Chainalysis CTO said blockchain is easier to trace than paper money
lancengym.medium.com
lancengym.medium.com
Wait, you mean something that literally tracks any and all actions in a literal chain of history that is immutable is easy to track?!?
You mean that pattern recognition can be applied to even “randomized” in both size, time, and destination of transactions can be done to track like how they can track burner phones?
I’m shocked! Shocked I say!
Because some people are corrupt, you feel no law should apply to you or anyone?
Or... really, I can't come up with any sensible interpretation of what you wrote other than that.
> oh so you think you're above the law now?
The ledger as a permanent history available to the world, in real time, of every single transaction.
arguably a selling point. just not for selling large quantities of online drugs.
> The Ex Post Facto Clause, contained in Article I, Section 9, Clause 3 of the Constitution, provides: “No . . . ex post facto Law shall be passed.” The phrase “ex post facto,” Latin for “after the fact,” refers to laws that apply retroactively. While the Ex Post Facto Clause on its face might appear to bar all retroactive legislation, courts have applied the Clause only to penal laws.
> Congress has much greater leeway to enact retroactive legislation in the civil sphere than in the criminal sphere. However, certain constitutional limits apply, and courts interpreting ambiguous statutes apply a general presumption against retroactivity.
Paper money was never designed to be tracked, and IMO that's a good thing.
You're saying you'd like to see better tracking of paper money?
Even when they are deposited at a bank the banks don’t tend to keep those records forever, they have lists of serial numbers that they need to watch for but if you deposit cash into your account the bank would hold the bill information for a relatively short period of time and they don’t actively share that information with LEOs or other agencies unless explicitly requested to do so.
Even with robberies it sometimes takes years or even decades before enough bills surface to actually trigger an alert and many of them never do.
Not to mention that there are billions in counterfeit dollars in circulation at any point in time and many of them are rarely caught because they never reach a point where a good enough forgery would be discovered.
People consistently don't listen.
Crypto pumpers on the other hand tend to not care and say whatever BS they want to pump their bags.
Such advocates are the fringe. Most bitcoin advocates are saying "If you're not buying bitcoin you're an idiot! It's easy money! My critics are no-coiners who didn't listen to me!"
They're not the fringe, they're the core that the fringe pump monkeys looking for a quick buck latch onto and promptly ignore.
The majority of people who talk about literally anything aren't worth listening to, and if you can't differentiate between the two, we have bigger problems to work through.
These are fringe. The cynical and predatory advocates are the ones who are actually heard by the naive marks.
It is a shame that your only exposure to the space comes from pump monkeys who don't understand that a blockchain is barely more than a distributed linked list (hell, it's basically just glorified git) and the real innovation was not the data structure, but the integration of proof of work to create Byzantine fault tolerance.
I'm pretty sure the only difference between a Merkle tree and an Oak is the theoretically infinite branching. Is that right? /s
Me? I think the tech is intellectually interesting, but doesn't really scale to the point where it can provide a "world economy". If nothing else, with Proof-of-Work, you need 51% of ALL available computing resources dedicated to maintaining the chain, which is an incredible waste (if you don't have a majority of all available computing power, the chain is vulnerable). With Proof-of-Stake, you need a majority of the economic system dedicated to just maintaining the economic system.
So, intellectually interesting, but practically useless.
It's pretty much focused on heavily tech-savvy people.
Basic strategy: buy and hold unopened copies of the 'flagship' sets of each Lego theme. If a theme is small enough, get complete sets of sets. For instance, the Muppets minifigs were sold in blind bags, but every case was guaranteed to hold three complete sets, so buy a whole case, not random bags. The Speed Champions line, after the switch to 8-stud wide models, had a dozen or so sets over two years (so far).
At your time horizon, decide whether you want to sell as parts or sets.
In 2000, the UCS X-wing (7191-1) was about $150 new. There appears to be one incomplete set on the open market for $831. The parts are worth about twice that if sold individually. I suspect an unopened set would go for about $2000, implying a return rate of about 12.5% APY.
Pattern matching has been successfully applied to phone logs between seemingly randomized src and dst phones. I'm busy at work and terrible at communicating clearly but what I am trying to say is that even when person A is using multiple phones and person B is also using multiple phones, there is still enough of a pattern involved such as call lengths, time of calls, etc to be able to sniff out and match these seemingly random devices to specific users.
I would have to dig up papers/reports on times this has been successfully done and reported publically.
But my point is that even running shit through coin mixers etc there is a high probability of there /still/ being enough latent information floating around to suss out a track between src and dst of blockchain transactions.
The Hezbollah Connection https://www.nytimes.com/2015/02/15/magazine/the-hezbollah-co...
https://archive.ph/4uWfM#selection-1937.0-1937.13
Section 5+
> they could see that a given assassin had an “operational phone in his front pants pocket” and “in the back pocket a phone that he used to call his girlfriends.”
The point is, cash is hard to trace. And that's a good thing. I personally refuse to shop anywhere that refuses cash, and I encourage you to do the same if possible.
And also cash is king and coins and bills are very neat.
Would you support removing cash if everyone was given a bank account? Perhaps with the government?
OPs point was that cash not being accepted means you have no privacy in a place you might want it. Governments love credit cards, easy pay, etc. Especially in the case where your transactions are kept with you forever so that future governments can punish you.
... that couldn't be closed, limited, frozen, or surveilled?
Sure!
But otherwise, not a chance.
Giving somebody "a bank account" is just giving them a pretty piece of paper. All the useful properties of that pretty piece of paper are revocable at a whim.
https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=3...
"The New York City Council has approved, by a vote of 43-3, a bill that would make it unlawful for most businesses to refuse to accept payments in cash, with limited exceptions."
It was supposed to go into effect November, 2020. I don't know if COVID concerns about handling cash meant that businesses were formally or tacitly allowed to require cards since they could be touchless (tap) or close to it (wipe down the hard plastic keys).
