you have someone sell NFTs to those untraceable wallets and now you have a legit income stream as an artist. Pay the tax in the place you want your money to end up and you really only need like one person in your destination country to clean as much as you'd like.
Given cryptos nature of being a public ledger and there more then enough compute power available everything can probably be traced and backtracked in real-time.
KuCoin? Binance?
You just have to take it up with the government in whatever country they're domiciled in. Like any legitimate company, they simply won't tell anyone which country that is, of course.
So I don't mind the KYC process so I don't have to jump through hoops, but I do see how nations can use lawfare to attack/monitor crypto currencies, its not that hard to see. You have a open ledger, you have wallet addresses connected to personal identities. They can probably use social media connection graphs to fill in the gaps of unknown wallet addresses. Its a real time financial monitoring tool like the current system, just packaged up as some libertarian/tech bro nirvana escape hatch. Brilliant marketing if you ask me, but I'm just using it as an inflation hedge.
XMR I don't know though.
Wouldn't be surprised if there are ways to obfuscate your bitcoins. Something like wrapped bitcoins or something.
For the time being you already have block chain analytics companies that can trace and back trace transactions. Hell maybe they can even do it cross chain.
I wouldn't be surprised if a NSA or other nat sec organization can hack something together in a weekend.
So to transfer $1 million out over 3 years, you'd need to run mine ~$900 of crypto per day, ie. run 90 RTX3080s 24/7/365.
Also note that this would draw around 20kW.
[1] https://www.nicehash.com/profitability-calculator/nvidia-rtx...
assuming you're able to buy them and have the money upfront and are able to hide the purchase.
"What this person could be doing with 90 3080, I wonder" asks the Chinese government employee that checks your bank transactions.
https://www.techradar.com/news/nvidia-rtx-3080-shortage-coul...
The questions of number of cards and electricity usage are pretty secondary and easy enough to hide. Go off grid, setup a similar legitimate company, lots of options to hide it.
This is backed by the fact the vast majority of hash power for BTC comes from China (3). There are world wide shortages for sha asics and gpus. I'm not describing a hypothetical.
(1) https://www.nicehash.com/profitability-calculator/nvidia-rtx...
(2) https://www.globalpetrolprices.com/China/electricity_prices/
(3) https://www.statista.com/statistics/731416/market-share-of-m...
The easiest thing for China would be monitor crypto transactions and stop them from happening.
But suppose you are Chinese and have a good friend in UK who's going to report as legit income the result of your criminal activity in China (criminal as in simply hiding the money from the government, for whatever reason) on your behalf.
Why should you set this complex scheme up when you could simply fly to UK to visit your artist friend, buy one of his artwork with your yuan and you're done?
Or better yet, invite your UK friend to China and give him the money, that he can then deposit on his account.
Purchasing mining hardware or artworks with your money that can be trace back to you it's the exact same thing.
> Or better yet, invite your UK friend to China and give him the money, that he can then deposit on his account.
China has capital controls and dual currencies to prevent these common scenarios. The yuan that the Chinese resident can get from a Chinese bank is devalued outside of China, and it is forbidden to move large quantities anyway (much less than the 1M USD mentioned in the thread).
https://statrys.com/blog/cnh-vs-cny-differences-chinese-renm...
that's why you buy stuff in yuan and sell the stuff for dollars/euro or other currencies
BTW we are talking about criminal activities here (money laundering), of course there's a price to pay and that price usually is in the 20-40% range (I've checked CNY and CNH and they are being traded at very similar rates right now [1][2])
there's no need to buy hundreds of GPU to mine crypto to do what the OP intended to do
unless OP meant btc it's a cheaper and safer way to launder money, which is a good reason why people could think it's a scam
Its like kind of like the unequal treaties but now china can fight back and as small concession for less aggressive approach, offered a small piece of the China pie for the outsiders to fight over. Let the outsiders fight among themselves instead of letting them fight together against you.
Isn't the cap like $25k/year/person that's like top 5~10% of the global citizens that can save up like $25k per year.
Taiwan's silicon shield and western semi conductor independence are contradicting objectives, sacrificing Taiwan for a bigger piece of the Chinese market is more then worth it from a realist/Mercantilism perspective.
The US investing in the Chinese "pie" is useless because they're just feeding the CCP more. CCP will use the power to take over the world. US companies would get eaten by the Chinese companies and US gov would be taken over from within, once mainstream and social media is taken over by CCP hands.
But don't be afraid of China taking over US cyberspace, I wouldn't be surprised that the Anglo-Europeans will build their Hadrian fire wall. To keep the Eurasian troll armies out of their part of the cyber world. This might all grow out of the clean network initiative.
For most non westerns nothing will really change if the king sits in Washington or Beijing. If you think it does you have been drowned in US propaganda. Maybe the biggest historical difference is that Beijing builds, and Washington bombs cities in the global south.
TLDR: CCP doesn't answer to the people. US gov at least has open elections.
I agree that at this moment, a poor person in central africa should not care 1% between US and CCP. But for their descendants, yes they should care.
That thinking is quite shallow.
And depending on where you live you wouldn't be able to make big purchases in cash (in France I think the maximum cash transaction allowed is about 3000€).
BTC or cash you would have to launder your money to make it look like legit and be able to buy a house etc
Of course the other problem of BTC is that transactions are stored forever (as long as the BTC network operates) so it might bite you decades later.
