They're still a decade ahead of most people. It seems only now that people are becoming aware of privacy coins. I go to a lot of crypto meetups and every time I bring up that bitcoins aren't fungible (because they carry full provenance and you might not be able to cash out tainted coins) I just get blank stares. FATF Travel Rule is turning up the heat on this.
I haven't kept up with developments though. What are best privacy coins these days. ZCash seems to be the institutional favourite while Monero hasn't moved much.
This will initially go the same way as the porn ban that's being enacted all over Europe — VPN usage will skyrocket, people will still do whatever they want.
Then they will have to resort to the only other alternative: require a government ID and static IP allocation to access to the internet, for complete surveillance and traceability. You know it's coming.
I guess what the parent is saying is that every user will be issued a private/public key pair to be able to access the internet. You can, maybe, buy one. But it’ll be easy for the gov. to ban it.
The US already cracked down on mixer Tornado Cash [1]. Wouldn’t surprise me if they (try to) follow suit on privacy coins as well.
There’s a chance there’s enough political influence by libertarian/crypto folks in the US to push back though.
On the other hand, the transparency of bitcoin could be a boon in ways as well. Currently only governments, large banks, some multinationals can track large transfers of money. Bitcoin levels the playing field and enables internet sleuths to uncover government or corporate corruption.
A reversal is indistinguishable from a scenario where Tornado was turned and is now cooperating with US LEO. Hypothetically, of course - US prosecutors wouldn't use this tactic to go after bigger fish.
Europe lost on crypto. There are only users but no infra. providers based in Europe (and even the UK). So my guess is that this will do very little to nothing.
This is not what "fungibility" means in terms of accounting & balancing:
In fact, Bitcoin are fungible from a regulatory perspective: As every one USD is worth as another USD, every Bitcoin has same value as another Bitcoin and they are fully intechangeable without any change of value on both sides of the transaction.
Thats the reason why there are NFT - these are not fungible in that sense, as they are not interchangeable one by one, since one 1 NFT may have another value than the next NFT.
Echoing the other comments here, but because of the blockchain every bitcoin is effectively unique as it is defined by its history of transactions. As is pointed out by other commenters, a shadey transaction history could lead to lower value. A US dollar on the other hand is truly fungible. It doesn't carry that burden of knowing what transactions it was previously used for.
I watched A Simple Plan (1998) at the weekend and SPOILER ALERT: a large percentage of the bill's serials were recorded.
I just don't understand in practice how this is an issue.
Say you spend $100 on groceries with marked cash, how are you de-anonymised? The cash mixes in with all the rest of the cash from other registers and then gets picked up by Securicor and so on.
If you just spent a few bucks on groceries once, then you are in the clear. But if you get doing it repeatedly, or worse, spent a whole bunch of cash to buy a car or something expensive, then when that money did get back to a bank then eventually those numbers will be identified and FBI will be notified. If you are trying to spend $20 or $100 in marked bills, you'd be fine. But try that with 4 million in $100 bills, it won't take long for them to find you. Not instantly, but eventually.
I'm assuming you're wrote this tongue in cheek. Cooper absconded with his bills in 1971 — 54 years ago. Do you really believe that spending one of them today would bring trouble?
I think there'd be a fair amount of interest though I'm not sure how tightly bills returned for destruction are monitored for known serial numbers like that so I'm not sure if anyone could notice. But if they are I think it'd trigger some interest at least just to figure out where you might have gotten it from.
Anyone know if there's a monitoring program for serial numbers of interest?
It's just numbers in a database if they're doing automated scanning, it's basically free to keep an alert around, and if the bills show up new out of nowhere it means there's a decent chance you're relatively close to their original source.
The FBI gets out of bed for more inane things than maybe figuring out what happened to DB Cooper (he probably died during the jump or after landing) after all this time.
I should have wrote "will draw attention" rather than "you'll get into trouble". I also mistakenly thought there were already pre-photographed ransom bags by that time, those came later.