I get it that there's multiple reasons they wouldn't want to and they can say it's their policy, etc but it's on the paper money itself "LEGAL tender for ALL debts public and PRIVATE".
It's like when you hear the stories about people paying debts with buckets of coins. Obviously a huge PitA but technically allowed.
If they make you pay before giving you the food, then they can refuse to take cash.
> Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues." This statute means that all U.S. money as identified above is a valid and legal offer of payment for debts when tendered to a creditor.
That taco shop that doesn't want to deal with cash isn't a creditor.
And everywhere else in the U.S. if the Payment Choice Act passes.
https://www.cashmatters.org/blog/america-legislates-for-cash
https://www.congress.gov/bill/117th-congress/house-bill/4395
Edit: Those jurisdictions have "pro-cash legislation" according to the ATM Industry Association Stateside Monitoring Service, but the source appears paywalled:
Went to a concert in SF at the Independent last month and the bartenders wouldn't take cash. You're saying they were breaking the law?
The legal tender law is about what forms of payment can validly settle a debt denominated in US currency.
That is a far cry from "what must businesses accept in daily consumer purchases".
Congress could likely force businesses to accept all forms of legal tender, but hasn't.
If you look at the edge cases, it becomes more clear why the federal government doesn't require businesses to accept paper cash. Imagine someone attempting to purchase a sky scraper in Manhattan with cash. That would be a mountain of bills which would be unwieldy to carry, transport, and count. Or what about if someone insisted on buying your house with all pennies. Would you like being required to accept that payment?
The idea that cash shouldn't create an undue burden to a business is an important one. And that's why the federal government doesn't require the acceptance of cash for transactions. It's best to let the parties involved decide what method of payment is most appropriate.
As for the burden: if taking money is a burden, why are you in business to begin with?
However, a store owner can choose to only accept bottle caps or conch shells in exchange for their goods if that's what they want to do. If you go up to the register and you tell them you want the widget, you have to pay whatever they're asking in exchange. Doesn't have to be cash, credit or even money of any sort.
As an aside, our currency used to say that they could be exchanged for the denomination in Gold (or silver, depending on the note) on demand at the US treasury.
For example, it is my understanding, most banks and ATMs scan serial numbers when receiving or distributing cash; oddly, banks will not give you itemized list of serial numbers of the bills they distributed, which would be useful in cash seizures. Also my understanding that most cash withdrawals are spent with vendor that deposits the larger bills back on receipt and do not recycle them back into circulation. As such, not sure what percentage of cash transactions are traceable, but not an insignificant percentage and per person, given largest enough cash flow, would be very hard to stay anonymous; which is not even account for tracing asset flows themselves related to the transactions.
Core point is like blockchain, people do not realize how traceable cash is and many falsely assume it’s completely anonymous, which it is not.
Unless you're also an expert at disguise and also avoiding security cameras to and from the stores. Every time you buy something.
That is potentially a clue. But in itself would not answer to a legal certainty (that one fact) that a bill with a serial number in a nefarious transaction means the person who withdrew it (from the ATM) made the transaction.
1) I can withdraw $300 from an ATM and purchase a coffee (using $5 of that). That $5 might be refunded as change to someone who then uses it (to buy chinese food) and then as change to another person. And that person purchases something that they shouldn't.
2) Of course at scale with large amounts (say $300 withdrawn 10 times to equal $3000) used in a nefarious transaction yes they could trace back but they still wouldn't have proof that the person withdrawing it didn't pass it to someone else (who then used it). Further they can't require you (in the US) to disclose what you did with the money after you withdrew it. However they might try to convince you you have to answer and tell them.
3) That said of course like with anything again yes it would point them in some way to you and then might be able to find another way to then focus on you and get what they need (in order to get a warrant to do a search or get other records released).
My assumptions include:
- Knowing how cash is flowing is extremely valuable to governments for a number of reasons; economic, investigations, counterfeits, etc.
- Cash management businesses scan 100% of their cash received or distributed, voluntarily provide that data and meta data to governments, and majority of cash transactions are non recirculated, but withdrawn, used, deposited.
- Governments have a wide-spectrum of resources to trace cash on a bill by bill basis; likely key methods include face scans, serial numbers, and location data via apps/cell.
- Assumption that if you combined all the prior assumptions and fact that many governments have millions to research topic, often leverage their authority, etc — and it is not a stretch to believe governments are able to identify significant percentage cash transactions if prior assumptions are true.
There are literally serial numbers on every bill printed in the United States.
It shouldn't even be legal for a shop to refuse cash. I understand the grey area of some asshat coming in with $300 of pennies, but outside of those edge cases, it should be illegal to operate a physical store without accepting cash, and without putting in limits to convince people not to use cash.
How do the unbanked pay their electric bill?
1 of three ways.
1. They walk into the electric company directly and pay directly (no fees)
2. They walk into a store that "supports" said electric company and pay (with fees)
3. They find a kiosk that accepts the cash and pay (with fees).
1 implies they have access to a vehicle or that they take public transportation. The problem is that public transportation is trading their TIME for money, the other problem being, public transportation only exists in cities.
These sorts of policies have an adverse effect on the poor, making them poorer and increasing the likelihood that they cannot exist in our society.
The question is, what are the benefits of not accepting cash?
The answer is that it's cheaper for the business.
I'm ok requiring businesses to pay that expense if it means people can walk into a physical store and be guaranteed to purchase something.
Credit card processing fees, cash collection services (ie hiring armored trucks), theft concerns (both from employees and robberies), and the accounting headache of dealing with cash are all valid reasons depending on the area and business.
There are trade offs on both sides of accepting/not accepting cash.
It's that the state has never, ever, been used against the poor.
In the UK, coins are only considered to be legal tender up to a certain amount. This amount varies depending upon the value of the coin. See: https://www.royalmint.com/help/trm-faqs/legal-tender-amounts...
Is there any equivalent rule in the US?
If a place is cash only, they simply lose out on my business. I'm done using their shitty ATM in the back with its $5 fee, never again. And I'm done helping these cash-only businesses evade their taxes.