This has to be the worst reason a drug dealer would avoid dealing in cash ever. Inflation is literally 2% per annum. Drug dealers pay 20%-50% to launder their money. C'mon now.
There is no such thing as a free lunch.
Deposit money to Binance, covert to XMR, withdraw XMR is well under 0.1% total in fees.
Yes, there are risks involved in doing criminal business, inflation is not one of them
... for now.
The thing is, 2-3 tx/sec is basically snail mail. That's such a small number of transactions that there's not even a forest to hide within.
As the analytics tools improve the de-anonymization will be faster and more automatic, and that "tens of millions" figure will dwindle down to pennies. State actors can easily combine that data with actual fiat, and you'll be in court before you know it.
The problem is you're committing a ledger of your criminal activity to the cloud forever, and CCing your attorney general, smirking that they'll never figure it out. Of course they will. Either they'll figure it out or ban it. Or both.
Basically, if you dont want to deal with the onchain transactions, you could sell the risk of that to someone else and only deal in internal offchain transactions. Dont know if this actually happens though.
The security in the Lightning Network doesn't come from settling on-chain after a transaction happened but from signing over all your money in a Lightning Network channel to the other party should somebody catch you cheating.
They are unconfirmed transactions and there are many ways of losing your funds compared to confirmed ones. Such as having your harddrive corrupted and your node trying to propagate an old state.
You are correct that funds in a Lightning Network wallet are at higher risks than those in a cold wallet, but this applies to all "hot" crypto wallets. Most LN wallets supports "Static Channel Backups" which you only create and store once after setting up a channel. In case your phone goes up in flames, you can use it to safely close your channels and receive your balance.
It involves either buying or creating a tamper resistant device and a reputation for authenticity.
It's significantly more complicated.
https://www.wired.com/story/bitcoin-blockchain-fifo-dirty-co...
You might find that the mixer, rather than washing your bitcoin, unexpectedly taints them.
The threat being considered in this thread is a future crackdown on bitcoin and how the blockchain may be used against bitcoin owners. Legal threats seem very relevant.
The idea isn't necessarily to de-anonymize the transactions here but to disincentivize people from using mixers. Either a haircut kills a portion of your value, or you lose it all, the idea is you won't do that again.
That doesn't change that legally it still kills all your money, and creates a liability on the person who put in the dirty money. If you figure out who they are it's all you, you're welcome to sue them. If not, you've learned a hard lesson.
I'm fine with either.
You're not solving the problem, you are just introducing new problems that affect other people in the hopes that the entire system becomes unworkable.
While some will try to do everything the legal way, the the wily people who believe they are getting away on some kind of technicality sometimes find themselves charged with a different crime, or maybe just unlucky after a pre-dawn police raid or traffic stop goes south.
It bears repeating explicitly I think: you're not working against today's analysis tools, you're working against whatever analysis tools exist far into the future, since everything is recorded for eternity.
only as far as statute of limitations. figuring out the crime after that point is not a risk ... but it does put a target on your back
For a buyer, this isn't as big of a deal because you won't have that level of target on your back, but for anyone running a marketplace I don't think statute of limitations will protect you once they figure out who you are.
From what I've seen, success in this industry is predicated upon planning, caution, and constantly thinking of ways that people are going to screw you over.
Most people who break the law do so because they either don't consider the consequences or accept the rewards as justifying the risks. And plenty of criminals go to prison because they judged wrong. That those who are successful for long periods of time buck this trend is just survivor bias.
That is completely unsubstantiated. You have no evidence for that.
Tumbling also makes some of their other figures unbelievable. For example in table 2 they report "181.82%" of all users transactions attempt to use tumbling services... I have little confidence in this paper being accurate.
First problem: transaction fees are currently over $10 per transaction.
Second problem: max transactions per block (2k?). Wouldn’t a single tumbling instance of 100k pieces completely fill 50 bitcoin blocks, effectively browning out the system?
Coinbase, shockingly, violated trust on both sides and is still being hyped. Doesn't take much to understand what a terrible investment that is.
Now imagine I smuggled in from Mexico to Chicago this[1] but I don't know how to take back this[2]
What kind of genius/idiot criminal would I be?
[1] https://www.gannett-cdn.com/-mm-/6d0c827943b8dc8c2c7449974d0...
[2] https://www.cbp.gov/sites/default/files/u6097/CBP-AMO%20-%20...
are we still talking about criminals?
I don't think something that make it worth optimizing for but is intended to optimize criminals activities is really desirable.
Anyway, there's no advantage with crypto, the smuggler didn't smuggle 1 million dollar worth of cocaine from Mexico, cocaine is moved in much larger volumes, if a few pounds are lost, it's part of the business risks, criminals understand it and sometimes facilitate it, so that police can make big splash announcements and everybody is happy.
money is another thing entirely.
that million dollar worth of cocaine has been cut in hundreds of smaller doses, that are being paid mostly in cash.
so now every corner dealer has a pile of cash that use to pay the bigger dealer and so on.
first of all, you can't buy crypto with cash. You should go through another person who already owns enough to sell them to you, which means another breadcrumb that could lead back to you in case that other person is caught.
also, cash has some disadvantages over a usb pendrive, but one big advantage is that it's harder to lose a briefcase than a usb drive and they don't break as easily.
so the smaller dealers have no incentive to do it.
the average dealer has no incentive on buying crypto to pay the larger dealer, because he gets rid of the cash pretty fast and keeps his cut that invests into criminal but legal activities so that the facade is clean.
the larger dealers have now a pile of cash that need to handle anyway, they can't ignore it and make it disappear just because it takes too much space.
let's go back to the smuggler (probably a cartel man) that moved cocaine from Mexico to Chicago
they have bank accounts in Panama and don't care about moving large sum of money anonymously or through perfectly clean American front men.
