5 ms·

This is why Bitcoin's traceability is a problem for it's money status. If people are actively pursuing the stolen bitcoins, regardless of who's currently holdin

by lawn 7y ago

This is why Bitcoin's traceability is a problem for it's money status. If people are actively pursuing the stolen bitcoins, regardless of who's currently holding them, then Bitcoin's fungibility will break as some coins will be worth more than others. The only cryptocurrency that comes close to solving this is Monero, which isn't traceable. If the attackers were smart, this is what they would've done: Send them to Bitfinex, which is an unregulated and shady exchange, sell them for Monero and withdraw them immediately. Congratulations, now you have a bunch of untraceable cryptocurrency.

freejulian85 7y ago
Traceability is also a benefit. It makes corruption easier to find.
FDSGSG 7y ago
You can write down the serial numbers of paper money you hold, but that's not going to help you recover the money if someone steals the money and spends it at a shop. Traceability doesn't need to be a problem.
- shkkmo 7y ago
  Untraceability sidesteps getting courts or lawmakers to give you legal status as money. I don't see why governments have any motivation to extend this protection to cryptocurrencies as it would seem to mainly facilitate crime without providing any benefit in terms of encouraging adoption of government controlled currency.
  - FDSGSG 7y ago
    >I don't see why governments have any motivation to extend this protection to cryptocurrencies The governments don't need to do this, the courts do. There's an existing principle they could very cleanly apply here.
- pjc50 7y ago
  Steal a banknote, nobody's going to find it. Steal enough banknotes and the bank will go to great lengths to find you. The Northern Bank robbery stole a significant fraction of all NB notes in circulation, so the bank re-issued them, relying on the impossibility of the criminals laundering them before the swap deadline. https://www.belfasttelegraph.co.uk/news/northern-ireland/the-provos-got-so-much-cash-from-northern-bank-heist-they-could-not-handle-it-30833641.html https://www.belfasttelegraph.co.uk/news/northern-ireland/the...
- stanferder 7y ago
  Governments are unlikely to give cryptocurrencies the same legal privileges as the currencies they issue. As such, traceability will remain a risk for anyone receiving cryptocurrency payments. If a chain analysis reveals an illegal transaction as a precursor, it's going to be considered stolen goods, not money, as the article states.
  - FDSGSG 7y ago
    > Governments are unlikely to give cryptocurrencies the same legal privileges as the currencies they issue. That's fine, but if the governments don't take action it'll be up for the courts to decide that. >it's going to be considered stolen goods, not money, as the article states. This is not at all obvious. It's not even clear that the nemo dat rule would apply to any kind of ransom payment.
dylkil 7y ago
bitcoin related privacy features are getting much better [1] as are ethereums [2] [1]https://news.bitcoin.com/how-to-obscure-bitcoin-cash-transaction-data-by-leveraging-cashfusion/ https://news.bitcoin.com/how-to-obscure-bitcoin-cash-transac... [2]https://medium.com/@tornado.cash/introducing-private-transactions-on-ethereum-now-42ee915babe0 https://medium.com/@tornado.cash/introducing-private-transac...
- shkkmo 7y ago
  How are CashFusion or tornado.cash different from other mixers?
  - protanopia 7y ago
    I believe in the case of a mixer, you need a trusted third party to be the mixer.
- CallMeMarc 7y ago
  [1] is about Bitcoin Cash, not Bitcoin. [2] is basically a Tumbler/Mixer based on a smart contract which there are plenty of available (at least non-smart contract ones)
  - dylkil 7y ago
    anything useful on bitcoin cash is easily ported to bitcoin, vice versa. with cashfusion not even the server owners know which transactions belong to who, which isnt the case with normal mixers[1]. [1]https://medium.com/@james.waugh28/is-cashfusion-really-anonymous-352164a071c2 https://medium.com/@james.waugh28/is-cashfusion-really-anony...
    - lawn 7y ago
      No, it's not "just copy it" because Bitcoin Cash has some OP codes that Bitcoin doesn't have. See OP_CHECKDATASIG for example.
kzrdude 7y ago
Why not z-cash?
- drcross 7y ago
  Fundamentally not trustable.
- lawn 7y ago
  Because, like with mixing services, ZCash shielded transactions are opt-in and can easily be detected. So exchanges could decide to ban coins with mixing in their history or require extensive KYC information. Yes it's a little different from the problem described in the post, but it's another facet of the fungibility issue.
  - dwild 7y ago
    > So exchanges could decide to ban coins with mixing in their history or require extensive KYC information. The same way they could decide to ban Monero... seems like what you describe with z-cash is more complex to support in an exchange than simply removing a whole cryptocurrency, thus is less likely to happen.
    - lawn 7y ago
      Sure, but that's a different issue than fungibility.
shkkmo 7y ago
I would assume that Monero isn't being used because Bitcoin tainting hasn't become a significant issue and Monero doesn't provide sufficient liquidity to allow extorting at scale.
derefr 7y ago
Greenbacks seem to do fine despite the existence of marked bills.
- PopeDotNinja 7y ago
  Money laundering is a thing for this reason.
- deleted 7y ago
  [deleted]

by lawn 7y ago

freejulian85 7y ago

Traceability is also a benefit. It makes corruption easier to find.