My communications are digital. My calendar is digital. My concert tickets are digital. Even house keys are turning digital. Physical cash is an anachronism.
If you need privacy, the solution needs to be encrypted value on refillable cards or a blockchain or whatever it is. But not grimy pieces of paper. Digital-only, please.
Edit in response to comments: thanks, but it's never been a problem. I have multiple credit cards and I can call 24/7 to resolve an issue with one and use another as backup.
And then there's also my debit card, Venmo, and PayPal to be able to fall back on.
And if the internet is down for days across my whole city then there might be even bigger problems to be worrying about...
So just never had a bank holiday as any problem, not even remotely.
Recently happened to be in a bank and teller randomly mentioned that they had just updated their systems and if internet goes out they are no longer able to do any transactions, including distribute cash.
While you typically are still able to use ATMs and pay by card, any glitches you encounter can only be resolved after the banks open again.
In the past month I've encountered two such glitches: once the ATM debited my account but did not give me the cash, and another when my card payment errored out repeatedly and I had to pay cash.
Having some cash on hand can be prudent under these circumstances.
Everything was resolved by next day, however.
Happened at least once with a major country-wide bank in EU this year with some of my friends, and I doubt it's either the first or the last occurrence.
That's why I carry at least two (physically _and_ in Apple wallet). One Visa, one Mastercard, one is issued by my credit union, the other by a large bank.
If both Visa and Mastercard are down and both banks are unreachable then there are bigger issues. Connectivity issues where more common when transactions relied on landlines. It's pretty rare now.
I also carry some cash as last ditch backup. Some places may be temporarily not accepting cards.
Is it appropriate to bring identity politics into the discussion around the utility of cash? Or, why do your opinions matter here?
When I see a business that doesn't take credit, I think... tax evasion.
It pains me every time I go to Costco and I see contractors dressed in their work clothes pull out a wad of cash to pay for their groceries. They are effectively getting a 30% discount on the price I pay by not processing their income through the banking system and not paying their fair share of tax on it.
In democracies. For as long as the government remains stable.
Cash can be used outside of the law. That's exactly WHY it's important to have in a free society. To say otherwise would be saying that morality and legality are one and the same.
Maybe but I default to, doesn't want to pay credit card fees.
The point of Bitcoin is to enable anyone to exchange value with anyone. And it does that very well. When the US justice department declared that credit card companies had to stop processing donations to wikileaks I could still donate through bitcoin.
Also he literally links the original paper, quoting the part where it talks about transactions being harder to trace. "without telling who the parties are".
I came here hoping for an interesting discussion about Monero, ZCash, Tornado Cash on Ethereum, and Halo/ZK proofs. Disappointing!
https://arxiv.org/pdf/1704.04299/
The problem is also one of credibility, Bitcoin was supposed to be private and breaching privacy has proved to be pretty trivial. Encryption is hard, but maintaining anonymity is much harder.
From the paper - "Our techniques show that Monero is not necessarily a dead end for investigators."
And then offers zero evidence to demonstrate that investigators were able to use anything from the seizures.
This is not evidence - "They (mistakenly?) advised their hopeful subscribers to publish their email addresses (hexencoded, but publicly visible) in the Monero blockchain, leading to these transactions being identified" [31]
[31] - https://steemit.com/shadowbrokers/@wh1sks/ theshadowbrokers-may-have-received-up-to-1500-monerousd66-000-from-their-june-monthly-dump-service
Link is broken - where is the evidence that 1500 XMR was transacted?
https://www.getmonero.org/2018/03/29/response-to-an-empirica...
If any appreciable amount of money was sent this way you would see blacklisting of bitcoin addresses where sending / receiving money from that address would get you in legal trouble. Bitcoin creates a situation where you cannot be physically prevented from sending the money but everyone including the gov’t will know you did it so it’s so it’s not censorship resistant to any gov’t that cares to get a wrench.
It makes continual leaps from Satoshi Nakamoto's intentions to short-comings of non-BTC cryptocurrencies, and then snowballs this into the tremendously non-sequitur subheading Bitcoin has failed. Cryptocurrencies and DeFi platforms are now more vulnerable to privacy breaches and hacking than traditional banking.
Personally, all I see are a string of obvious scams collapsing. These scams were perpetrated by imposters pretending to be a part of a movement so that they could better tug on their victims' heartstrings. But I fail to see how the goals of these imposters should be conflated with the intentions of Satoshi Nakamoto, purely because the imposters bastardized Nakamoto's tech.
Also - the title is barely the subject of the article, but even if it were, I don't think that it, in any way, stands contrary to the goals of Bitcoin. I could see it being an issue for a blockchain meant for privacy, like Monero, but I didn't see any such reference in the article.
I think you and rational people agree, it's just the rational people see the whole space as a scam, and they're not wrong.
It's been, from it's very start, a Dunning-Kruger trap sold on lies. First it was supposed to be a currency, but was created from the ground up to be deflationary, which is a death knell for a currency and leads to perpetual recession.
Then it was an asset that can only go up, until the price crashed and people realized its intrinsic value is 0 and there is no floor.
Then it was an inflation hedge that would keep you up when markets went down, except it turned out to be largely correlated to the market.
Every use case they come up with is a bag of magic beans with the sole intention of getting you to carry their bags. I've heard it described as digital beanie babies and that moniker is more apt then most could have imagined.
If, tomorrow, everyone suddenly forgot what e-mail was and someone suddenly tried to invent it there would be a ton of people angry that it served no purpose and would ever catch on because it would be full of spam and people would have to run their own email servers instead of using centralized messaging servers and all the same arguments people make about crypto would re-surface ("well, maybe people could run servers on behalf of other people" "well doesn't that undermine your precious decentralization?" "somewhat, sure, but federation is still valuable" etc.).
>Then it was an asset that can only go up
>Then it was an inflation hedge that would keep you up when markets went down
All of these are just random narratives that you sometimes see being pushed on reddit or twitter. No credible person would make the last two claims.