The system already works, there was an article the other day on front page titled "The war against money laundering is being lost" (https://news.ycombinator.com/item?id=26786810), so why change it for an asset that has not even a stable value?
I guess they tried at one point, but there's too much attention on them now, so criminals with capital C dropped them and let only their kids play with it so they can pay for their college expenses.
I'm not defending that Bitcoin is a solution to moving money, I'm attacking what I perceived to be an argument that it's not a problem for dealers because they can just do to cash as they do to drugs.
What a hilarious claim. Everything else you've said just confirms you've fallen for the "BTC bad" narrative. I wonder how you feel about you-know-who printing unlimited toilet paper money for their own benefits.
It takes something pretty extreme to get the consensus of enough miners to matter, but the hack of Mt. Gox was that extreme.
[1] https://www.coindesk.com/623m-in-bitcoin-from-2016-bitfinex-...
This is bullshit. WHM switched to Monero, not "all of the DNMs"
DNM == Dark Net Market WHM == White House Market, a large DNM
Sources?
The same applies with fiat. This is a tired argument against cryptocurrencies.
It seems that HN has been upvoting anti-bitcoin content for the past few days now.
Yes, but the difference is that for fiat this amounts to a small percentage.
Please... Bitcoin transactions can be traced by whoever has a laptop and internet. If you want to stay anonymous, there is nothing worse than Bitcoin. Do yourself a favour and switch to Monero and similar which offer some level of privacy. But there is nothing better than the good old bank notes. Anyway, please educate yourself https://en.wikipedia.org/wiki/Bitcoin
Of course, Monero is a better option but even with BTC it's not as trivial as you claim.
Comparing that to any other payment system (or combination of) where there is due process in collecting this information (hopefully accurate and valid) you're going to have a much easier time developing tools to detect and alert with Bitcoin.
I would not be surprised if there will be agencies that will bid on tracing services.
its really not.
unlike cash or bearer bonds, _all_ transactions are recorded in perpetuity. That's literally the entire selling point of bitcoin, the ledger is opensource and universal.
Given that virtually all money going into and coming out of bitcoin is through establishments that have financial licenses, its perfectly trivial to trace the flow of money from its first exchange of real cash for bitcoin, to when its used for illicit purposes.
You're currently labouring under the impression that tracing cash flows in the real world is hard. its not, especially for a government. what is hard is proving that its illicit. cash is fungible, as in each unit of currency has no ID. so its much harder to prove that this $1 came from a drug sale.
with bitcoin, you have a public wallet, and a clear lineage of transactions from start to end.
Outside of some exchange link keeping a name = address record, the public wallet doesn't really expose you as there's no link between an address and a person.
Also, that $1 can be charged with crime and sized directly. Good luck siezing a brainwallet etc.
Edit: like IP address and torrent lawsuits etc.
"Outside of" is doing a lot of work here.
This may seem nitpicky to point out that it does, but since it does, I'm not sure of your point.
"A unique combination of eleven numbers and letters appears twice on the front of the note. Each note has a unique serial number"
https://www.uscurrency.gov/denominations/bank-note-identifie...
moreover we are assuming that cash is ID at entry and exit, which its not, unless someone suspects something.
So when a cash machine gives you money, the ID of the currency not be tied to your account. When you spend that money in a shop, those notes will not be attached as having come from you as a customer.
With bitcoin, that all comes for free, we know when money left your wallet, what addresses it passed through to get to someone's else's. the whole selling point of bitcoin is that you can trace the provenance of each transaction right back to when that coin was originally mined.
For example, if I was to use bitcoin as a bank account replacement, everyone would know my employer, they would know how much money I give to my spouse each month. They would know who I invest with. They would know when I do my shopping at the super market. They would know when I'm having work done at the house. They would know if I got a bonus, and how much.
Some of those things I'm ok with, but a lot of things, I'm not
If you mean physical units of currency that is no longer the case, most notes have serial numbers. In principle quite a lot of tracing can be done.
there is lots of scope for laundering by giving the cash to third parties, before it gets to the banks.
Laundering inside bitcoin is pretty futile, because we can trace from mining to current wallet. we don't even need to trace all bitcoins.
All you have to do is pay for something illicit, and you can trace the flow of money from wallet to wallet, until its either converted into real cash, or held as a "reserve"
Think drug dealers/gangs recirculating bitcoins mined years ago. Now the tricky part of this is that it would only take knowledge of a few transactions in the networks identity, complete with purpose to start identifying everyone. I’m sure an AG is looking forward to the largest RICO case in history at that point.
I’m sure that folks looking to anonymize are aware of this and take further precautions, I’m also sure that there is someone in the network who is dumb.
If I was in law enforcement I’d make btc address collection a top priority.
Some bold statements there. Do you have any evidence to provide?
Do you have a source for that number, or did you just pull it out of thin air?
Funny how in the hack space some people explained how to buy drugs with bitcoin, others showed how they can track you anyways.
