6 ms·

Privacy: crypto to the rescue.

by _the_inflator 7y ago

a012 7y ago
How exactly the crypto could rescue?
- henrikschroder 7y ago
  "something something blockchain!"
- bduerst 7y ago
  Theoretically Monero would be a possible solution, but only if your sole requirement is anonymity. Heavy emphasis on only if though, since payment systems are much, much more than that requirement (i.e. dispute handling, chargebacks, insurance, fraud identification, etc.). I don't think there are any crypto implementations today that could compete with existing mainstream systems, which in itself is a statement that opens a can of worms on HN, but maybe someday.
  - guelo 7y ago
    As if the store that can't be bothered to accept cash is going to accept some hard to use fringe coin.
  - koonsolo 7y ago
    That depends how you look at it. Crypto also has other advantages that payment systems haven't: any arbritary amount from 0.00001 to millions in 1 go, instant (especially advantage for the large numbers, since banks cannot do that), smart contracts etc. Dispute handling and chargebacks are also very disputable for wire transfers. I have to give my ID to the bank every few years, yet people get scammed with wire transfers all the time and get a "sorry can't do anything about your lost money" from the bank.
    - est31 7y ago
      > instant (especially advantage for the large numbers, since banks cannot do that) It's not instant. According to https://www.crypto51.app/ https://www.crypto51.app/ the cost to 51% attack ethereum for 1 hour is $92k. This means it's $2.2 million for one day or 24 hours. Let's say you want to transfer $10 million via ethereum. Then the party who gives you the eth can perform a double spending attack, only pretending to give you the $10 million while getting something else from you in exchange as part of the original deal that takes one day to be transfferred to them. As long as that something else is worth more than $2.2 million, that other party has made a return. The only good remedy is waiting for the double spending cost to exceed the contract volume, but it means that the currency isn't instant any more, or at least is instant for small sums of money only.
      - koonsolo 7y ago
        Your whole argument falls to pieces when Proof Of Stake is used instead of Proof Of Work. Plenty of high TPS crypto's use POS. https://blog.qtum.org/how-proof-of-stake-renders-a-51-attack-unlikely-and-unappealing-ddebdc91a569 https://blog.qtum.org/how-proof-of-stake-renders-a-51-attack...
    - bduerst 7y ago
      Punching holes in certain payment methods (like money wires) isn't the same as building a case for crypto. Also crypto isn't instant. Bitcoin takes 10 minutes if you're lucky, even longer if the network is maxed at 7 transactions a second (comparatively, Visa handles 42,000 transactions a second).
      - topranks 7y ago
        While that’s correct that is also just an artificial limit put on it by the Bitcoin core devs, who somehow think it is desirable. Many other coins have the capability to support orders of magnitude more transactions per second and have been successfully demonstrated to do so. In theory, with 10GB blocks or so, it could scale to Visa-levels although I’m not sure anyone has tested at that scale.
    - 7y ago
  - topranks 7y ago
    The problem being discussed is replacing cash. Cash does not provide dispute handling, chargebacks or any of those other things either.
- CameronNemo 7y ago
  Adoption. If we can buy groceries, get served at a restaurant or by street vendor, pay for utilities/fuel, and receive medical attention while only using Monero, zcash, or cash shuffling financial privacy could be in reach.
  - dymk 7y ago
    None of which support chargebacks, fraud prevention, anti money laundering, or the other benefits to a centralized reversible money system.
    - bartkappenburg 7y ago
      Just like cash.
      - jkepler 7y ago
        Since cash and open/decentralized crypto are bearer instruments.
      - bduerst 7y ago
        Cash's physical nature makes transactions with parties less anonymous, meaning there are other routes of remediation (i.e. small claims court, etc.)
    - CameronNemo 7y ago
      I would imagine these (anti) features could be implemented by signing transactions with government recognized private keys.
    - koonsolo 7y ago
      I'm from Belgium, which has one of the highest income taxes in the world. Why do you put "anti money laundering" as a benefit?
      - reallydontask 7y ago
        Not OP Most people would agree that not allowing criminals to enjoy the spoils of their crime is a good thing. If you think that your taxes are too high, and would like to be a law abiding citizen, you've got options: ballot box (you might need your own party) move to a different country
kerkeslager 7y ago
Trivially, cryptocurrency is less private than credit/debit cards, because every transaction is written to the public log. This is true of Bitcoin, Bitcoin Cash, Litecoin, and Ethereum. Coin tumblers exist for all these currencies. But these a) cost a small fee, and b) are back to centralization, requiring you to trust the tumbler maintainers not to record the transactions. ZCash[1] is the only cryptocurrency I know of which attempts to actually be private, but the unpopularity of ZCash relative to Bitcoin/Bitcoin Cash/Litecoin/Ethereum shows that most people involved in cryptocurrencies actually don't care about privacy. [1] https://z.cash/ https://z.cash/
- topranks 7y ago
  Monero is a fairly popular privacy coin too. And while Bitcoin is written to a public ledger, there is a key difference in that you only see “this address sent money to this address.” That’s still fairly public and you might not want that. But unlike a bank there is nothing linking those addresses to any individual, no name, address and phone number is associated. Plus you can receive funds to a different address every time, so you don’t have to use the same one for each transaction. It doesn’t mean it’s not public but just to put it in context. The main issue with crypto is the confirmation time, but 0-conf is probably acceptable in the same way contactless is for small things.
  - kerkeslager 7y ago
    > Monero is a fairly popular privacy coin too. I'll look into that. At first glance some of the privacy claims seem a bit strange, but I haven't looked at the proofs enough to be sure. > That’s still fairly public and you might not want that. But unlike a bank there is nothing linking those addresses to any individual, no name, address and phone number is associated. Plus you can receive funds to a different address every time, so you don’t have to use the same one for each transaction. Okay, but trivially this allows you to trace transactions back to institutions (i.e. Coinbase) which are tied into the traditional banking system just like banks--unless you put your coins through a tumbler, coins purchased from an exchange are exactly as private as traditional currency at a bank. Arguably less private, since coin exchanges are under more scrutiny right now than banks. And unlike banks, if you expose a receiving address for transactions tied to your name, you're exposing every transaction you receive. You're depending on pseudonymity for anonymity, which doesn't work if the only reason you're receiving coins in the first place is a reputation tied to your name. And if a pseudonym can build up enough reputation to receive coins (i.e. Dread Pirate Roberts) then all you have to do to break the anonymity is to tie the pseudonym to the person (we know all the transactions received by Ross Ulbricht because they were received pseudonymously not anonymously, so knowing Dread Pirate Roberts = Ross Ulbricht tells us all the transactions Ross Ulbricht received). In short, pseudonymity is not anonymity. > The main issue with crypto is the confirmation time, but 0-conf is probably acceptable in the same way contactless is for small things. There isn't a single "main issue" with crypto--it just has properties, and people only have issues with it if they use crypto for purposes where those properties are unsuitable. If you use Bitcoin for anonymity, your main issue is that Bitcoin isn't anonymous, but that's your main issue, not the main issue with Bitcoin. I personally have never used cryptocurrency for anything where I cared about waiting for 6 confirmations.