I get it, shitting on crypto has become hip especially in the last couple of years. But it doesn't change the fact that the general trend for bitcoin has been a steady increase in value, and given how much money is currently being invested to crypto adjacent businesses I don't see the trend changing anytime soon.
> I get it, shitting on crypto has become hip
To be honest if GP was trying to shit on crypto they would've mentioned the ridiculous NFT craze and multitude of shitcoin grifts of the last few years. They're being very charitable by sticking to some very simple things.
> the general trend for bitcoin has been a steady increase in value
There has been nothing steady about Bitcoin's value, wild swings up and down are the norm. I mean if you look at the exchange rate to an actual currency 10 years ago vs today then pretend nothing happened in between, then yes that's a nice steady rate of growth. However that would be ignoring multiple huge, sudden spikes and falls that have happened during this period.
Not exactly the reassuring defense of crypto.
To my mind Crypto has not yet made the case that it is better than the current system and the extreme impact that all these scams have on the currencies they are run on, e.g. high volatility in price, indicates that they are substantially worse as a currency than the US dollar.
The traditional monetary system prevents fraud by relying on trust and reputation of participating entities. Frauds can happen naturally but also can be reverted by making a few calls.
Of course this system suffer from its own problems specially being prone to corruption. You need permission to participate on a monetary network that is controlled by few. I'm not even talking about underground gray black market activity because unless you were living in a cave it wasn't long ago that Robinhood and others were blocking, reverting and force selling stocks from Gamestop and AMC.
Such things are rooted on the creation Bitcoin: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" is written on the genesis block.
Bitcoin transactions are final and do not depend on trust. You don't need permission to participate. Bitcoin won't kick you because you spoke some wrong on social media or is trying to raise money from a cause your government doesn't like like Belarus or Nigerian protests.
As many things in life the alternatives have trade offs. Personal responsibility is important. Keep your keys safe and do not participate in scammy or bleeding edge experimental defi or meme coin schemes.
Everything you said above is true and as a result crypto is fundamentally unsuited for the vast majority of the human population to use and always will be. Unless they begin to adopt the same safeguards that the current monetary system uses.
1. Bitcoin addresses are 100% traceable from the first to the last transaction that's ever taken place.
2. Tracing a Bitcoin address to an individual depends on the individual's OpSec.
For example: bank account to exchange to Bitcoin is traceable with the help of the exchange's KYC records, assuming they have them. From there, any further Bitcoin transactions can be traced to an individual. Buying Bitcoin with cash in person may make traceability to an individual more difficult, but then you'd have to trust who you're meeting in person to not take photos / videos or have a meeting place swarming with CCTV, and both parties not already be using individually traceable Bitcoin addresses.
Monero and / or exchanges with little to no KYC (therefore, use at your own risk) may allow for some level of 'cutout' in the traceability. Or tumblers or coin mixers or other shady, questionably trustworthy services.
> This is worse than what the central banks have done.
No, it's not. Even a coin that is emitted one per second forever is disinflationary. Not only is the yearly supply inflation rate perfectly predictable (unlike fiat), it also steadily converges toward zero (again, unlike fiat). In the long term, the difference between finite and infinite supply is negligible as long as the yearly supply never increases [1].
[1] https://john-tromp.medium.com/a-case-for-using-soft-total-su...
[1] https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHp...
Yes people can make an infinite number of currencies, but they are all parallel systems. Making a new coin doesn't inflate the supply of bitcoin, it is just one more thing that bitcoin could potentially be exchanged for. And in practice it seems unlikely that more than a few thousand could be adopted by enough people to have a value appreciably different from zero.
A competing monetary system relative to the Federal Reserve isn't something these interests are all that thrilled about. Hence, regardless of the soundness or unsoundness of various cryptocurrency approaches, ex-FBI officials should hardly be viewed as independent credible third-party voices on the issue.
Regardless of the truth or falsehood of your observation, publicly-verified blockchain-backed currencies are easily traced (especially now that they've become valuable enough for companies with money to invest in solving the problem). The possibility that the messenger has a vested interest in amplifying this message is orthogonal to the truth of it.
https://www.cnbc.com/2021/12/07/treasury-wants-to-crack-down...
That is true but honestly cryptocurrency isn't a threat to the Fed at all.
Go to GBTC ATM shops in Barcelona, they'll do KYC-less $100K transactions for 4% transaction fees. I was shocked and walked out of the shop.
If you come to South Florida, you'll find that there was an era where cartels would pay high schoolers to roll up to ATM's and empty them of cash one by one.
Crypto ATMs have 7%-15% fees with no KYC up to 1k USD and have grown about 5x-10x in the last 5 years in the USA.
Ask yourself, do Somalis in Minneapolis care about cryptocurrency or did the proliferation of Crypto ATMs in the city and subsequent drought of court cases around Al Shabab money laundering in the region have some sort of relevant relationship?
If you go to China, from what I've been told, there's private OTC massive wechat groups that have coded words for crypto transactions.
In India, it's the same now, you can liquidate crypto on the street with ease.
The real problem now for the market cap of cryptos is the ultimate draw down in the growth rate of KYC'd accounts in demographically high gdp growth countries.
India implemented 1% per trade, zero loss deduction, 30% cap gains taxes on crypto...essentially incentivizing indigenous stock ownership over any and all crypto assets.
Portugal implemented crypto short term capital gain taxes as well.
It might be easier to trace than paper money, but it's still a world class indefatigable money laundering substrate that trades well with watches and other asset classes.
Customs agents at major ports of entries have not been checking watches. Miami etc...
FWIW, "Crypto ATM" is sort of a misnomer.
AFAIK, no crypto ATM in the USA allows you to sell cryptocurrencies and pull out cash. You can only buy them, which as far as I'm concerned, is the easy part.
Ironically, a version of this was in private fiat currency - the coins in the John Wick movies were used this way.
For an example, most cryptonote networks function this way unless they have explicitly damaged or disabled the functions responsible, like in the case of Electroneum.
