0 sats \ 10 replies \ @beorange 6 Aug 2023 \ on: Privacy is important, but bitcoin doesn’t help bitcoin
Without privacy there is no fungibility, without fungibility Bitcoin cannot be viable currency long term.
If you think fungibilty is not important, wait a bit until you get some tainted coins without knowing.
So privacy is important, it needs to be addressed and solved.
What does privacy have to do with fungibility? Interested to hear your reasoning.
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All bitcoins (outputs) should be equal and traded the same way, you should not be able to distinguish one from the other (like all $,€, etc). If you can look for the whole past of each individual bitcoin/output (the privacy part), different outputs have different histories and are distinguishable, meaning different values can be assigned to them based on their past (the fungibility part).
One practical example is if you receive tainted coins for some reason (outputs that have an undesirable past, such being used in illicit activities). Businesses and exchanges can refuse to accept them, meaning those coins end up being less valuable than clean bitcoins/outputs.
There are many companies providing these analytics services to other companies.
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That’s exactly how the public ledger works, though. It’s too late, the cat’s already out of the bag. Do you think the bitcoin that’s been used for terrorism and black market sales is going for any less? It’s not, that’s now how it’s worked. The value of bitcoin is its immutability.
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Do you think the bitcoin that’s been used for terrorism and black market sales is going for any less?
It is definitely harder to use (and depending on the circumstances it will have an impact) . Ask around to people that got ETH assets frozen or rejected, due to having a link with tornado cash addresses in their "history".
There are privacy improvements that can help fix some bitcoin shortcomings as a currency. Lightning Network already helps with this, but more is needed.
Privacy is done better off the internet. Bitcoin is on the internet, and that’s ok.
That's not 100% ok, bitcoin can and should improve on that front.
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ETH is joke land. I mean that literally - We all saw the quote where Vitalik said ETH shouldn't have to adhere to the laws of physics. Dude thinks he can write his own truth.
You can't freeze bitcoin! That's a huge reason why it has value.
Bitcoin should absolutely not improve. We shouldn't be adding new features or making any changes. Layer 2 solutions have promise and are interesting, but the base layer needs to stay unchanged. Changes are vulnerabilities. Money should not have any inherent additional "features". Leave that to shitcoins and fiat.
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ETH is joke land. I mean that literally - We all saw the quote where Vitalik said ETH shouldn't have to adhere to the laws of physics. Dude thinks he can write his own truth.
That's not the point, it was one example. The same kind of thing happens when trying to use BTC with businesses (and will be more common in the future). They run chain analysis on the funds you send and reject the funds if their have a bad history.
This is a real problem for a currency, and it doesn't matter if you like it or not.
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Nah, I just solidly disagree. You can't wash a public ledger, and eventually every sat will have been used for something shitty, because we live in a fallen world. I think people can and will eventually accept that the ones and zeros are arbitrary enough to use for their immutability.
We can agree to disagree on that, I suppose.
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Sure, I guess :)
Bitcoin is fungible. 1BTC=1BTC. These are the protocol rules. You're not selling fresh mined coinbase BTC for more on a DEX than you are conjoin or random coins. I've never seen an example of this. I'll buy anyone's tainted coins (there's no such thing) for a discount. Fungibility is a mathematical reference. You're using it informally as a social reference outside the protocol for what governments try to enforce, because they have no authority in the enforcement of bearer assurances, where the protocol is the supreme court there.
If you look at the people who need privacy the most, you'll find they use bitcoin, mostly. This goes for darkweb marketplaces (mostly bitcoin volume, some exclusively bitcoin), ransomware (mostly bitcoin), cartels (mostly bitcoin), laundering (mostly bitcoin), journalists, privacy mail like proton, etc.
The privacy issue with bitcoin arrises when people use centralized exchanges, which is the vector that blockchain forensics lever, because they're useless without CEXs. But imagine a world where bitcoin has a robust circular economy, and with enough goods and services priced in bitcoin, using a CEX is unnecessary. Also imagine with more and more global users, the volume spikes, and the global data set is enormous.
What remains of the privacy problem is being solved on L2, where with Taproot channels and splicing, submarine swaps, etc, privacy overkill can be achieved, and it's going to be achieved in the background with no work required by the user.
Lastly, consider that protocol privacy and anonymity are meaningless for many transactions. If for example, you order something from Amazon or PizzaHut, you provide a shipping address; or if you pay insurance-utility-rent, it's linked to a name.
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Bitcoin is fungible. 1BTC=1BTC
Until one of it has a some problematic owner/origin in the past (the ledger is public, each output has a different history). Then it isn't accepted is many places. You can deduct the rest of the story. There are many examples in transparent chains of this happening.
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