"Open" is a heavily overloaded term. One of the main premises of Bitcoin is tamperproofness and permissionless participation.
That in itself does not equate to lack of anonymity. Just have a look at Zcash[0] or Monero[1].
In general, the idea that openness and anonymity are in conflict with each other has not been true for at least 40 years. There's entire field of mathematics dedicated to solving this problem known as secure multi-party computation.
I haven't dunked on bitcoin once. nor have i ever mentioned "permissionless"
Bitcoin is an open ledger. It was never designed for hiding transactions. I'm also not saying thats a bad thing. it just is what it is, and yes I hold some btc (albeit not much, just enough to experience it mostly)
and in practice maintaining that theoretical anonymity is hard. if you use a distinct amount in a transaction, it'll be visible. if there's a low volume your transaction can be correlated with a high probability, etc.
I put it back to the inherent conflict of interest in such a weak fiat currency: the people who hold it must convince you to buy in to see any value from otherwise valueless tokens. Over the years you could watch the Bitcoin sales crew trying tons of marketing pitches trying to find which sold the best – accuracy didn’t matter as long as prospective buyers found it appealing.
it was the early use the in the DNMs. After all why would they be using it if if could be traced? Of course there was ignorance at some of the opsec and other methods those sellers were using.
In general maybe, but if you were selling something online and received bitcoin on a wallet not associated with your irl identity you can be anonymous, its just not practical because you need to de-anonymize to get that into actual cash unless you really know what you are doing.
Only if you and everyone you ever deal with have perfect security. As soon as one person’s identity is leaked, that opens the possibility of a real-world ID being linked to a wallet.
This story from about a year ago also showed how that worked with investigators tracing it link by link:
Future proof security. I think that people discount that aspect of it. If your identity is cracked at any point in the future, perhaps using methods yet to be invented, all your transactions will still be there on the blockchain. I once heard someone refer to the blockchain as prosecution futures, and that is about right.
Exactly - and that’s especially true if laws or other things change. For example, suppose that you made a donation to the political party which lost a key election to an authoritarian – are you sleeping easy at night wondering whether they have a data mining team?
In your hypothetical scenario, I think I would sleep easier having tried to stop it, then to be in the same world but having done nothing to stop it.
There's no real alternative. You rely on the secrets technology we currently have, knowing it might not be future-proof for your entire lifetime, or you don't use secrets technology at all (and I guess live in fear of all possible futures?)
The chance of somebody storing my WireGuard traffic from a local public hotspot to be able to hopefully decode it at some point in the future is far less than someone sniffing dns and http traffic I send from the same hotspot today.
The value of breaking my communication now compared with in 10 years time is far higher too. My bank will have destroyed the records of my dealings in a decades time for example.
Bitcoin’s ledger is specifically designed to be kept forever though. You don’t need to target me today in the how if future payoff
I get the point you’re trying to convey but - at least in the US - you’re legally required to make donations to political candidates publicly anyway, so this isn’t really a regression over the status quo.
That's why you make your anonymous donation to the "Friends of John Smith" organisation, who is completely unaffiliated with John Smith and is merely interested in seeing him elected to office
Or using a business which is required to report transactions, using a site which gets hacked, etc. I don’t think people sufficiently weight the risk of having a ledger which can’t be redacted – for example, I’d imagine there were a lot of people in Weimar Germany who did not think twice about donating to a synagogue or other organization which you would not want have wanted linked to your bank account a decade later.
Maybe you own a car. In 10 years time a green authoritarian communist group starts to suspect anybody who owned a car, you are sent to a re-education facility.
Maybe you are environmentally conscious and bought solar panels. In ten years time an anti environmental fascist group comes to power. You are disappeared.
You make some negative comments about AI at a dinner party. The host has an Alexa home automation system. In ten years time when government is run by AI. You are assigned to sewer cleaning duty, a tragic accident happens.
Summarizing: It's not a really strong argument.
However, if you are doing things that can get you arrested today; That's another story, then you should be paranoid and not use bitcoin. Maybe Monero instead? Although, that's not watertight either.
If you trade in and out for cash, in person with a counterparty, from a self-hosted wallet that you never use to send or receive from any other wallet that's connected to an exchange... then yes. The use case for this is mainly moving money over borders.
It actually is exactly like Hawala, and I've traded BTC in and out with networks that had roughly the same human topography. That was the original killer app or crypto.
