103 sats \ 4 replies \ @mallardshead 25 Aug 2023 \ on: Are LN users naively thinking LN is private? bitcoin
LN can be as private or public as you want its to be, so can L1 if you try hard enough. You must've been on Twitter or Reddit recently. Also, privacy is irrelevant for half the real-world transactions people will make. If you order something from Amazon, you're providing a shipping address. Are you paying your insurance, rent, or utility? Those are tied to an SSN.
Blockchain forensics grossly overestimate their abilities so they can sell their software and products to businesses and governments. And if BTC layer 1 was lacking privacy in such a dramatic way, the majority of darkweb markets wouldn't accept it, the money launderers wouldn't use it, the eastern journalists wouldn't ask for donations in it, the ransomware hackers wouldn't post ransoms in it, the Chinese producers of fentanyl precursors for cartels wouldn't demand payment in it, etc. Also, go read up on the cases of people prosecuted for bitcoin-related crime. Quite complicated and difficult. And they always have the same dominant recurring theme: the criminal used a CEX.
Onchain privacy is so sensitive, Its safer to assume even mixing doesnt hide you fully. Or if someone really wants to track you.
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Don't use a CEX. We have far better options for extreme privacy than just mixing now. And that's with a small data set and no circular economy. A large global data set and circular economy starts to leave institutions and governments as the parties being surveilled — perhaps by us.
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I didnt touch KYC CEX since 2019 :)
But lets say someone were to buy/sell btc P2P via LN. Taxaman dislike "cash deals" and totality of those trades might be bg enough to grab someone for undeclared cap gains
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Not possible with a large global data set on a global network. They'll spend more money doing the grabbing than they collect in taxes. A circular economy makes it harder. We already have multiple DEX's on LN, Robosats being the one I use most often. And the LN doesn't even have Taproot channels, splicing, or a self-validating wallet standard. I don't see your concerns playing out directionally. That's the beauty of FOSS and having a base layer designed with the right incentives and principles.
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