IMO The whole world has gone mad with the need for surveillance of everything.
Luckily, they can't really do that, since people would be able to poison an arbitrary BTC wallet just by sending them a quantity of BTC laundered via monero. But it'd be a pretty expensive poison pill.
Right now, you can probably do that without being sent to prison. It's a matter of using one of the many conversion websites to go from XMR to BTC, then depositing to your exchange and selling it. (I don't know how you'd explain it on a tax form, but maybe you can think of something clever.)
But if exchanges start actively cracking down on any account that deposits BTC in response to XMR transactions (i.e. the exchange maintains a known list of wallets used by those conversion websites), they can start putting accounts on hold if those accounts have received large quantities of BTC from any of those XMR-related BTC wallets.
Also with the lightning network you can mix and change different crypto currencies, and it can be really hard to trace the provenance of the coins. Not something an exchange can do automatically.
> the exchange maintains a known list of wallets used by those conversion websites
Remember that new wallet can be created for each transactions. So even if they'd try to do that, it wouldn't work.
Most wallets aren’t used for any high volume transactions; most account holders at Coinbase have no need for that. So it’s certainly possible to map out the network and partition it into known good / known bad categories, and handle the middle ground manually.
In other words, yes, XRP is very clever. That’s not the problem. The problem is, you’ll someday find it very hard to convert large quantities of XMR to USD without risking jail time.
You can't do this sort of analysis on the XMR blockchain. Can't see who's actually sending or receiving money. Can't see the transaction amounts. Can't see how much money any given wallet contains. Can't taint coins by association with criminal activities. Without exchange metadata it's impossible to correlate transactions with any certainty.
There's essentially nothing that can be done about it. Will governments become oppressive enough to jail people for the crime of using a medium of exchange they can't control? I'm not even sure that'd be enough to stop it.
Suppose I want to map an XMR->BTC converter.
I sign up for the converter, and say "Here's some XMR. Give me BTC."
At that point, some BTC wallet gives me BTC. I now know which wallet is being used by the XMR converter. And I know all the other metadata as a result.
When I accept these 'tainted' BTC tokens, they might get blocked by others parties.
So even here, XMR has a real benefit since those tokens are really fungible.
The question will indeed be if it can live together with the economy, or beside it.
This is the original cryptocurrency dream. Monero is the only coin that has a shot at actually achieving this.
1 Satoshi is only $0.0006 USD plus the transfer fees... which is pretty low on the lightning network
Then again, they dont need to provide privacy, just the preception thereof.
(I stopped paying attention to cryptocurrencies a while ago. My opinions may be outdated)
Also, there are a number of projects coming on line using the same privacy tech. Good privacy is feasible, we have the technical protocols. But product-market-fit niche isn't entirely there yet: the problem is few people grasp then need for on chain privacy yet.
There's even a draft spec for doing it for Zcash. https://github.com/zcash/zips/pull/420/files#diff-635022fa4a...
But it's at least possible if the tech works. So I guess my view is: at least someone has a shot.
Can you provide some link to back this up? I am genuinely interested because in principle public ledgers and privacy seem to be antithetic to one another.
Here's Greg Maxwell (one of the Bitcoin core team members) explaining the confidential transactions.
https://crypto.stanford.edu/bulletproofs/
Here's an optimization used in Monero that optimizes the ledger size (initial confidential transaction proofs were too large).
You can have a public ledger but all of the data in it is encrypted and verifiable.
Each transaction, from the creation, to validation has its amounts and wallet ids hidden, the sender and the receiver cannot know anything about wallet contents of each other and receiver has no idea from where the sender is sourcing the coins.
This anonymity depends on encryption to hide the wallets & transaction, and decryption to verify it, and for the receiver to be able to use the funds in the future.
So, who/what controls those keys? Seems they've just exchanged an open ledger problem for a key management problem - why is this not the case?
The key insight is that you design a cryptographic algorithm that will preserve addition between amounts, even when encrypted but you need to also provide some encrypted data that will allow an independent verifier to validate the whole transaction.
The problem is more nuanced because you need to guarantee that coins aren't produced from thin air.
The problem of the approach in the linked article is that proofs are large. To support encrypted verification (there is no need to decrypt anything in any step of the process) you need thousands of bytes for verifying a 32-bit amount.
Bulletproofs reduced the proof size significantly. There are then additional approaches like MimbleWimble where the proofs on the ledger can be discarded to make it even smaller.
Start reading this paper above then, it goes from the simplest form to data optimized form.
Three years and much work by others later, it takes ~2 to 3 seconds on a Pixel three to make a zk-proof for a payment. This can be optimized down to 1 second fairly easily (on that you have only my assertion currently)
This is commercially deployed in Zcash (the above mentioned coin with usability and adoption issues), a few other straight up forks, and a new coin called IronFish. And related protocols are in a few things on Ethereum (e.g., Aztec). If you want to test performance numbers, you can download one of these systems and try it yourself (Nighthawk is a decent mobile wallet for Zcash)
Current technical objections (again, beyond criticisms of Zcash as a coin itself) 1) Current ZK proofs require trusted setup. New ZK proofs developed by engineers at Zcash removed this[1]. So its not longer an issue for the technology (or for Zcash once it's deployed)
2) you have to scan the blockchain to get notified of payments. No, this happens to be how Zcash does it. As I said in a separate comment, it's easy to send payment notifications out of band.