FWIW, we Jews (speaking for my family) mostly think the Rothschilds were pretty smart for working out the same type of system by placing a brother in each European capital and banking to kings, keeping a ledger instead of moving physical gold whenever possible. It seems obvious now, but it was "moving fast and breaking things" in the 18th Century.
Are Bitcoin ATM's still a thing? There used to be one in a coffee shop near where I lived. If I deposited cash and wore a facemask and sunglasses, how would anyone ever know who did the transaction?
A couple months ago, I was incredulous when I noticed about a half dozen of them on google maps within a mile radius of where I am in San Jose. I haven't gone looking for them physically, though.
in reality, no, they don't know who I am. Back when LocalBitcoins.com facilitated face to face trades for cash around the world, you just had to have a high rating from previous transactions. Now... how safe do you feel showing up to meet an anonymous guy in a bar with thousands of dollars in Benjamins? That's the downside of being anonymous. /edit: The downside of operating completely outside the system.
/edit 2: I should also clarify that I never cashed out my casino's BTC in this manner. That obviously wouldn't make sense because anything that touched a casino wallet would be traceable to that nexus. I only used it to bring extra spending cash and rent money to countries where it was hard or expensive to transfer USD through banks.
... lol. Going to a site to exchange bitcoin for cold cash seems like the worst idea ever if you want to stay anonomyous. Did everyone just forget about snowden?
Let's game this out. Bob and Alice are the first parties.
You trade in cash, in person, probably in a public place. Say that Alice then gets in trouble for the drug dealing they also do (or maybe the government just pings her for not doing KYC and being licensed to do financial transactions), it could be years later. The authorities seize Alice's computers and subpoena "localbitcoins", or the whatsapp/telegram/signal chat that you had to organise the meetup. They might even have a list of addresses that Alice used for transactions at this point. Alice may or may not have had good OpSec, Bob doesn't know.
From that there a myrriad options to identify Bob and Bob's addresses.
In your example you don't use an exchange, but that's not the only method of identifying Bob. Mass survelliance and metadata gathering noticed 100 phones within the location and timeframe Bob and Alice were supposed to meet. Bob had to take a phone to do the actual transfer of bitcoin (or any altcoin), so just leaving it at home wouldn't work. They also know the amount Alice transferred to Bob and the rough timeframe that it was completed and put into the ledger. Bob was also seen drawing out roughly the right amount from the ATM an hour before the meeting. Of the 100 phones, most haven't drawn out that much money recently.
So they can correlate a set of phones with a set of addresses. Even if Bob is not completely unmasked at this point. He has the money in but has to get the money out as well. Bob wanted as you say, to move money across the border. In order to do that Bob must cross the border[0] and meet with Charlie to do the reverse of the transfer. Only a handful of those 100 phones crossed borders shortly after meeting with Alice.
As soon as the money in that address moves again the cross reference with the locations of the tagged phones and discover that they know Charlie because he's done a KYC with an exchange and installed their app (even if he doesn't use that address for the transaction). They ask Charlie some pointed questions about whether he is following KYC procedures in his financial dealing and he caves and gives up the chat logs confirming your meeting, or maybe they just install NSO spyware on his phone and watch to find all the other people Charlie is dealing with.
So...
In a perfectly isolated one off instance maybe that's pseudonymous. In any real world transaction it's extremely unlikely that a state can't use it's resources to unmask the participants. In a one shot, the rules might be one way, but in multi-shot there are always factors that will serve to unmask the participants, and in reality you have to do those transactions over and over until you slip up and just combine them with a KYC exchange account and it doesn't even require that level of effort on the part of the state. OpSec is hard, as they say.
[0]: there is an alternative where only the bitcoin transaction crosses the border in return for something of value, either physical or digital, both have alternative paths that can be tracked in similar ways.
Since the ledger is public, it can be analyzed for patterns from the individual transactions. The more transactions there are involving a certain party, the more likely an outside observer will be able to piece together identities for that party's overall network. KYC exchanges accelerate that process.
Crypto projects like Monero (XMR) do not have this flaw, as deducing the identities of parties from the public ledger is computationally prohibitive.
Going back to Bitcoin is unnecessary but possible. You go from Monero to cash, wire transfer, or gift cards through a variety of unlicensed conversion services that advertise themselves all over the Internet.
Then you end up like the guy asking for advice on how to sue his banks for freezing the accounts that he'd been using to run his Monero to UKP gateway.
> but possible. You go from Monero to cash, wire transfer, or gift cards through a variety of unlicensed conversion services that advertise themselves all over the Internet.