What's stored in the blockchain that makes it work are public keys, and how you can talk to nodes who can append to the blockchain have to work over a network. You can always walk the whole chain at any time and account for all the activity of all public keys, and that is actually required because it's the primary way that the network knows "who" has what.
So what connects the public key to a person?
If:
- private keys are never in the hands of a third party (public keys don't matter), and
- transaction processors/miners are only available over secure channels that somehow dissociate the involved keys from loggable networky things like IP address, and
- information like IP address is not stored in the blockchain,
then a blockchain would be untraceable to anyone who does not have a complete view of all Internet activity between all the participants.
Anyone with your private keys (which you can make more up any time you want) could transact under those keys as long as they can talk to enough processors/miners through any transport method, and alter "your" stuff, that's why you guard those with your life.
- enter the data somewhere
- put a tag on the product
- scan a tag
and where they could, knowingly or not, produce false data?
The issue here is a social/regulatory/legal one. The current international shipping game is a cartel business, and the cartel doesn't want competition - so they can use government, brand recognition, etc to maintain their moat.
It's not that the blockchain version isn't clearly better, it's that the getting there part is a very difficult and tricky process.
I don't understand why even this is sensible. Why not just use a database? The only miners/validators on a produce blockchain are likely to be agri-companies anyway.
Who's gonna run it? Any individual company in the chain has a vested interest in fudging the data, and the technical means to do so. A private third-party lacks oversight (and thus could also be given a vested interest in fudging data). A government agency could do it (assuming one's government is trustworthy, which is often a poor assumption), but that would likely preclude international cooperation unless it's something like the UN running it (and even then).
> The only miners/validators on a produce blockchain are likely to be agri-companies anyway.
Preferably you'd use an existing public blockchain rather than spinning up an entirely new one.
Even if there was such a blockchain solely for tracking produce, the fact that no individual agri-company has control over its data makes it more trustworthy/impartial than some centralized database.
However, that's still missing the point that this is fundamentally a problem about humans in the real world and the technology can't magically change that. The problems with supply chain authenticity aren't a question of record keeping but whether those records are accurate. If my inspector is being paid off, he'll do the same thing for the blockchain record that he was doing with paper. If things are being tampered with in shipping, the same people will do the same things and you'll have the same dodgy goods arriving at their destination except they'd now have valid but inaccurate blockchain records.
As usual, the blockchain solution isn't adding anything except creating a market for the people selling it. It doesn't solve the real problems and if you spend time tackling those, you won't derive any benefit from diverting more your revenue to some VC's yacht fund.
From each participant's perspective they cost far less, both in terms of implementation and ongoing maintenance, than attempting to build and run a centralized database oneself (and if you're gonna match a blockchain's trustworthiness, every participant would indeed need to run a database oneself).
> and add significant performance reliability problems
1. Nothing beats the performance of /dev/null.
2. They do the precise opposite of adding reliability problems; they're in fact notoriously difficult to bring down given the sheer degree of data replication.
> without adding trust.
The comment to which you replied describes at length how they add considerable degrees of trust. They only "don't add" trust if - again - every participant is running one's own database, at which point - if they're expected to agree with each other - you've got an ad-hoc, informally specified, bug-ridden, ludicrously expensive version of half of a blockchain.
> If my inspector is being paid off, he'll do the same thing for the blockchain record that he was doing with paper.
Which would then be public and uncensorable evidence against that inspector.
> If things are being tampered with in shipping, the same people will do the same things and you'll have the same dodgy goods arriving at their destination except they'd now have valid but inaccurate blockchain records.
And that inaccuracy would - upon detection - become public and uncensorable evidence against those tamperers.
This comparison isn’t valid: you’re using a shared blockchain service with high transaction costs but then saying the comparison can’t use a shared service.
> 2. They do the precise opposite of adding reliability problems; they're in fact notoriously difficult to bring down given the sheer degree of data replication.
So you’re saying I can process blockchain transactions without a reliable, high-speed network connection? I never have to worry about fee increases or high volume impacting my clearance time?
> The comment to which you replied describes at length how they add considerable degrees of trust.
It describes a number of distractions from the core problem but doesn’t solve any of the hard ones. The fundamental misunderstanding you and the poster are operating under is that this kind of system is based on anonymity. Since the real world is not, you don’t need anything which PKI doesn’t give you far more efficiently.
> > If my inspector is being paid off, he'll do the same thing for the blockchain record that he was doing with paper.
> Which would then be public and uncensorable evidence against that inspector.
Just like it is currently, except with hefty transaction fees. The problem here is that you need someone to figure out where things are being faked in-person. A blockchain can't solve that because the problem happens in the real world and if you setup an oracle to inject that information you're just renaming that existing trust relationship, not removing it.
> > If things are being tampered with in shipping, the same people will do the same things and you'll have the same dodgy goods arriving at their destination except they'd now have valid but inaccurate blockchain records.
> And that inaccuracy would - upon detection - become public and uncensorable evidence against those tamperers.
Just like it is currently, except with hefty transaction fees. Again, “public” isn't relevant — all of the parties already know each other and if it goes to court they're going to produce records — and “uncensorable” is just meaningless blockchain marketing fluff because that's not a relevant problem or one which a blockchain effectively prevent.
In all of the cases I outlined, the problem requires real world checks to find who is faking the records. Whether those records are paper, actions tracked on a website, PKI signed documents, or transactions recorded on a blockchain is a rounding error on the difficulty of setting up the real world legal system and monitoring which actually prevent cheating. If I have a problem with counterfeit goods showing up, everyone involved is going to say that their records were accurate and the problem must have been somewhere else – all a blockchain tells you is that you paid more to store the receipt, not that it was accurate.
The parenthesized bit immediately following what you quoted (in addition to other parts of the comment and its grandparent) specifically explains why the comparison can't use a shared service: who's going to run it while being trustworthy for all users of it?
> So you’re saying I can process blockchain transactions without a reliable, high-speed network connection?