3) Vague objections about "scale." Even though zksnarks take a second or two to prove, they are very fast to verify. So adding privacy doesn't make blockchain's scaling problems worse. And the privacy tech is agnostic to the underlying consensus layer, so if you ever get a blockchain to scale, you can put privacy on it.
4) Other approaches(Monero/RingCt/Coinjoin) are better. The major problem is these don't offer strong privacy, just obfuscation. See [2] if you want a 20 minute talk on the issues or [3] for a blog post covering the same
5) There's an inflation risk. Yes, once you hide the values of a payment, because you want privacy, if the crypto breaks, things can go wrong. This is true of any serious approach to privacy. So you want to very carefully vet the crypto design. But if you don't hide payment values, you get no privacy and your blockchain is twitter for your bank account.
[0] https://www.cs.umd.edu/~imiers/pdf/zerocash-oakland2014.pdf [1]https://electriccoin.co/blog/technical-explainer-halo-on-zca... [2]https://www.youtube.com/watch?v=9s3EbSKDA3o [3]https://www.zfnd.org/blog/blockchain-privacy/
It is shown everywhere that it does not work. This due to human nature, timing analysis, lack of censorship resistance and lack of fungibility.
Hard to do that if the crowd is all criminals lol. I often say BTC is only used for speculation and crime. At least the criminals in BTC can hide among the speculators. Zcash and Monero are literally only used by criminals and a handful of die hard ancaps. That gives you nowhere to hide.
It's the equivalent of trying to cash out El Chapo Bux. Simple possession is enough to pretty much guarantee anyone looking you've been involved in one crime or another.
The thing about the law is, as Lavrentiy Beria (Stalin's head of the secret police) said, "You bring me the man, I'll find you the crime." Once someone's looking at you, it's too late.
Pretty much all countries still have presumption of innocence and a legal system
The ownership of the monero itself may be granted the presumption of innocence however if you have a bunch of El Chapo Bux they'll just start digging for other things.
[1] https://www.wsj.com/articles/SB10001424052748704471504574438...
Can you elaborate on why you say this and what you mean by it? From what i've seen no entities, including governments, have been able to crack Monero's privacy, so i'm pretty interested if there's an obvious flaw.
The initial version of Monero had a flaw but if you start transacting now I do not believe anyone can deanonymize wallet ids or amounts.
Even if there's a 51% takeover, those guys would just be able to mint new coins, they still wouldn't be able to see the amounts and wallet ids.
Also, confidential transactions and optimizations (bulletproofs) are math proven.
Zcash and Dash with their optional privacy just leave everyone vulnerable to deanonymization.
If you're worried about the code changing, you can run e.g. ETH nodes yourself, download the DEX frontends, and run the DEX locally.
As for Zcash and Monero, yes, these are sensibly some more anonymous cryptos, still nothing as anonymous as some simple bank notes .. :-)
Btw, when I see the amount of people thinking that Bitcoin is used (nowadays) for illegal activities, and commenting about it on HN (which has theoretically a more educated audience), this is mind-blowing how little Bitcoin is understood at the moment. It feels like our governments have made a really good job of disinformation
Speculation is one thing, but BTC is going nowhere and in a world hit by an incoming significant inflation, many have understood that Bitcoin is simply an easy place where to safeguard your wealth if the outlook is at least +5 years, not days / months. That's why people buy Bitcoins at the moment.
Who would have thought that the ARPANET would be the basis for today's Internet.. and still, here we are..
How about buying food and paying bills?
https://news.ycombinator.com/item?id=25797143
https://news.ycombinator.com/item?id=25889590
https://www.coindesk.com/bitcoin-adoption-venezuela-research
> By and large, this is true in Venezuela. Expats use bitcoin to send remittances back home, where locals convert it to bolivars to buy food and pay bills. With crypto remittances from expats plunging, peer-to-peer cryptocurrency transactions within the country have proven resilient. LocalBitcoins and Paxful trades using bolivars peaked in the first half of 2019, and have since hovered around $20 million.
> “People living in Venezuela are living under a very unstable and predatory government. They suffer from extreme inflation and general economic instability. And here’s a censorship-resistant, inflation-proof asset, so it’s very attractive to people who are looking for a way to maintain value,” said Andrea O’Sullivan, director of tech and innovation at James Madison Institute, a Washington think tank.
But, there is a string attached. Who knows whether a genius will not have found a solution in 6 months?
One thing is sure, if you buy some drugs with some bank notes, that's not the bank notes which will betray you. If you're into any kind of (highly) illegal activity, Monero is not bad, but bank notes are just safer.
BitCoin's major purpose is as a hedge to massive fiat printing.
Just because something takes a while to produce does not give something value otherwise I’d be making a killing on my Etsy store
Also that fixed schedule will end soon.
In the year 2140. And the end strengthens the point you're disputing.
Doesn't mean that other things couldn't cause it to be devalued.
(and, of course, if the network consensus shifts in a way that changes the issuance rate... though perhaps it wouldn't really "be bitcoin" if that happened.)
What exactly does btc solve or bring to the table? People buy it “cause it goes up”. That won’t end well.
Feels like a bunch of people buying digits rocks.
All I'm doing, is explaining as best I can, why someone might see it as a "hedge" against large amounts of money printing.
