3 ms·

Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much

Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much smaller amounts..

woodruffw 4y ago
> Why can't non-institutional actors achieve the same level of privacy? Non-institutional actors are transacting over an immutable public ledger. Institutional actors are transacting via backchannels. In other words: the cryptocurrency transaction space is "schizophrenic": the traffic that supports high valuations is not settled on the chain itself, but via gentlemen's agreements. Non-institutional actors could do the same thing (and get the same privacy), but then it's just normal money laundering instead of "decentralized finance."
- thebean11 4y ago
  > Institutional actors are transacting via backchannels. As in, they are keeping funds on centralized exchanges? Users can do the exact same thing if they want, not sure I get your point.
  - woodruffw 4y ago
    See the original comment: the point is that there's no actual way to verify the central claim ("$3B in Bitcoin was sold [...]"). We're expected to take everyone's word for it. This is in marked contrast to how two arbitrary users are expected to transact via a blockchain.
    - thebean11 4y ago
      How would you verify that something was sold outside of a blockchain? The receiver of the item would need to prove it's in their possession, which is pretty easy on BTC. I guess I'm not sure how you get from that to privacy only being achievable by institutions?
      - woodruffw 4y ago
        I didn't. That's not a property I want in a financial system; it's one I want in a legal system. The only points being made are that (1) virtually nobody actually wants their entire life's transactions recorded on an immutable public ledger, and (2) the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely.
        thebean11 4y ago
        > the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely I guess this is where I don't know what you mean, specifically
- deleted 4y ago
  [deleted]

Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much smaller amounts..

woodruffw 4y ago

> Why can't non-institutional actors achieve the same level of privacy? Non-institutional actors are transacting over an immutable public ledger. Institutional actors are transacting via backchannels. In other words: the cryptocurrency transaction space is "schizophrenic": the traffic that supports high valuations is not settled on the chain itself, but via gentlemen's agreements. Non-institutional actors could do the same thing (and get the same privacy), but then it's just normal money laundering instead of "decentralized finance."

thebean11 4y ago
> Institutional actors are transacting via backchannels. As in, they are keeping funds on centralized exchanges? Users can do the exact same thing if they want, not sure I get your point.
- woodruffw 4y ago
  See the original comment: the point is that there's no actual way to verify the central claim ("$3B in Bitcoin was sold [...]"). We're expected to take everyone's word for it. This is in marked contrast to how two arbitrary users are expected to transact via a blockchain.
  - thebean11 4y ago
    How would you verify that something was sold outside of a blockchain? The receiver of the item would need to prove it's in their possession, which is pretty easy on BTC. I guess I'm not sure how you get from that to privacy only being achievable by institutions?
    - woodruffw 4y ago
      I didn't. That's not a property I want in a financial system; it's one I want in a legal system. The only points being made are that (1) virtually nobody actually wants their entire life's transactions recorded on an immutable public ledger, and (2) the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely.
      - thebean11 4y ago
        > the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely I guess this is where I don't know what you mean, specifically
deleted 4y ago
[deleted]