Well, yes you are correct. Physical bills have unique serial numbers and a small (effectively insignificant) percentage of these bills are flagged as stolen and can be seized.
This is true of US dollars too, it's just a matter of scale.
US dollars are certainly worth less if they have a shady transaction history. That's why money laundering exists - I will pay you $100,000 in dirty money if you give me $95,000 in clean money.
Also, US dollars are non-fungible in a collectibles sense because certain id numbers on bills are valuable, older years are valuable (and condition matters). With coins there's a lot more, too - misprints and the like.
So I reject your idea. Either they are both fungible, or neither are.
USD in bank accounts is definitely fungible. They may track who sends what money to whom. But this transaction data is not tied to specific 'dollars' just to 'dollars' in general. So yes, perfectly fungible.
Inside a single bank - definitely. But if you have dollars in different banks then they suddenly start having very different value. Couple examples just in case:
1. Spending dollars on US soil from an US bank account won't incur extra fees (at least visible to the person - I know about interchange fees, but they are borne by the merchant), while using card issued by a foreign bank can incur fees for cross-border transactions (at the level of 2-3% usually).
2. Sanctions and KYC concerns also make different dollars have different value. Money in US bank account of an US company employee can be used at face value - money in some less-favored country bank, not so much.
This examples don't mean the dollars aren't fungible only that where they are stored can make them less accessible or subject to fees. Its like the difference between a gold nugget in your hand and one that's buried deep in the ground. The gold itself is inter-changeable, one nugget is worth the same as the other if side by side. Only one is in a more inaccessible location and you'd have to pay the cost of retrieving it. If you magically switched the two nuggets, the situation would be exactly the same from a value perspective.
> In fact, Bitcoin are fungible from a regulatory perspective: As every one USD is worth as another USD, every Bitcoin has same value as another Bitcoin and they are fully intechangeable without any change of value on both sides of the transaction.
They're not worth the same from a market perspective. When bitcoins are dirty they trade at lower price.
They go to crypto meetups, they know all of this. Their point being that when provenance comes into play they are not fungible anymore because you may be able to spend a bitcoin but not another. So they are not all worth the same. You just repeated wikipedia, they were making a new point.
I did not say anything about your professional experience nor make any implicit assumption.
You would benefit from using translation tools in order to participate more effectively with less frustration.
This is not a personal attack, it is a factual statement about your level of English writing and reading proficiency. That you would interpret as such may not be a purely linguistic issue, but I am trying to be charitable and helpful.
Bitcoin associated with criminal transactions are worth less than "clean" bitcoin. so they are not fungible. All bitcoin outputs are naturally NFTs, for example see Colored Coins or Ordinals.
Depends on how each individual institution handles it:
Some exchanges and banks to trace lets say the last 20 hops, and if these are OK, then they accept the coin.
I know also about institutions which trace ALL hops, meaning: At their desk you cant ever sell a coin that has been in the dark only one day since its existance.
Most have a relaxed approach, like "if the coin wasnt in dirty hands for the last 5 or 6, its OK for us"
This seems like an absurd rule in the context of a blockchain that allows spinning up new addresses for free, and sending transactions between them almost for free.
Not in practice. Would you trade a clean bitcoin for a bitcoin stolen by North Korean hackers? Knowing chances are big you might get your coin sized. If you take that trade you are not bright.
You check the transaction history. So your argument is that they are worth equal as long as the buyer doesn’t have all the information? It’s like claiming that a new CPU is worth the exact same as an old broken one because you can trick someone to buy it for full price if they don’t check it before paying.
This brings to my mind: Chainalysis or the exchanges Co should offer such service like "bitcoin cleanyness lookup" or similar :-)
(maybe some do already and Im not aware of...)
But the thing is: These service work wallet-based.