If it is valued by people at some time (it has a price that people are buying and selling it at, whether in exchange for some currency like USD or for pizzas), and the value for the USD (in the sense of "how many pizzas / market-basket-of-goods does it buy?") is going down as a result of the quantity of money being printed-and-introduced-into-the-economy being unexpectedly very large, if that sort of event isn't positively correlated (as in, in the probabilities that people assign to future outcomes) with the value (in the same sense of number of pizzas) of btc going down, that could be something people see as merit-worthy in it.
People conceivably could want to hold something which is both easily exchangable, and highly subdivisible, and which has such a property, .... provided that they didn't expect the number of pizzas it buys to rapidly decrease.
I do wonder though, why there isn't simply a common financial instrument which pays out with the price of some market basket of goods at a designated time? It seems like such an instrument would serve much the same appeal.
Perhaps the issue is that, in order for people to be willing to issue such an asset, one would have to pay them a large amount to account for the risk that they are taking on?
There's also the issue that one would presumably have to keep actively buying more of such an instrument if one wanted to hold large portions of it over time.
I think it's more like digital beanie babies but to each their own :)
Dollars used to be backed by gold and it was still fiat money.
Bitcoin is backed by its own scarcity.
Fiat is typically contrasted with commodity or representational currencies. The key element is that fiat has no intrinsic value. It's usually issued by a government, but need not be. The value comes from faith.
Bitcoin meets all the qualifications save government issuance. The bits themselves have no value. The currency's value is based on faith in both the underlying computations and in the existence of a market for trading bitcoin.
Wikipedia gives the definition "often by government regulation" (implying not necessarily) citing Goldberg, Dror (2005). "Famous Myths of "Fiat Money"". Journal of Money, Credit and Banking. 37 (5): 957–967. doi:10.1353/mcb.2005.0052. JSTOR 3839155. S2CID 54713138.
From a mathematical crypto standpoint it's sorta good, but again what value has been created? It's not like the blockchain is now saving us time and effort in factorization that can be applied to real world problems that would otherwise need to be recalculated regularly, which is a pity.
Of course you can truthfully say fiat currencies are totally notional, but as a practical matter the value of a fiat currency reposes economic stability and security offered by whatever government issues it (which may or may not be valued by other people).
A backed currency means another entity is willing to guarantee they will trade the currency for something else. In the example of the gold standard, this means the government would exchange dollars for a certain fixed amount of gold. This meant that dollars could be worth more than gold, but theoretically wouldn’t fall below their fixed value in gold, because at that point people would trade them in for the gold.
You can’t just redefine backed to mean something that is expensive to produce. If something is expensive to produce it also doesn’t mean it has any intrinsic value.
(I’m also not arguing that modern fiat currencies are backed - in fact they are not backed by definition! I just get frustrated by all the fake economic mumbo-jumbo about Bitcoin).
I used to be able to trade dollars for gold and vice versa, at a fixed price, guaranteed.
I can't trade bitcoin for 'math'. No-one is storing energy reserves in case there's a run on people converting bitcoin to energy. Bitcoin is not backed by anything.
And if you want to be that picky, Bitcoin is backed by math and energy (or at least heat). You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
Can you show me where I'm swapping? I don't think I am. It's not semantics anyway, its a fundamental definition of what a backed currency means! The value of my car isn't backed by all the petrol I have used in it, nor is bitcoin backed by the electricity used to produce it.
> You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
This is not what backing means - at all. Backing doesn't mean "is expensive to make", it means its value "has a direct correspondence to the cost of another commodity".
So a few questions to test if it is backed:
* Is the price of bitcoin directly linked to the cost of electricity? (No - there is a relationship between bitcoin price and the amount of energy used for bitcoin mining, but I can't track electricity and use that to guess what the cost of a bitcoin is and visa-versa). Meanwhile, Tether IS backed by USD so I can use the historic value of tether in BTC to act as a proxy to understand how much BTC cost in USD.
* Have we seen the cost of bitcoin track global electricity prices? (No!)
* If abundant cheap energy is discovered tomorrow, does bitcoin become valueless? (I believe no, it maintains value!)
Almost all modern currencies aren't backed, nor do they need to be, so this is a weird hill to fight for.
Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
The usual way bitcoin payments are traceable are due to crypto-fiat exchanges requiring that information (AML & KYC regulations).
Wouldn't that make it effectively equivalent?
Unfortunately, transaction records like financial records are currently afforded a very low level of legal protection in the U.S., so the "warrant" and "probable cause" parts don't describe current practice. (That would be the case for a telephone wiretap, or a search of your home, but not for access to your financial records.)
https://en.wikipedia.org/wiki/Third-party_doctrine
One thing that I don't think the press ever managed to chase down -- following the Snowden revelations -- is the rumor that there was also a "bulk financial records program" which would have involved intelligence agencies and/or law enforcement getting access to search all bank transactions, without any individualized suspicion. (Recall that one thing Snowden revealed is that there was a bulk telephone records program, in which telephone metadata was turned over to the government in bulk, without individualized suspicion, which the government justified in part due to the third-party doctrine.)
In the government's view, the third-party doctrine means that it's never a fourth amendment violation if the government compels access to most kinds of transaction data in the possession of some kind of service provider or intermediary. (Some of those kinds of data may have higher levels of statutory protection but the government's position, as I understand it, has been that it's not an infringement of your fourth amendment rights even if those protections are circumvented or ignored.)