Privacy: crypto to the rescue.

a012 7y ago

How exactly the crypto could rescue?

henrikschroder 7y ago
"something something blockchain!"
bduerst 7y ago
Theoretically Monero would be a possible solution, but only if your sole requirement is anonymity. Heavy emphasis on only if though, since payment systems are much, much more than that requirement (i.e. dispute handling, chargebacks, insurance, fraud identification, etc.). I don't think there are any crypto implementations today that could compete with existing mainstream systems, which in itself is a statement that opens a can of worms on HN, but maybe someday.
- guelo 7y ago
  As if the store that can't be bothered to accept cash is going to accept some hard to use fringe coin.
- koonsolo 7y ago
  That depends how you look at it. Crypto also has other advantages that payment systems haven't: any arbritary amount from 0.00001 to millions in 1 go, instant (especially advantage for the large numbers, since banks cannot do that), smart contracts etc. Dispute handling and chargebacks are also very disputable for wire transfers. I have to give my ID to the bank every few years, yet people get scammed with wire transfers all the time and get a "sorry can't do anything about your lost money" from the bank.
  - est31 7y ago
    > instant (especially advantage for the large numbers, since banks cannot do that) It's not instant. According to https://www.crypto51.app/ https://www.crypto51.app/ the cost to 51% attack ethereum for 1 hour is $92k. This means it's $2.2 million for one day or 24 hours. Let's say you want to transfer $10 million via ethereum. Then the party who gives you the eth can perform a double spending attack, only pretending to give you the $10 million while getting something else from you in exchange as part of the original deal that takes one day to be transfferred to them. As long as that something else is worth more than $2.2 million, that other party has made a return. The only good remedy is waiting for the double spending cost to exceed the contract volume, but it means that the currency isn't instant any more, or at least is instant for small sums of money only.
    - koonsolo 7y ago
      Your whole argument falls to pieces when Proof Of Stake is used instead of Proof Of Work. Plenty of high TPS crypto's use POS. https://blog.qtum.org/how-proof-of-stake-renders-a-51-attack-unlikely-and-unappealing-ddebdc91a569 https://blog.qtum.org/how-proof-of-stake-renders-a-51-attack...
  - bduerst 7y ago
    Punching holes in certain payment methods (like money wires) isn't the same as building a case for crypto. Also crypto isn't instant. Bitcoin takes 10 minutes if you're lucky, even longer if the network is maxed at 7 transactions a second (comparatively, Visa handles 42,000 transactions a second).
    - topranks 7y ago
      While that’s correct that is also just an artificial limit put on it by the Bitcoin core devs, who somehow think it is desirable. Many other coins have the capability to support orders of magnitude more transactions per second and have been successfully demonstrated to do so. In theory, with 10GB blocks or so, it could scale to Visa-levels although I’m not sure anyone has tested at that scale.
  - 7y ago
- topranks 7y ago
  The problem being discussed is replacing cash. Cash does not provide dispute handling, chargebacks or any of those other things either.
CameronNemo 7y ago
Adoption. If we can buy groceries, get served at a restaurant or by street vendor, pay for utilities/fuel, and receive medical attention while only using Monero, zcash, or cash shuffling financial privacy could be in reach.
- dymk 7y ago
  None of which support chargebacks, fraud prevention, anti money laundering, or the other benefits to a centralized reversible money system.
  - bartkappenburg 7y ago
    Just like cash.
    - jkepler 7y ago
      Since cash and open/decentralized crypto are bearer instruments.
    - bduerst 7y ago
      Cash's physical nature makes transactions with parties less anonymous, meaning there are other routes of remediation (i.e. small claims court, etc.)
  - CameronNemo 7y ago
    I would imagine these (anti) features could be implemented by signing transactions with government recognized private keys.
  - koonsolo 7y ago
    I'm from Belgium, which has one of the highest income taxes in the world. Why do you put "anti money laundering" as a benefit?
    - reallydontask 7y ago
      Not OP Most people would agree that not allowing criminals to enjoy the spoils of their crime is a good thing. If you think that your taxes are too high, and would like to be a law abiding citizen, you've got options: ballot box (you might need your own party) move to a different country