Those are probably run by the FBI. It seems like a no brained for the government to try to run such services given the wealth of information they would provide.
Having unexplained assets is not a crime and won't be at least in the US because of the constitution, worst case they could be subject to civil forfeiture. Assuming you did everything else right (full disk encryption, Tor on public wifi/LTE router that you alternate routinely, not using Google, etc) the anonymity of Monero means the government would have a very difficult time tying whatever you bought with the Monero to your actual criminal activity. Of course if you are involved in meatspace crime like drugs then maybe if you use these services they put you under surveillance and eventually find you with drugs in the trunk of your car.
Parallel construction: if you do enough crime-adjacent things, the likelihood that you are also engaged in crime makes you interesting to law enforcement.
Breonna Taylor (2020) - Louisville, Kentucky: Police officers entered the wrong apartment using a no-knock warrant, which led to the fatal shooting of Breonna Taylor, an emergency medical technician.
Eurie Stamps Sr. (2011) - Framingham, Massachusetts: Police raided the wrong apartment, and during the operation, an officer's gun "accidentally discharged," killing Eurie Stamps Sr., a 68-year-old grandfather.
As many have mentioned above, civil forfeiture cases for carrying cash are rare, but devastating to people who are originally from countries/cultures that don't trust banks or police.
Heh, it's a literal meaning of crime adjacent (presuming that the person in the actual target apartment was actually guilty).
I suspect anyone that was an early adopter of crypto is somewhat considered crime adjacent because so much of the early usage was silk road.
For a while after MtGox was hacked I used BTC-e (yes, I lost money in MtGox). It was later discovered(alleged?) that the operators of BTC-e were involved in laundering money for the MtGox hack[0]. I guess my very presence in that case would be considered crime adjacent.
I think pocketing any unlockable crypto-wallets you found along the way would cross the line. You could stick them into civil forfeiture and use the resulting cash to upgrade your department-owned car though.
This scheme is so obvious that authorities are monitoring such trades and people have been convicted for money laundering by self-trading NFTs this way.
As always, you can definitely get away with this for smaller amounts, but if you go big and/or repeat it for a long time, this has all the potential to come back to you.
I think you are projecting your beliefs onto them. Mixers, privacy chains, and ZK privacy schemes have all been implemented because everyone in crypto acknowledges the lack of privacy.
You are confusing the enthusiasts with the people who understand crypto. Both groups existed, but the enthusiasts group made many claims that anyone who had even minimal understanding didn't believe.
Satoshi (and many other OG members of bitcointalk) knew, and tried to improve the protocol. BTC was not set in stone at the beginning. It's just at some point Satoshi disappeared, and moonfags[1] who controlled the capital (miners and exchanges) weren't interested in any technical improvements that may make regulators more angry, causing the end of most innovation in the cryptocurrency space.
[1]Sorry for the very colloquial term, I don't know a better one. I mean people who care about cryptocurrencies only as a speculative "investment".
Bitcoin chose a certain set of tradeoffs, and other coins choose differently. It has its advantages. There's no need to project such negativity onto other projects for making different design choices.
Just say crypto bros. We all know someone who treats crypto like it's CrossFit. We'll get what you mean. Even a miner and exchanger is a crypto bro, even if they don't want to admit it. They're in it for the money.
The idea of using Bitcoin or Ethereum to pay for anything always seemed insane to me. I don't want my info about payments I've made to be public, espcially not in a form where, by design, it will never disappear!
I mean bank and CC transactions are remembered, but due to them being privacy-sensitive information, this is tightly secured and (depending on where you are and probably a load of other factors), deleted after a mandatory retaining period.
> And the government interprets sanctions law extraterritorially so you're not safe in other countries either.
It does not; these sanctions only apply to US Persons. Secondary sanctions mean that the Treasury can additional designate non US-Persons for breaches of the primary sanctions, but that is a heavy-handed tool and unlikely to happen to people who merely use Tornado Cash; regardless, no law was broken by such a person.
It is trivial for the government to say that you directly or indirectly used some service operated by American company and therefore you are subject to American jurisdiction. Yes it’s unlikely to happen to any small time Tornado Cash user.
The sanctions are being challenged in court. A federal agency prohibiting use of what is nothing but software is totally unconstitutional, and amounts to a total abrogation of internet freedom, done without any public process like legislation.
It also amounts to a general criminalization of financial privacy.
However, actually running the code to facilitate North Korean hackers launder money and personally profiting off of it? That's not covered by the first amendment, and I sincerely urge you to not try to find that out in the hard way.