(Technically the third party doctrine would still apply in any case, because this would be a statutory protection rather than a constitutional protection.)
EG, technically cops don't need a warrant or subpoena to ask Google where you were on a particular day. Though, in practice, they often still get one because they know that it's kinda unfair and judicial or statutory protections are probably coming soon and they don't want to jeopardize the prosecution should the law change during the investigation.
For example, the January 6 insurrectionists are largely being caught through location data obtained under warrant from Google. Do they technically need the warrant? No. And if they were investigating, like, shoplifters, they probably wouldn't have bothered to get one. But they don't want to let thousands of insurrectionists off the hook in case this is the case where the courts decide to flip.
>>> The government needs a warrant after convincing a judge
Granted, it's not for your local drug dealer but for higher level surveillance.
not everywhere. In some places in Europe (e.g. Germany) the IRS is able to pull up your banking history without the bank having to notify you, and they can query a subset of the info (time of account opening, current deposit, personal info) without even notifying the bank.
Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
The bank will not be informed of the invasion of privacy (the excuse is so that banking customers don't have any negative impact when they realize customers get probed - it's probably more to avoid spooking the public about the frequency of how often this happens).
> Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
you're mistaken. These are the organs which have automated access (in addition to the IRS):
- social services
- job center
- bailiff
- state attorney
- customs authorities
[1] in German (just run through any translate service): https://www.vlh.de/wissen-service/steuer-nachrichten/kontena...
[2] https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...
A cross-country wire payment visits multiple jurisdictions already with the US getting first dibs via SWIFT.
My local IRS can also read them.
So they are effectively public for all major actors.
> Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
And I'm saying its main purpose is not to avoid surveillance but at as an inflation hedge.
The fact that the governments also see in real time should count as a vote of no confidence.
So it's alright because western countries aren't suffering any side effects?
> Hyperinflation is a made-up problem.
My country suffered hyperinflation multiple times. It was so bad we had to create new currencies with every iteration. I think the most recent episode happened in the 90s or so.
For most people in the United States, some inflation would be objectively positive.
[0]: https://www.bankrate.com/personal-finance/debt/average-ameri...
[0]: https://www.businessinsider.com/bottom-half-of-americans-neg...
In objective reality, setting aside philosophical objections to usury, since inflation devalues debt as well as savings it is a net benefit to the above mentioned Americans.
Do you know what else is a great inflation hedge? An index of stocks. Unlike BTC, the stocks also pay dividends, are backed by real economic activity, enjoy massively lower volatility, don't suffer from large fees, are never going to be banned, aren't tainted by endemic fraud and scam, and even produce a tiny bit of societal good. Stocks are objectively a better inflation hedge than BTC in just about every aspect, apart from not being a novel tech bro toy.
With bank ledgers, the computation energy is a minimized side effect that does not even show up as a rounding error in the financial reports of companies, and they do tens of thousands of transactions per second.
For cryptocurrencies, burning the energy is a key feature - 100% correlated to the proof of work and increasing by design. This achieves handfuls of transactions per second with energy burn exceeding that of nations.
Children's cartoons make better representations of the real world than that post.
I can issue fiat money myself. Here: "I owe you 5 CKD." What is the value of that? Zero. You don't know me, you have no reason to trust me, you cannot take my IOU to court and force my property to be seized. Your 5 CKD is worthless, in contrast to 5 USD.
Not at all. You can't take your dollars to the issuer (the Federal Reserve) and have them redeemed for goods and services. They are not redeemable, hence not "backed". Fiat simply means not backed.
> Why else do non-US residents value the USD?
Do you mean why they demand USD? For different reasons. One reason is to pay for goods and services imported from the US. Another reason is to use it as reserve currency.
> And why does EURUSD vary with relative economic output of the two countries?
It doesn't.
Given each bitcoin breaks down into 100 million sathosis you can always buy/sell parts of a bitcoin. Doing the same with other assets classes is harder or not even possible.
It's pretty trivial to make Bitcoin virtually useless. Pass some laws that effectively render it useless to corporate entities and it's basically banished to the shadow realm. Won't stop criminals from using it, but you can regulate crypto to hell for 99% of the population.
The government cannot make bitcoin worthless through legislation. The government can make bitcoin worthless through an attack that costs less than 1% of the DoD budget though.
What do people use Bitcoin for? Buying drugs online! If the demand for drugs is inelastic, then presumably the demand for a way to buy them online is somewhat inelastic too?
The law fighting internet stuff seems very difficult. Just look at the rich media companies. Name me a movie or song and I'll download it. Even with all their money and laws they couldn't stop this. So how would you expect them to stop internet money.
The only advantage over fiat is the theoretical purchasing power stability due to algorithmic supply.
The fee does not depend on transaction value, so the greater the value transferred the smaller the fee in percent. Bank transfer fees are a percentage of value transferred, in my experience.
Strictly looking at this, it is somewhat more unfair to poorer people compared to banks.
Bitcoin+all of crypto combined is nowhere close to that scale. Bitcoin sees around 300k transactions per day. It's miniscule.
It stands though that it's orders of magnitudes less than USD.
We will never find out such data for USD anyway, where do you verify for yourself that the claimed 2.7T is accurate?
---
Ben Bernanke (ex-FED Chairman) - The dollar’s international role: An “exorbitant privilege”?
