6 ms·

So can privacy coins scale or all the efforts put there were futile?

Taek 5y ago
Privacy coins can work if you can maintain the property that _every_ transaction could plausibly be spending _any_ historic output. For the most part, that's just Zcash-like coins
- matheusmoreira 5y ago
  What about Monero?
  - Taek 5y ago
    Monero fails the privacy doom principle, eventually analytics will be enough to fully break it. In the long term, it's not really any safer than bitcoin.
    - matheusmoreira 5y ago
      Can you elaborate? It's my understanding that Monero uses ring signatures and that it's impossible to tell which key actually signed the transaction. It's also impossible to correlate multiple transactions without external metadata such as exchange records. This implies there's no way to compute intersections of the set of keys in all related transactions until only one element remains.
      - salawat 5y ago
        Think about it. What is the point of a transaction you can't eventually confirm whether it happened or not? Monero may utilize a heaping helping of obfuscatory steps, but those steps need to be consistent, and reversible. Otherwise, you have no guarantee that someone well placed hasn't modified the record in all the right places. Nation state's sole reason for existence is to implement solutions to these kinds of hard-to-reverse problems by sponsoring tooling and regulation to ensure that knowledge graph can be traversed. Either through mandatory reporting of the requisite metadata by exchanges that handle those transactions en-masse and who make money off it as a pre-condition of doing business, or by banning systems and instituting penalties for being discovered to use such an unreversible system. This is the part that blockchain people don't get. If you have a public ledger, it's a matter of time until LE and regulators figure out how to legally constrain you. You may have a chunk of time when you can get away with untraceable transactions, but measures will eventually be implemented that will practically break anonymity for a lawfully operated business if you keep any sort of bifurcated record. Then there's the final measure of making it impossible to legally reenter the fiat market from these types of assets as well. Successful money laundering is already fairly difficult. Without a way to feasibly re-enter, it becomes that much harder. While in theory you could have two monetary instruments that fuel disjoint economic systems, there still has to be a cross-over point, and you can bet that that will be the point of maximum scrutiny. Not saying it's impossible to make work, but don't expect everyone else to make it easy for you. The glacier may not move quickly, but it does in fact, move.
- ComodoHacker 5y ago
  Doesn't that defeat the purpose of blockchain?
  - CodesInChaos 5y ago
    The purpose of the blockchain is to prevent double spends. For bitcoin that's done by maintaining the set of unspent transaction outputs. AFAIR Zcash maintains the set of spent serial numbers instead, so it scales worse in that regard.

Taek 5y ago

Privacy coins can work if you can maintain the property that _every_ transaction could plausibly be spending _any_ historic output. For the most part, that's just Zcash-like coins

matheusmoreira 5y ago
What about Monero?
- Taek 5y ago
  Monero fails the privacy doom principle, eventually analytics will be enough to fully break it. In the long term, it's not really any safer than bitcoin.
  - matheusmoreira 5y ago
    Can you elaborate? It's my understanding that Monero uses ring signatures and that it's impossible to tell which key actually signed the transaction. It's also impossible to correlate multiple transactions without external metadata such as exchange records. This implies there's no way to compute intersections of the set of keys in all related transactions until only one element remains.
    - salawat 5y ago
      Think about it. What is the point of a transaction you can't eventually confirm whether it happened or not? Monero may utilize a heaping helping of obfuscatory steps, but those steps need to be consistent, and reversible. Otherwise, you have no guarantee that someone well placed hasn't modified the record in all the right places. Nation state's sole reason for existence is to implement solutions to these kinds of hard-to-reverse problems by sponsoring tooling and regulation to ensure that knowledge graph can be traversed. Either through mandatory reporting of the requisite metadata by exchanges that handle those transactions en-masse and who make money off it as a pre-condition of doing business, or by banning systems and instituting penalties for being discovered to use such an unreversible system. This is the part that blockchain people don't get. If you have a public ledger, it's a matter of time until LE and regulators figure out how to legally constrain you. You may have a chunk of time when you can get away with untraceable transactions, but measures will eventually be implemented that will practically break anonymity for a lawfully operated business if you keep any sort of bifurcated record. Then there's the final measure of making it impossible to legally reenter the fiat market from these types of assets as well. Successful money laundering is already fairly difficult. Without a way to feasibly re-enter, it becomes that much harder. While in theory you could have two monetary instruments that fuel disjoint economic systems, there still has to be a cross-over point, and you can bet that that will be the point of maximum scrutiny. Not saying it's impossible to make work, but don't expect everyone else to make it easy for you. The glacier may not move quickly, but it does in fact, move.
ComodoHacker 5y ago
Doesn't that defeat the purpose of blockchain?
- CodesInChaos 5y ago
  The purpose of the blockchain is to prevent double spends. For bitcoin that's done by maintaining the set of unspent transaction outputs. AFAIR Zcash maintains the set of spent serial numbers instead, so it scales worse in that regard.