> However, actually running the code to facilitate North Korean hackers launder money and personally profiting off of it?
Who is "running" the code?
The US government, to this date, has not made an argument that the developers of Tornado Cash, who have deployed the code to the Network, have committed a crime; at least one of them seems to be living in the US.
Nor has the government made an argument that operators of Ethereum nodes are committing a crime; they might also be considered to be running the code.
What the government has done is, through sanctions, instituted restrictions on Americans interacting financially with the smart contract. This has nothing to do with "running code"; this is operating under the assumption that the Tornado Cash smart contracts are an entity that is party to financial transactions.
Whether they have the power to sanctions non-entities like a smart contract is what the suit intends to find out.
Using any encryption protocol increases the anonymity set of the protocol and therefore will inadvertently help criminals who are trying to stay anonymous. That is not an argument for doing away with constitutional rights and human rights.
That covers you publishing software. It doesn’t cover providing a service to criminals and personally profiting from it, and the constitution definitely gives the government authority to police that so it’s going to come down to how well they can prove that those guys were going more than just releasing code.
The tornado cash smart contracts simply encrypt your transaction. When you use it you are not profiting off of it. It would be akin to banning. The use of communication encryption protocol period this is completely unprecedented in the US.
That's not accurate: my choice to encrypt a message does not directly assist you in committing a crime but that is unavoidably true for using a mixer. The guy who was arrested wasn't just arrested because he released something on GitHub but because he operates a service with North Korea used to launder money and received payment for it, and it's the operations part which brings the most risk — that service isn't complying with legal requirements for record keeping and since it's not free to use, that means that there's a transaction record showing the operators receiving a non-trivial sum of money from a criminal group.
That last part is potentially defensible – bankers aren't charged just because a criminal stores money in a checking account – except that each KYC law not followed is not only its own offense but also a chance for prosecutors to argue that the decision not to do so was intentional and the operators knew their service was predominantly used by criminals. That's going to be an interesting case with potentially significant implications for the entire field.
1. Your choice to encrypt metadata can in fact make it more difficult to identify criminal correspondents. Your choice to use Tor similarly makes it more difficult to track criminals' web usage. Both of these help criminals to engage in certain nefarious actions.
To generalize, every user of a privacy protocol increases the protocol's anonymity set, and thus its utility to all users.
In other words, Tornado Cash shares this property with every other privacy protocol.
2. The guy who wrote the Tornado Cash code operated no aspect of the Tornado Cash smart contract. That operates entirely autonomously. It's code, deployed to a massively distributed blockchain, that any one can use to encrypt their transaction.
Yes, which is why most people do not run Tor exit nodes because it’s inherently riskier to have your equipment directly involved in legal activity. Tor is actually safer than this since the traffic is encrypted so a node operator can quite confidently say they don’t know the contents. Some of the charges in this case will depend on whether these developers were in fact similarly unaware of who their heaviest users were. That doesn’t help with charges related to not following KYC, of course, because unlike an IP network financial services are fairly heavily regulated.
Your belief expressed in #2 is at odds with the charges specifically saying he profited from money laundering activity. We’ll see when that goes to court exactly what that meant and whether there’s evidence suggesting that he knew where those fees were coming from.
The developers deployed the Tornado Cash code, and subsequently, had no control over it. They did control one of the front-ends to it, and they instituted blocking of transactions originating from hacks in that front-end. But criminals were free to use any front-end to access the deployed code, and there was no way for the developers to stop that.
In any case, what is being criticized in this particular thread is OFAC prohibiting all Americans from using Tornado Cash code. This is unprecedented, and clearly outside OFAC's statutory powers to sanction "entities".
Despite the US Treasury's claims, Tornado Cash is not in any way an entity, as it is not controlled by any party. It is simply code, running autonomously on a massively distributed blockchain. When someone uses it, they are using zero knowledge proofs to encrypt their transactions. The fact that this act of encryption adds their activity to the same anonymity pool as criminal activity is no more an argument for banning this encryption protocol as it is for banning any other encryption protocol.
Again, the problem is not the code but the running service. If you are involved in processing a transaction, you are required to follow applicable laws and risk consequences if you don’t. The technical details might explain how you got involved but they don’t remove the legal requirement.
That is not true. The original Satoshi paper has a whole section about it. So the intention of privacy was - at least in theory - there from the beginning.
"Bitcoin is not, and never was, anonymous."