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
> A great deal of U.S. currency is held abroad, which amounts to an interest-free loan to the United States. However, the interest savings are probably on the order of $20 billion a year, a small fraction of a percent of U.S. GDP, and that “seigniorage,” as it is called, would probably still exist even if the dollar lost ground to other currencies...
> The safe haven aspect of the dollar is actually a negative for U.S. firms, since it implies that they become less competitive (the dollar is stronger) at precisely the times that global economic conditions are most difficult.
Dedicated privacy coins like ZCash have existed for years, and even more modern systems like Aztec are on the rise.
Eventually Aztec will allow not just private payments but running arbitrary code on-chain in private.
The mainstream is completely clueless.
I understand there are different uses for all of these coins, vaguely. But I also have no idea which are scams, which are not, and which are good for what I need. Further, I have zero idea where to even start to evaluate those three points, let alone the trading process.
And a lot of that issue is because crypto zealots are sort of awful to deal with, because many times they are needlessly condescending. Ask for help in crypto forums, and you get responses such as, "don't be clueless" or "use [insert weirdly named coin here], obviously [zero references to follow this statement]."
Also, the number of people shilling various coins is genuinely startling. Too many people have too much invested in too many coins for me to be comfortable that I'm not being scammed.
Source: I am as mainstream as it gets with this stuff.
I can't even see what this website is doing and you expect people to just trust their money with these types of actors? I think that says more about you than "the mainstream".
https://helplbrysavecrypto.com/faq
Video summaries:
> SEC vs. LBRY Could be DEVASTATING! Viva & Barnes HIGHLIGHT:
> SEC vs. LBRY Crypto Lawsuit
the issue is that actual unregistered securities can't be traded by custodial exchanges, and registered securities have to be traded by broker dealers, and none of that exists or has any liquidity in crypto land.
but the autonomous non-custodial exchanges have more volume and liquidity now anyway
so nobody cares.
I don't see how SEC could regulate cryptos much more than they already do. I suppose the could force US exchanges to disable withdrawals like the Chinese government did a while ago for Chinese exchanges. Other than that there's nothing they can do regulation wise.
If this harassment continues, how any startup will be able to continue fighting bigger fish like YouTube, FB etc is beyond me.
Maybe by not selling unlicensed securities. Like bitchute is doing, or daily motion, or rumble, or even peertube.
I'm not saying that selling unlicensed securities should be illegal, but it currently is, and if you look at LBRY, there's a strong case that it did sell an unlicensed security.
I always assumed the closest you could get to anonymity with any blockchain based coin is to use a burner wallet, and convert it cash as soon as the transaction is complete--but that's just using cash with extra steps.
All transactions are visible, sure, but Bitcoin also enables mass dilution and mass money washing.
Let's say there is a bitcoin address A on which you have identified that 50% of the Bitcoins are legit, and 50% came from a suspicious flagged address B.
Now what? Do you also flag A as "suspicious". What if A also made thausands other payments, do you flag all the recipients as suspicious?
Let's say you are drastic and your external system only allows payments from the addresses with a 100% verifiable and clean history. Now all I have to do as an attacker is to make a payment to your address from a flagged address I own, and all your bitcoins are also now flagged for life.
You quickly end up flagging the whole address base as suspicious, because there is no way to :
- block deposit
- differentiate Bitcoin X from Bitcoin Z
Or am I missing something ?
You are in general correct.
However, there is currently no market price difference for "untainted coins". Some are expecting a secondary market to appear, some are not. A lot to uncover in this area!
https://www.metzdowd.com/pipermail/cryptography/2020-Decembe...
> The pseudonymity of coins being owned by the bearer of some cryptographic key is a failure;
> People have been eavesdropping and aggressively analyzing the block chain from day 1.
> And the block chain will always be there, it will always be public, and it will always be subject to further analysis.
> And we are learning that analysis of that record is sufficient to destroy any pretense of anonymity or pseudonymity.
The code is complete and is open for review.
And confidentiality isn't the same as fungibility. To be fungible all transactions need protection, so it cannot be opt-in. This is what Monero provides.
Also, Monero actually focused on on-chain scaling with it's dynamic blocksize, as opposed to Litecoin that follows the Bitcoin way of second layer scaling.
> What Litecoin provides is far from what Monero provides.
Monero's privacy technology is a bit more nuanced than Litecoin, but again, this is also a feature, not a bug. Litecoin's technology being simple means it's more difficult to get wrong, and also allows for scalability overhaul improvements, which cannot be applied to Monero (read the MimbleWimble whitepaper for more info on this).
Even if many of these activities cannot be identified today, it seems likely that many peoples transactions will be unmasked at some point in time.
I would not recommend using bitcoin for illegal or embarassing activity.
A complete transaction history for users which were attracted by alleged anonymity?!
The ability to extort even if you just traded with someone who’ve traded with someone shady?
The possibility to thread ceasing of wealth without one judge approval needed?
Ability to manipulate the price by extorting whales?
The ability to extort miners because all of them store and share child pornography via the blockchain?
What could possibly go wrong...
The answers in here are horribly sad really.
That crypto is still a low percentage of overall illicit transactions makes sense, but give it 10 more years and that wont be the case anymore.
Which is a baseless assumption.
Nobody with a modicum of opsec knowledge would even use Bitcoin for secure, secret transactions. There are better alternatives
Get over your conservatism and accept the fact that crypto is the future.