You need one for any other database, especially a shared one as you suggested above. In fact, it'd need to be more reliable and more high-speed for a non-blockchain solution; even full nodes don't require continuous uptime (that's only needed for mining or staking, neither of which is necessary to query and post transactions), and blockchain transactions tend to be pretty light on bandwidth.
> Just like it is currently, except with hefty transaction fees.
1. Citation needed on "hefty transaction fees". There are blockchains other than Ethereum, in case you weren't aware.
2. You're forgetting (or perhaps deliberately ignoring) that it's considerably easier to "figure out where things are being faked in-person" when the evidence of fakery is permanently in the public record. There's also far less room for plausible deniability on the faker's part.
> “uncensorable” is just meaningless blockchain marketing fluff
You might be surprised to learn that traditional database records, unlike those on blockchains, are trivial to destroy or otherwise tamper with. The inability to cover up fraud by editing transactions after-the-fact is nowhere near as meaningless as you assert.
> Whether those records are paper, actions tracked on a website, PKI signed documents, or transactions recorded on a blockchain is a rounding error on the difficulty of setting up the real world legal system and monitoring which actually prevent cheating.
And setting up said real world legal system and monitoring is considerably easier when the digital records are auditable by pretty much anyone and effectively impossible to modify.
> all a blockchain tells you is that you paid more to store the receipt, not that it was accurate
A blockchain tells you that the receipt was not and will never be modified. If there's an inaccuracy, that makes it much easier to detect it. If there's a pattern of inaccuracies, that makes it even easier to detect it and quantify it. What would've previously taken weeks or months worth of wrangling records from filing cabinets or arbitrary databases can instead be done in minutes or even seconds - freeing up time for the actually-hard parts of such investigations.
> Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
- Satoshi
The reality is that Satoshi envisioned bitcoin very differently from how things are currently implemented. They envisioned public keys being rotated, single use addresses, etc.
The current systems don't provide any of the privacy that the original paper sought.
> It is high time for blockchain enthusiasts to ask this question: Have the primary principals underlying bitcoin’s design — privacy, fraud proof, non-inflationary— been completely destroyed by today’s blockchain operators?
You can pick apart this Medium post if you'd like but I think it's really an excellent question. Read the original paper and ask yourself if what we're seeing in the market is really the "Satoshi vision".
Yesterday the average transaction cost was 0.7 USD. That’s pretty cheap as far as money transfers go, definitely beats most banks.
If everyone in the world tried to use bitcoin as a replacement for bank transfers, etc. then the fees would be astronomical
That's actually how the majority of Bitcoin wallets operate. I'm not sure what you mean here.
That’s literally how all wallets work in 2022, no?
Public keys are constantly rotated, addresses are single use.
Not to my knowledge? I believe Coinbase lets you manage any number of public keys but there's nothing enforcing a "burn on use". Also, obviously, there's a central authority that has your name, government id, and keys.
This technique, is so simple it should not be even be considered a technology, it is just a technique. A myriad of technologies can use this technique to add some additional properties, to an already existing technology. For example, in the IOT world, an oven connected to the internet, could be used only by a particular key in the blockchain, thus proving ownership to control the oven. One microtransaction can turn on the oven, or turn it off.
The most important aspect of bitcoin, is of course spam prevention. Gmail servers just block any unknown mail provider, just in case they are spammers. When spam was limited to email messages, that was a viable solution for the internet. This however is gonna change.
Synthetic data, i.e. deepfakes, are really gonna take off right now. Synthetic faces of people can be uploaded by the tens of millions to facebook each day. Synthetic photographs of places can be uploaded to Insta. Synthetic conversations can can be uploaded to twitter by the billions. Synthetic songs can be uploaded to bandcamp, terabytes of them every day. Synthetic videos can be uploaded to youtube, or tik-tok, petabytes every day.
The advertisement based free model of posting information on the internet, will go down in flames in less than 4 years.
A new technique is going to emerge, in which we send value to the hosting providers, for our information they are willing to host for us. That value, trillions and quadrillions of microtransactions, less than a cent each per day, it is difficult to track, but it can be done, the question which arises is, what can someone gain doing that?
Now as for Monero, I would imagine it has them shaking in their boots.
Also - Satoshi - who? no one knows, really? Dread Pirate Roberts, name insinuates that the role (of site administrator) was handed over to him. There has been speculation that he was not the creator of the site. Tor - created by the Navy.
Why? - Black money / create an "open source", super duper encrypted method of communicating that cannot be broken (unless you control 70% of the exit nodes, whoopsies), get people invested in using it. How many of the dealers that supplied on silkroad where "free-lance" and scooped up later (along with their product and cash)
There's a reason that neither CipherTrace, Chainalysis, nor Integra FEC got the IRS bounty for successfully tracing Monero transactions with all privacy features enabled. The latter two got a $500k grant to try, with $125k available for successfully tracing, but neither claimed that final $125k.
This also isn't an either/or where one crypto will win out. Different cryptos will continue to focus on different use cases. Bitcoin is one step removed from FIAT and just as traceable, but it's the first step you need to go from BTC to other cryptocurrencies - XMR for privacy, ETH for dApps and smart contracts, XRP to see what a CBDC will look like, LUNA for involuntarily donating your money to some south Korean guy, etc.
A critical weakness of crypto is that the actors involved are *less* trustworthy than government.
And this lack of trust and transparency and oversight; combined with the fact that anyone and his brother can mint their own crypto, makes a general consensus on the value of crypto unlikely.
Has anyone seen the financial records for Tether?
Tether underwrites the entire crypto marketplace. It is involved in more than half of all crypto trades. And it's unlimited supply is totally controlled by crypto market makers with every incentive to use it to manipulate the crypto market.
It's like giving NASDAQ and the NYSE control over the Federal Reserve. No possible conflict of interest there, right?
https://www.theverge.com/22620464/tether-backing-cryptocurre...