Zcash is not a privacy coin in the same way that Litecoin isn't. In both cases, their privacy is optional, which is to say that when you need to swap it, your recipient will likely not accept the private version. Monero is a privacy coin with default privacy.
Institutional pumps and dumps are exactly the thing to steer clear of, and Monero is fortunate to not have become a huge victim of them. Monero has seen more organic growth.
Monero also isn't tradable on coinbase and is much harder to obtain or spend. Zcash has been pushing Zashi which will reconvert coins to shielded ones. They seem to be trying to take the issue seriously and help make this trivial for those who actually want to use coins as cash. Not sure it really matters for those who are just holding on coinbase or daytrading, as traders don't care about privacy and if you have a custodial wallet the custodian already has access to the sending and receiving addresses, significantly reducing privacy.
I'm with you, but it also seems like they have a better roadmap than Monero. If Silicon Valley can get monopoly status by selling things cheap and then jacking up the price after they have their network effect, why not get the coin embedded into the financial system first and then hard fork into private transactions only? Maybe it's not the right play, but at least we have people trying different things.
Monero is hard to obtain and spend if one doesn't know how. If one has an app like Cake Wallet, it's easy. Monero has a strong culture of self-custody, competitive DEX swappers, and P2P swappers, although a few service providers occasionally are scammy. Centralized exchanges are scammy too though in that they have a habit of going offline during a crash.
I am not opposed to the existence of more privacy coins and features. Anything that loosens the grip of surveillance is good.
Besides default privacy, one other thing that Monero has is constant emissions, making it sustainable for transactions in the long term beyond the next century. To my understanding, both Bitcoin and Zcash will in contrast shift toward pretty high transaction fees, keeping them relevant as a store of value, but irrelevant for small transactions. Bitcoin will survive via an efficient layer 2, e.g. Lightning, but will Zcash? Switching to PoS and other such gimmicks won't fix the core issue.
> Monero is hard to obtain and spend if one doesn't know how.
So is writing python. Hell, so is writing bash. So is literally anything.
What matters is not how difficult something is once you know how, what matters is how difficult something is when you don't know how.
> If one has an app like Cake Wallet, it's easy. Monero has a strong culture of self-custody, competitive DEX swappers, and P2P swappers, although a few service providers occasionally are scammy.
So you expect average people to
- Download an app they have little to no familiarity with
- Buy a different currency like LiteCoin
- Perform a swap to Monero
- Reverse the process to spend their XMR since essentially no service allows direct purchase by XMR
You're right, it's not hard, but we're two people talking on a tech form who are familiar with tech. If I tell my partner with a PhD in econ to do this they'll be confused even if they will have no problem with the process after doing it a few times.
> Monero has is constant emissions, making it sustainable for transactions in the long term beyond the next century.
My understanding is that ZEC and XMR have similar transaction fees[0]. ZEC has a cap but I'm sure they'll deal with that when it starts to be an issue. You can vote on their policies, including the governance fund.
While XMR has a larger block size they're still longer times than ZEC. That still presents an issue as well[1,2]
[^]Again, I want to repeat myself because I want to make this part abundantly clear
>> Maybe it's not the right play, but at least we have people trying different things.
I'm not trying to say "switch from XMR to ZEC" I'm saying "It's nice that we have multiple attempts to solve the problems here as there is yet to be a coin that solves all problems." We can go back and forth all day pointing out problems with both XMR and ZEC. They're both far from perfect lol. That's not what matters, what matters is that there's competition and people are working on finding solutions. The reason I'm pointing out the problems with XMR is because you're painting a picture as if ZEC is foolish and XMR is obviously right. Maybe this was the wrong response and ignore all that until this point. But it is also crypto and there's a lot of cult like attitudes around this that prevent the technology from actually progressing. I like ZEC, but that also doesn't mean I have to dislike XMR. Me, Godelski, wants a private and secure coin that is easy to use (by every day people), fast, and solves a wide number of problems. But currently the union of XMR and ZEC doesn't begin to get there. Are we techies or evangelists? As a techy I want the problems solved and I'm going to recognize that neither XMR nor ZEC has solved them. As an evangelist? I've been in more than enough cults in a lifetime, I really don't want to be an evangelist. My advice to most people is don't buy any crypto. Have some for fun or interest, but the cult mentality and hype hinder their development ¯\_(ツ)_/¯
> ZEC has a cap but I'm sure they'll deal with that when it starts to be an issue.
