pull down to refresh
228 sats \ 22 replies \ @siggy47 2 Dec 2023 \ parent \ on: Btc privacy tradeoffs, overt and covert bitcoin
I understand your evolution, and I have similar feelings. Still, isn't this really accepting the end of bitcoin as a fungible asset? That's a big deal.
Fungibility seems to me to technologically determined -- if a money cannot be differentiated from its other units, then it's fungible. If it can be differentiated, then it will be, because people have all kinds of feelings on the issue of where it's been spent, and by who.
In other words, because it's technically possible for people / groups to have opinions about different UTXOs, they will have those opinions, and nothing can prevent them from having them.
Which would suggest that the best we can hope for is some kind of overwhelming cultural pressure to keep that inevitability in check, kind of like norms can racism or sexism socially inadmissible in the broader society, but obviously those things still happen.
Thoughts?
reply
What you wrote is accurate, but then we must accept that bitcoin is inferior to gold, and even paper bank notes, when it comes to fungibility. Perhaps the only recourse is to use mixers, and, to quote a famous philosopher named @DarthCoin, "fuck the guvs."
reply
Mixers, and then hope the culture makes mixing so prevalent that preferences for 'clean' coins with good pedigrees becomes implausible; and that the ability of state actors to oppress based on that pedigree becomes minimal.
reply
sir, did you finish reading ALL my guides?
Please try to pay this LN invoice and tell me if you can find the destination...
lnbc10u1pjkhyzkpp54xg0hgtp24h6mc0ce0llu3mxl57p86564pglk5vk86x0v3gqqt2qdqqcqzrcxqr8qlsp56qlgqxxfp5e2g2c5q2qdf24n09np4unfrnlmqkmv5us74vj3q7sq9qyyssq2r9zd7kda6g8cmpu6lh0hte9mentj0v7mcvy6glkngygdfe600qxkqf2f5ffumvvdatk5wzgmw6j49z6ee62hfkk8dpwggew7x6kntqpuykn79
reply
^ this. Lightning is the most effective mixer/anonymous layer on Bitcoin. When you need anonymity, it’s there, and it works pretty damn well these days. Sure, there are issues with edges knowing their points on the route, but it’s good enough to mitigate anything but a very expensive to concoct NSA surveillance node network (that would be frequently bypassed anyway).
Besides, it’s much easier for a government to just demand records from merchants and get shipping info to hunt you down in meatspace than to trace lightning. We’ve reached the point of evolution where the privacy failure exists outside the bitcoin payment ecosystem.
reply
I tried, it expired :)
But point taken. I need to learn more about this aspect of LN. Well, I need to learn about all of it, but this in particular.
reply
LOL after 4 h ?! hahaha, I never let my LN invoices to be valid after 1h.
Read more here https://docs.zeusln.app/lsp/wrapped-invoices/
reply
Dude with wrapped invoices you are involving a LSP. That is a third party. Similar privacy as a banking app.
The whole point is that ideally no one else should know except the sender and receiver.
reply
How does that negatively affect Bitcoin fungibility? Lightning is effectively an anonymous payment layer and it maximizes fungibility by being able to send 1 sat. I would only use the loop technique if I wanted/needed a larger sum of BTC on chain to be anonymous, which is not even a need that’s surfaced yet.
Also, worth noting, I’m not in the camp that’s worried about hiding BTC to evade taxes. Ultimately, I think that’s a losing proposition if you are buying BTC and then trying to anonymize it. May work for local merchants like taking cash, but ultimately the government knows you bought some asset and then sent it somewhere.
reply
Fungibility meaning "The property of a good or a commodity whereby individual units are capable of mutual substitution." In other words, the impossibility of having whitelisted and blacklisted bitcoin.
reply
Ah, you mean the labeled UTXOs being the ruin of it. I think that will ultimately wash out. The government blacklisted Silk Road BTC, but then what? They confiscate and sell it to the market and remove the blacklisting because they washed it. The purpose of government blacklisting UTXOs is so they can catch people (and then steal the asset to sell it).
But, in the meantime, if you are operating on the dark market for UTXOs, you could get stuck holding that pre-government-cleansed blacklist UTXO.
reply
My point is more basic. Bitcoin is money. Gold served as money for centuries. Part of the reason gold was good money was that it was fungible. If a government attempted to restrict a particular gold coin, the owner of that coin could just melt the coin into an unrecognizable lump that would be the same weight and value. That's fungibility. If we surrender that in bitcoin we are surrendering an important trait of good money. No government should have the ability to favor one type of the asset from another.
reply
Bitcoin is money.
Exactly. Nothing else. People always forget that.
reply
I talk and talk, and think about things from different angles, and then I just wind up agreeing with you. I should save time and energy.
reply
I’m not concerned about government or individual preferences because systems like Lightning exist to bypass preference.
For gold, people and governments absolutely have preferences and exercise them. That’s why American eagles have a premium over Canadian maples (even though Canadian maples have higher gold purity). Assaying gold is a nightmare and most people won’t trust a gold bar from China. Gold is barely fungible in practical terms.
Likewise, I may have a preference for $2 USD bills or classic Eisenhower dollar coins. Just because I have this preference doesn’t really mean that dollars are less fungible, just that I’ve put a premium on some forms of it.
This is inevitable to any asset that is not 100% obfuscated like monero, but I don’t think the value proposition of removing this ability to have format/source preferences is worth the trade-offs of a purely anonymous monetary system.
And, even anonymous systems like monero can be subject to preference overrides. A government could say that the only legal monero is accompanied by a Keybase.io signature linking your identity to the transaction…
reply
And, even anonymous systems like monero can be subject to preference overrides. A government could say that the only legal monero is accompanied by a Keybase.io signature linking your identity to the transaction…
That's why white market crypto usage makes little sense. Using a permissionless money (Bitcoin/Monero/etc) in a permissioned way defeats the entire purpose. And regulations/requirements on the white market are pretty much garunteed to become more onerous over time.
Bitcoin/Monero is inherently black market money.
reply
It's not an issue of preference. American Eagles and Maple Leafs are coins. You pay a premium for design- if they look pretty. The ugliest looking once ounce Krugerrand and a beautiful Eagle are the same value when melted down. You're discussing jewelry premium.
reply
They are physically not the same when melted down. The melt value of an American eagle is lower than the melt value of a maple because eagles are watered down (American Eagles contain 91.67% gold, 3% silver, and 5.33% copper, whereas a Canadian maple is 99.99% pure gold)—and yet somehow the manipulated gold market values the eagles higher.
Beauty is an arbitrary construct. My point is that anyone can think anything is more desirable and that can’t be fixed even with anonymous assets.
reply
I assume that the difference has something to do with increased confidence in the provenance of the thing, or the enthusiasm with which counterfeits are pursued, etc.
An ounce of gold = an ounce of gold, like 1 btc = 1 btc. That's the real money calculation.