FDSGSG 7y ago

You can write down the serial numbers of paper money you hold, but that's not going to help you recover the money if someone steals the money and spends it at a shop. Traceability doesn't need to be a problem.

shkkmo 7y ago
Untraceability sidesteps getting courts or lawmakers to give you legal status as money. I don't see why governments have any motivation to extend this protection to cryptocurrencies as it would seem to mainly facilitate crime without providing any benefit in terms of encouraging adoption of government controlled currency.
- FDSGSG 7y ago
  >I don't see why governments have any motivation to extend this protection to cryptocurrencies The governments don't need to do this, the courts do. There's an existing principle they could very cleanly apply here.
pjc50 7y ago
Steal a banknote, nobody's going to find it. Steal enough banknotes and the bank will go to great lengths to find you. The Northern Bank robbery stole a significant fraction of all NB notes in circulation, so the bank re-issued them, relying on the impossibility of the criminals laundering them before the swap deadline. https://www.belfasttelegraph.co.uk/news/northern-ireland/the-provos-got-so-much-cash-from-northern-bank-heist-they-could-not-handle-it-30833641.html https://www.belfasttelegraph.co.uk/news/northern-ireland/the...
stanferder 7y ago
Governments are unlikely to give cryptocurrencies the same legal privileges as the currencies they issue. As such, traceability will remain a risk for anyone receiving cryptocurrency payments. If a chain analysis reveals an illegal transaction as a precursor, it's going to be considered stolen goods, not money, as the article states.
- FDSGSG 7y ago
  > Governments are unlikely to give cryptocurrencies the same legal privileges as the currencies they issue. That's fine, but if the governments don't take action it'll be up for the courts to decide that. >it's going to be considered stolen goods, not money, as the article states. This is not at all obvious. It's not even clear that the nemo dat rule would apply to any kind of ransom payment.

dylkil 7y ago

bitcoin related privacy features are getting much better [1] as are ethereums [2] [1]https://news.bitcoin.com/how-to-obscure-bitcoin-cash-transaction-data-by-leveraging-cashfusion/ https://news.bitcoin.com/how-to-obscure-bitcoin-cash-transac... [2]https://medium.com/@tornado.cash/introducing-private-transactions-on-ethereum-now-42ee915babe0 https://medium.com/@tornado.cash/introducing-private-transac...

shkkmo 7y ago
How are CashFusion or tornado.cash different from other mixers?
- protanopia 7y ago
  I believe in the case of a mixer, you need a trusted third party to be the mixer.
CallMeMarc 7y ago
[1] is about Bitcoin Cash, not Bitcoin. [2] is basically a Tumbler/Mixer based on a smart contract which there are plenty of available (at least non-smart contract ones)
- dylkil 7y ago
  anything useful on bitcoin cash is easily ported to bitcoin, vice versa. with cashfusion not even the server owners know which transactions belong to who, which isnt the case with normal mixers[1]. [1]https://medium.com/@james.waugh28/is-cashfusion-really-anonymous-352164a071c2 https://medium.com/@james.waugh28/is-cashfusion-really-anony...
  - lawn 7y ago
    No, it's not "just copy it" because Bitcoin Cash has some OP codes that Bitcoin doesn't have. See OP_CHECKDATASIG for example.

kzrdude 7y ago

Why not z-cash?

drcross 7y ago
Fundamentally not trustable.
lawn 7y ago
Because, like with mixing services, ZCash shielded transactions are opt-in and can easily be detected. So exchanges could decide to ban coins with mixing in their history or require extensive KYC information. Yes it's a little different from the problem described in the post, but it's another facet of the fungibility issue.
- dwild 7y ago
  > So exchanges could decide to ban coins with mixing in their history or require extensive KYC information. The same way they could decide to ban Monero... seems like what you describe with z-cash is more complex to support in an exchange than simply removing a whole cryptocurrency, thus is less likely to happen.
  - lawn 7y ago
    Sure, but that's a different issue than fungibility.

shkkmo 7y ago

I would assume that Monero isn't being used because Bitcoin tainting hasn't become a significant issue and Monero doesn't provide sufficient liquidity to allow extorting at scale.

derefr 7y ago

Greenbacks seem to do fine despite the existence of marked bills.

PopeDotNinja 7y ago
Money laundering is a thing for this reason.
deleted 7y ago
[deleted]