They will try, but as per my understanding, due to the cap, there is no mathematically conceivable solution that doesn't require escalating the transaction fees dramatically once the supply diminishes.
The development of zcash is entirely controlled by Electric coin company, and they use this to control the zcash supply by taking a fraction of the coinbase outputs.
Even if zcash is technologicially superior, why not just fork it exactly and start over from genesis? Zcash is not the next bitcoin, but the next bytecoin.
Cryptocurrency needs to be a community-led project like bitcoin or monero.
You're probably getting weird looks if you're phrasing it that way because there's not actually tracking of coins at an individual level, it's all balances that are fungible but the nature of the ledger allows tracking of interactions with 'tainted' wallets. NFT's were partially named non-fungible tokens because that was part of their main difference from other items/coins on the blockchain at the time.
All US bills have a unique serial number, so the same applies. Coins, however, do not. But their weight makes them impractical for use with large amounts, much more so than notes.
All you have to do is make a single transaction using all of them. You will receive a freshly minted UTXO. Each bitcoin block involves burning a set of UTXO and then minting a new set of clean UTXO.
By that definition everyone in the same block is tainted. Maybe the bitcoins from your output came from someone else's input. And you tainted input may have entirely gone to the miner as their reward UTXO. You can't really trace an individual bitcoin / satoshi because in reality it's just a bunch UTXOs constantly being created and destroyed. Maybe you can distribute a percentage of the taint among all the outputs, but at that points its like most US dollars have traces of cocaine on them.
Maybe this example will help. Let's say a user has 1 bitcoin UTXO that is tainted and then 1 bitcoin UTXO that is not tainted. They create a transaction that takes both UTXO as an input and as an output creates 2 UTXO of 0.5 bitcoin.
In this scenario, is the first output UTXO of the transaction tainted? The second? The miner's reward UTXO? Someone else's output UTXO?
That's not fungibility, that's just an association issue. If someone denies doing business with you because you bought (or sold) a Trump hat, that doesn't make cash non-fungible.
(Incidentally, banknotes all have unique serial numbers and can be traced to criminal transactions by either the serial or by more mundane taints/markings)
Fungibility accurately describes the main problem here, right now some bitcoins are worth significantly less than others because they’re tied to hacks and you can’t send them to any normal exchange without immediately getting your account frozen.
You will have to spend more than 1 “dirty” bitcoin to get 1 “clean” bitcoin. Almost nobody will accept the dirty bitcoin, whereas basically everyone will accept a bank note no matter the history of said bank note (cops might show up at your door later, yeah).
But sure, eliminating traceability inherently solves this issue too.
If you want to buy something and the guy says "I'd love to sell that to you, but your $100 was stolen in a bank robbery two years ago and it's on a list with its serial number"... well, that $100 isn't fungible, is it? Has little to do with the association, it's not you, it's the money itself. That said, my example is one that proves this happens for cash too. Extreme corner cases are funny like that.
Why would Bitcoin purists care about off ramping onto fiat?
This seems awkwardly unnecessary for a technology that has only prioritized deflationary economics and economic sovereignty through private key encryption.
Serious answer: Because they have to eat. Being a purist doesn't mean they can afford to ignore the world they live in; even if they believe that USD is fundamentally worthless and keep all their wealth in Bitcoin, they still need to occasionally pay bills to people who don't take Bitcoin.
I haven't kept up with developments though. What are best privacy coins these days. ZCash seems to be the institutional favourite while Monero hasn't moved much.