Should I mix my KYC-bought Bitcoin? \ stacker news ~bitcoin

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3171 sats \ 26 comments \ @Ed_Relight 26 Aug 2023 bitcoin

I have some bitcoin bought on a KYC exchange in a cold wallet, should I use a mixer to increase the privacy of my stack? What are the pros and cons of doing that?

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307 sats \ 6 replies \ @chairman_pretense 26 Aug 2023

So whoever has collected the KYC information, will always have a record of that amount of bitcoin to your name, no matter how much mixing you do.

This might be a concern if you think your government may one day come knocking on the door demanding your coins (rather like the gold situation in the USA in the 1930s).

The only way to clear this record is to sell the KYC coins back to the KYC exchange, thus settling the balance to your name to 0.

If that isn't a threat you're worried about, then mixing will still offer forward privacy. It will obscure from the KYC entity where you later spend your coins. This may still be valuable to you.

All depends on your threat model.

30 sats \ 4 replies \ @franzap 26 Aug 2023

That's why you give them fake addresses

22 sats \ 3 replies \ @orthzar 26 Aug 2023

Do any exchanges actually verify the information you give them?

If they don't have access to government ID databases, it's impossible to verify any information. Even ID cards can be faked.

100 sats \ 2 replies \ @franzap 26 Aug 2023

Correct. I have a friend who did this. Avoid the ones that require selfies.

22 sats \ 1 reply \ @orthzar 26 Aug 2023

Correct. I have a friend who did this.

I would expect that to change once the government asks for KYC info for an important case and the info turns out to be faked. Perhaps the US government would require every exchange to use an API to verify IDs.

Avoid the ones that require selfies.

Those could probably be faked via AI/social media and Photoshop/GIMP.

0 sats \ 0 replies \ @franzap 27 Aug 2023

I think at that point it's simply easier to move to Bisq or Robosats

Faking selfies already requires more than just Photoshop. Some exchanges ask for live verification so something like a deep fake video generator is necessary.

1 sat \ 0 replies \ @orthzar 26 Aug 2023

The only way to clear this record is to sell the KYC coins back to the KYC exchange, thus settling the balance to your name to 0.

It is worth noting that the records won't go away. The government will see that you bought and sold some amount of BTC. This matters, because it is means you could plausibly own more BTC that you didn't buy KYC. This is why KYC is such a serious problem.

204 sats \ 0 replies \ @mallardshead 26 Aug 2023

What are you trying to do?

Cons:

it'll cost you money
the bitcoin might be flagged if you try sending it back to the CEX

Pros:

it breaks the transaction log
increases the data set which is a boon for all bitcoiners

Judgement:

Using a DEX for buying and selling is the best way to go for the opening leg of privacy, and combined with a simple hardware wallet, is sufficient for 99% of people. You avoid any tax implications, avoid KYC problems in both directions, and don't finance centralized participants with bad directional motives. I mix all my coin after DEXing, but my privacy needs or ideological motives might be different than others

150 sats \ 1 reply \ @deepologic 26 Aug 2023

KYC

Kill Your Customers

57 sats \ 0 replies \ @nemo 26 Aug 2023

deleted by author

50 sats \ 2 replies \ @guts 26 Aug 2023

Buy XMR and then use atomic swap to buy BTC.

0 sats \ 1 reply \ @ProofOfWorkFitness 26 Aug 2023

On ramp to xmr?

10 sats \ 0 replies \ @guts 26 Aug 2023

You can use Trocador.

32 sats \ 0 replies \ @kepford 26 Aug 2023

Others have given good advice here. I would say use coin join like whirlpool. You never lose custody.

One more thing. Many folks say you're coins may be black listed. This may happen on chain but there are several exchanges and other services that accept lighting deposits of bitcoin so I would say at this point the black list issue is not an issue. If your UTXO has been coin joined move it to a lighting channel using your node or a lightning provider like Phoenix and then send to the exchange over lightning. The exchange will not see the UTXO and won't be able to reject it.

Right now I see no reason to not coin join any and all UTXOs.

20 sats \ 0 replies \ @fiatdenier 26 Aug 2023

If you bought KYC, mixing it won’t make it more private.

Why do you want to mix it to begin with?

If you want non KYC, buy non KYC or mine for it

20 sats \ 0 replies \ @2bithits 26 Aug 2023

If sometime in the future you plan to sell your BTC on an exchange, don't mix.

If you will only spend BTC or sell p2p & want to be more private, and hide from potential attackers. Mix it!

0 sats \ 2 replies \ @rijndael 26 Aug 2023

what are you planning on doing with it? If your plan is to buy from a KYC'd exchange, hold it for a few years, and then sell it back to a KYC'd exchange, it doesn't make any sense. In fact, it might be easier for taxes to not obfuscate the transaction graph.

30 sats \ 1 reply \ @Ed_Relight OP 26 Aug 2023

I'm not planning to sell by sats, only spend

0 sats \ 0 replies \ @ProofOfWorkFitness 26 Aug 2023

Is it a taxable event when mixed?

0 sats \ 0 replies \ @TheBTCManual 27 Aug 2023

Drop em into a statechain and pull em out later, :)

0 sats \ 0 replies \ @sandagoriate 26 Aug 2023

I think you should mix the wallets you have.

A hardware wallet
A web client wallet (Electrum as example)
A multisig wallet (where from 4 devices you need at least 2 of them to make a transaction)

LEAVE Centralized Exchanges you can lose everything or can be high taxed by governments. Just keep a little if you need to withdraw it for fiat money sometimes.

Spreat it. Decentralize it. Freedom is a question of time and strategy.

0 sats \ 0 replies \ @kristapsk 26 Aug 2023

Yes. But to avoid problems with exchanges I would recommend adding few hops by sending tx to yourself before doing coinjoins. Then use JoinMarket or Wasabi.