If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system, based on an agreed upon protocol with cryptographic controls. It isn't meant as an improvement to an existing system, but as an alternative system, and while we often hear of people who say it is a scam, that it won't work, that it can't work, the unbiased reality is that it is being used for value transactions and has been non-stop for over a decade now.
The phrase "a general consensus on the value of crypto" is equal to "a general consensus on the value of money". Crypto (as in cryptocurrencies, cryptoassets, and, in general, blockchain based digital ledgers) is a vast subject. Nothing stops someone from creating their own paper currency or non-blockchain digital currency (Nectar points, air miles).
There are for sure questions to be asked here about how unregulated, crowd managed currencies can be integrated into existing societies were money is heavily regulated, but that is another subject.
Those controls only address problems created by the distributed nature of crypto (double spend), but don't touch the most common types of financial fraud which is why wash trading and rug pulls are so common. Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly.
The human issues that we have from use of the system, fraud, P&D schemes, non-custodial wallets (exchanges) etc, aren't fundamental issues with the technology itself, but with the periphery. Cash can be used to buy drugs, bank accounts can be used for money laundering, financial markets can be manipulated.
We must be cognisant of the fact that where there are people, there will be misuse. Crypto is no different.
> Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly.
Must we assume that pricing is to be trusted? What pricing is this, exchange pricing? If you're using centralised exchanges then the issue is whether you trust the centralised exchange to keep an honest order book, and whether you're able to determine whether the exchange rate reflects the value of the token/asset.
Many people have recently begun trading on financial markets, see Gamestop, wallstreetbets etc, without the proper knowledge required to ensure they're making the right decisions. This is no different from buying BTC because your neighbour told you it'll hit $100k by Christmas.
These are societal problems from people who want to get rich quick and almost always get hurt trying.
LOL!
When you buy crypto, how do you determine what price is fair? Most people turn to an unregulated "exchange" that can easily manipulate prices in a multitude of different ways.
This is called "trust" --- blind, misplaced trust --- without any oversight or transparency.
You have reiterated a common crypto fallacy --- that blockchain accounting somehow makes the overall system "trustless". Nothing could be further from the truth.
> how do you determine what price is fair?
Well that comes down to you, doesn't it? Would you buy a litre of milk for $10? $5? $3? $2? $1? What about if you were buying some sterling to come and visit us here in the sunny UK, what exchange rate would you say is fair? £0.50? £0.75? £0.80? £0.85? What about if I was selling you a kg of Palladium, would you pay $100,000? $90,000? $70,000? [Assumed dollar currency but arbitrary to the point.]
That last question may be harder to answer without a google, as you might find it hard to determine what price is fair. If you can't determine the fair price for something you're buying, the question should be whether you should be buying it at all.
> You have reiterated a common crypto fallacy --- that blockchain accounting somehow makes the overall system "trustless". Nothing could be further from the truth.
It seems to me that you're having an adverse reaction to my comment, so I won't address the final two lines.
Sorry. At this point, hearing people still try to defend crypto as being "trustless" is kinda comical --- sorta like people who trusted and defended Bernie Madoff because he was once chairman of NASDAQ.
How many crypto rug pulls would be enough to convince you otherwise?
I do not subscribe that the view that "innocent have nothing to fear". If our transactions are visible for all to see then huge amounts of privacy issues become salient.
It's just that I don't believe secrecy is the solution.
Firstly, there is no digital secrecy. But mean maybe you have years long perfect opssec, but each of your partner transactions now need to be perfect. It's just not gonna work.
Secondly, why don't live in a secret world - the people I interact with know what I am doing each day - it's just either not worth their while to exploit me, or they are too polite, or exploiting their knowledge of me is kind of the point (my regular cafe just sees me sit down and the order is in). Yes the digital world made the marginal cost of exploitation much lower so third parties have got in on the act.
Anyway, the point is that it's either not feasible, likely or even desirable to move like a ghost through the world.
Technology will not magically fix our political problems - haters gonna hate, totalitarian governments gonna totalitarian. Our politics need to be solved with politics. I remember when we thought email and the web would create peaceful communities, when facebook would free the Arab world. And realpolitik always came back.
Please - let's not hope that some clever coding will fix deep seated political problems - especially with, of all things, money.
Let's get back to the brass tacks - informed, organised mass democracy. It's hard and dirty and means talking to other human beings. Not HN ideal :-)
Edit: TLDR
Do I want the director of the FBI to track my online spending? No!
Do I want the director of the FBI to track the money laundering by international cartels and criminals? Yes!
What's the difference? Democracy, individual rights, the rule of law, transparent law enforcement, strong institutions and so on.
I am reminded of a quote from Iain M Banks, where the hero was talking to a sentient nebula, and the background includes how the fleshy races would discuss if the nebula was "truly sentient", partly on philosophical grounds "but mostly because they could do immensely profitable things with a cloud of gas a million cubic parsecs in size"
This seems highly negative for society. We already lose hundreds billions of dollars a year to tax evasion.
Much confusion about crypto as some privacy preserving or decentralizing tool ignores the fact that increasing legibility will ultimately always enable centralization because it makes possible the creation of more sophisticated, larger structures.
Bad for customers to be sure. Most have no idea what they're doing and have fallen for a scam hook, line, and sinker. They (loudly, incessantly) proclaim to their friends the benefits of a new money paradigm while deriving all sustenance through the umbilical cord of OldFi. ChromaFlair on a Model T.
The article itself is a hot mess of muddled thinking. It starts by talking about the Bitcoin white paper (not a "manifesto"), then asking the absurd question: "Why can't DeFi make good on the promise?" The reason is that "DeFi" is about as far from Bitcoin as "car" is from "carpet."
The Bitcoin white paper describes the application of proof of work to the problem of electronic cash. The vast majority of DeFi projects are just centralized ledgers operating through trusted institutions. They are the very definition of "mint" in the white paper - a single, corruptible player that sets the rules - arbitrarily if need be.
"Blockchain" has stopped meaning anything when people decided to use it for anything remotely related to internet money. It's just become a fancy word executives put on investor decks to woo venture capitalists.
