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190 sats \ 4 replies \ @sethforprivacy 23 May 2022 \ on: Any thoughts on if this is a good way of un-KYCing Bitcoin? bitcoin
All those steps do is introduce middle-men just making it slightly harder to trace funds back to your wallet/node.
You cannot remove the fact that you bought Bitcoin via KYC using any privacy tools, you can only prevent that fact from being known by avoiding KYC exchanges.
If you just want to properly prevent tracing after withdrawal, you should withdraw to Samourai Wallet, mix the funds, and then you can submarine swap them into LN or open a channel with them etc. The exchange/gov will still know how much Bitcoin you bought and who you are, but will not be able to trace it back to your on-chain/off-chain activity (assuming you don't do something to mess that up in the future.
More on Bitcoin privacy here: https://bitcoiner.guide/privacy/
More on avoiding KYC here: https://bitcoiner.guide/nokyconly/
Thanks Seth! (By the way, love your podcast!)
I understand if I buy KYC, the gov may want to know what happened to it, for tax purpises or other reasons, still if I can hide where it went, thats still pretty good. (Ie. controversial causes like the canadian truckers)
I have heard of some exchanges (usually the lame ones) giving people trouble about people withdrawing directly to wallets that do coinjoins. Maybe putting an extra hop or hopping off chain and then back on chain before getting to the Samouri Wallet could be a smart move, right?
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Yes, the main issues with KYC are:
- Gov/exchange knows how much you purchased when, so could easily knock on your door to confiscate or force you to disclose what you did with the sats
- Allows governments to build nice, tidy lists of Bitcoiners to go to if they decide Bitcoin is too problematic for them and they want to stop it's use
- Allows hackers/criminals to steal KYC data from exchanges (who are notoriously poor at cybersecurity) and then hit you with a $5 wrench attack to send them all your sats, as they have an address, face, and amount of Bitcoin purchased/withdrawn to leverage
- Allows govs/exchanges to easily surveil Bitcoiner's usage of Bitcoin post-withdrawal and build deterministic links between IDs and on-chain activity
If you use proper privacy practices after withdrawing, it only prevents the simple surveillance that exchanges/governments are doing today on Bitcoin post-withdrawal, but it doesn't prevent the other three issues.
As for your other question -- so far there are no known cases of exchange accounts getting shut down for withdrawing to Samourai Wallet as far as I am aware. The only known case of exchange blacklisting is one user at Bottlepay getting their deposit rejected post-mix:
At this point it doesn't seem to be a major issue for people, but that could rapidly change. Just another reason to stop asking permission and go no-KYC-only ;)
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Thanks Seth, and thanks for your work in this space.
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Of course, thanks for the kind words on what I do and my pod :)
Hoping to focus next season on Bitcoin/Lightning/Monero and do some deeper dives on topics like sender privacy, receive privacy, circular economies, avoiding KYC, etc.
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