kerkeslager 7y ago

Trivially, cryptocurrency is less private than credit/debit cards, because every transaction is written to the public log. This is true of Bitcoin, Bitcoin Cash, Litecoin, and Ethereum. Coin tumblers exist for all these currencies. But these a) cost a small fee, and b) are back to centralization, requiring you to trust the tumbler maintainers not to record the transactions. ZCash[1] is the only cryptocurrency I know of which attempts to actually be private, but the unpopularity of ZCash relative to Bitcoin/Bitcoin Cash/Litecoin/Ethereum shows that most people involved in cryptocurrencies actually don't care about privacy. [1] https://z.cash/ https://z.cash/

topranks 7y ago
Monero is a fairly popular privacy coin too. And while Bitcoin is written to a public ledger, there is a key difference in that you only see “this address sent money to this address.” That’s still fairly public and you might not want that. But unlike a bank there is nothing linking those addresses to any individual, no name, address and phone number is associated. Plus you can receive funds to a different address every time, so you don’t have to use the same one for each transaction. It doesn’t mean it’s not public but just to put it in context. The main issue with crypto is the confirmation time, but 0-conf is probably acceptable in the same way contactless is for small things.
- kerkeslager 7y ago
  > Monero is a fairly popular privacy coin too. I'll look into that. At first glance some of the privacy claims seem a bit strange, but I haven't looked at the proofs enough to be sure. > That’s still fairly public and you might not want that. But unlike a bank there is nothing linking those addresses to any individual, no name, address and phone number is associated. Plus you can receive funds to a different address every time, so you don’t have to use the same one for each transaction. Okay, but trivially this allows you to trace transactions back to institutions (i.e. Coinbase) which are tied into the traditional banking system just like banks--unless you put your coins through a tumbler, coins purchased from an exchange are exactly as private as traditional currency at a bank. Arguably less private, since coin exchanges are under more scrutiny right now than banks. And unlike banks, if you expose a receiving address for transactions tied to your name, you're exposing every transaction you receive. You're depending on pseudonymity for anonymity, which doesn't work if the only reason you're receiving coins in the first place is a reputation tied to your name. And if a pseudonym can build up enough reputation to receive coins (i.e. Dread Pirate Roberts) then all you have to do to break the anonymity is to tie the pseudonym to the person (we know all the transactions received by Ross Ulbricht because they were received pseudonymously not anonymously, so knowing Dread Pirate Roberts = Ross Ulbricht tells us all the transactions Ross Ulbricht received). In short, pseudonymity is not anonymity. > The main issue with crypto is the confirmation time, but 0-conf is probably acceptable in the same way contactless is for small things. There isn't a single "main issue" with crypto--it just has properties, and people only have issues with it if they use crypto for purposes where those properties are unsuitable. If you use Bitcoin for anonymity, your main issue is that Bitcoin isn't anonymous, but that's your main issue, not the main issue with Bitcoin. I personally have never used cryptocurrency for anything where I cared about waiting for 6 confirmations.