But it doesn't mean that the actual cryptographic technology called blockchain, i.e. a chain of digitally signed transactions with a distributed consensus mechanism, is itself insecure.
Monero, on the other hand, is designed to intentionally be hard to trace history of transactions on.
You'd know that hex address X sent money to Y, but you wouldn't necessarily know that X is John Doe that lives at 1234 Main St., nor you'd be able to tell that, knowing address X, John Doe also owns address Z.
With KYC laws you have a lot more metadata to be able to do correlations like that, but I'm specifically talking about the protocol and the technology itself.
I wouldn't call it a scam, it's written into laws we should all be pretty mad about. It's only a matter of time before KYC companies are the only way to engage legally with cryptocurrencies. While I don't think having all your transactions in a public ledger was ever a smart move for your average joe, just one de-anonymizing event and you're out to dry. I think the bigger issue is the ever eroding privacy policy in many countries.
Well, except for the important detail that KYC requirements don't preclude the need for warrants...
> They (loudly, incessantly) proclaim to their friends the benefits of a new money paradigm while deriving all sustenance through the umbilical cord of OldFi.
Yeah, it's almost like crypto can't possibly be a fully self-contained ecosystem, and thus it must by necessity have integration points with the rest of the world. Who could have ever predicted that...
Banks and law enforcement frequently share data without caring about warrants. One example: if you send a $10K wire (in the US), your bank may voluntarily submit a Suspicious Activity Report. And since they may be liable if they choose not to report, but are not liable if they do report, guess which option they typically choose?
What I'd like to see Grigg admit to with a straight face is his companies ability to trace monero. his company got the US Government bid for a $625,000 bounty to trace it, and its been two years...so i suspect Grigg's releasing this presser to take some of the heat off the inevitable "no, we cant" he's going to need to admit sooner or later.
https://en.wikipedia.org/wiki/Monero#Efforts_to_trace_transa...
Updated to reflect the thousands, not mil. bounty.
The problem is a well-understood but innate limitation to all sender-obfuscating cryptocurrencies.
Only those that allow sending coins to recipients without their explicit approval. On pure Mimblewimble blockchains, the recipient must sign for receipt and is much less likely to accept poisoned funds.
The remaining half states: "As an additional firewall, a new key pair should be used for each transaction to keep them from being linked to a common owner. Some linking is still unavoidable with multi-input transactions, which necessarily reveal that their inputs were owned by the same owner. The risk is that if the owner of a key is revealed, linking could reveal other transactions that belonged to the same owner"
Unlike Bitcoin, account based blockchains make this extra measure of privacy harder as the receiving and sending address is one and the same, however there's no limit to how many accounts one can have, so anonymity is still possible as long as acquiring the coins doesn't reveal your identity.
Those who sign up for cryptocurrency service providers (who are required by law to perform AML/KYC checks - and do so with the consent of their customers) trade away the privacy (of some of their) transactions for the benefits (most commonly, yield and ease of use) said services offer. This is not different from use cases of cash money, where getting cash money from an ATM or most money transmitters will reveal your identity, and while one is free to make in person transactions and remain "anonymous", if one wants to have a bank account or invest legally, then some level of KYC will be in place.
The article indeed asks the wrong question. DeFi can't operate legally without KYC/AML and customers know it. Your comment on the other hand seems to me to be making an error in believing DeFi users don't know this.
... have been on-going for years.
Complex systems introduce a huge amount of attack surface. Verifying systems is expensive and slow. And this was all a scam anyway.
This is mostly an article about the exchanges and gets a few details wrong but the overall gist is that the federal agencies and regulators are cracking down and finding out what the black hats knew all along.
Just like drug cartels know how to collect and store anonymous money but find it very hard to use it. Every time you try to buy something expensive or normal financial assets, you have to explain where the money is from or you may lose it.
Try to buy a house with anonymous crypto and find out.
It still would make a lot of sense for regular folks who prefer their online habits not to be tracked by corporations and sold around.
Ie we already have paper money backed by blockchain currencies such as bitcoin using self custodial, rotatable private keys at https://offline.cash. This gives one the benefits of paper money alongside the benefits of decentralized currencies.
People can shout and scream about it all they want but it’s just not going to be the tech utopia people dream of. As soon as it gains any kind of significant traction, central banks will release their own coins, allow people a grace period to transfer existing Bitcoin/Ethereum into central bank coin after which they’ll outlaw transactions in coins that aren’t backed by a central bank. The elites will not simply roll over and give up control of the money supply. They’ll stop it in its tracks long before it gets enough traction to take over as a legitimate alternative.
Realistically, I’d say somewhere in the ball park of 1/3 to 2/3 of global gdp would have to be in crypto for the people to have enough power to just ignore the central banks and governments. Even then, the big players would have to be able to convince the right lawyers and military personnel to bet on crypto because it would most likely be a long and bloody takeover.
Blockchain might have other legitimate uses, but I just do not see it taking over standard currencies unless there is some kind of central authority that maintains control over it. I hope I’m proved wrong, and that we can live in a less corrupt world as a result. But I can’t see a path to getting there. Every other successful piece of tech ends up with large controlling players e.g Facebook for social, Google for search. The general public does not have the time or patience to learn the ins and outs of decentralised tech. They do not care about tech nor should they. Firefighters, nurses and factory workers do not want to be finishing 12 hour shifts to read up for hours on how to set up a mastodon account. They have bigger things to worry about like doing their jobs, keeping a roof over their heads and feeding their families. They only care about what tech can do for them. They want convenience. Which means opinionated decisions on how something should be. Which inevitably leads to the quelling of decentralisation and individuality in favour of a few big power players. I don’t see why crypto would be any different.
If I am missing something, would be interested in understanding why.
That’s why government and banks will push for banking apps and going entirely digital.
This is not a technology problem. It is a policy problem.
You wouldn't be able to track and trace everyone's interactions without it! It's essential for technocracy.
Apples to oranges, dumbass.