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Chainalysis CTO said blockchain is easier to trace than paper money

359 points by threelinepitch 4y ago

barbariangrunge 4y ago
A permanent public ledger of all transactions -- I was never clear why that was private. Could anybody explain why it is considered hard to trace?
jklinger410 4y ago
Too bad I can't send paper with my phone. Apples to oranges, dumbass.
_5uxp 4y ago
So we are reading "Bitcoin has failed." for the 24982424 time and this time from a VC that writes on medium? Bad take.
jqpabc123 4y ago
Functional money is built around trust and consensus. A critical weakness of crypto is that the actors involved are *less* trustworthy than government. And this lack of trust and transparency and oversight; combined with the fact that anyone and his brother can mint their own crypto, makes a general consensus on the value of crypto unlikely.
- pclmulqdq 4y ago
  The lack of trust means that the only thing left to guarantee (to a normal person) that the system is working is transparency.
  - jqpabc123 4y ago
    transparency Has anyone seen the financial records for Tether?
    - bavell 4y ago
      I'm pro-crytpo but Tether is a scam imo.
      - jqpabc123 4y ago
        As Tether goes, so goes the entire crypto eco-system. Tether underwrites the entire crypto marketplace. It is involved in more than half of all crypto trades. And it's unlimited supply is totally controlled by crypto market makers with every incentive to use it to manipulate the crypto market. It's like giving NASDAQ and the NYSE control over the Federal Reserve. No possible conflict of interest there, right? https://www.theverge.com/22620464/tether-backing-cryptocurrency-stablecoin https://www.theverge.com/22620464/tether-backing-cryptocurre...
    - saurik 4y ago
      Tether is a centralized bank that happens to use a blockchain as a backend. When people say "crypto is transparent" that doesn't mean you can't build things that are not transparent that use crypto. Similarly, one can benefit from a fully-open laptop (with open firmware running Linux or whatever) even if it allows people to still develop closed source software that runs on it, and even if some of that software is merely a front for software that runs on it is just a client for some remote server whose behavior cannot be modeled... because on the locked down device (imagine an iPhone) you can never develop something whose behavior is transparent as you can never discount what the platform is letting the developer hide from you.
    - pclmulqdq 4y ago
      Tether is basically a bank with none of the regulations, not actually a blockchain. All transactions done in USDT are public, but the backing money isn't. But trust me, it's all there, and it's totally not in speculative Chinese bonds.
- imdsm 4y ago
  > A critical weakness of crypto is that the actors involved are less trustworthy than government. If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system, based on an agreed upon protocol with cryptographic controls. It isn't meant as an improvement to an existing system, but as an alternative system, and while we often hear of people who say it is a scam, that it won't work, that it can't work, the unbiased reality is that it is being used for value transactions and has been non-stop for over a decade now. The phrase "a general consensus on the value of crypto" is equal to "a general consensus on the value of money". Crypto (as in cryptocurrencies, cryptoassets, and, in general, blockchain based digital ledgers) is a vast subject. Nothing stops someone from creating their own paper currency or non-blockchain digital currency (Nectar points, air miles). There are for sure questions to be asked here about how unregulated, crowd managed currencies can be integrated into existing societies were money is heavily regulated, but that is another subject.
  - AlexandrB 4y ago
    > If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system, based on an agreed upon protocol with cryptographic controls. Those controls only address problems created by the distributed nature of crypto (double spend), but don't touch the most common types of financial fraud which is why wash trading and rug pulls are so common. Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly.
    - imdsm 4y ago
      They address more than just double spend attacks, but also ownership and control. Without a private key, in a protocol where every transaction must be signed, no changes can be made to a ledger where balances are associated with corresponding public keys. The human issues that we have from use of the system, fraud, P&D schemes, non-custodial wallets (exchanges) etc, aren't fundamental issues with the technology itself, but with the periphery. Cash can be used to buy drugs, bank accounts can be used for money laundering, financial markets can be manipulated. We must be cognisant of the fact that where there are people, there will be misuse. Crypto is no different. > Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly. Must we assume that pricing is to be trusted? What pricing is this, exchange pricing? If you're using centralised exchanges then the issue is whether you trust the centralised exchange to keep an honest order book, and whether you're able to determine whether the exchange rate reflects the value of the token/asset. Many people have recently begun trading on financial markets, see Gamestop, wallstreetbets etc, without the proper knowledge required to ensure they're making the right decisions. This is no different from buying BTC because your neighbour told you it'll hit $100k by Christmas. These are societal problems from people who want to get rich quick and almost always get hurt trying.
prvit 4y ago
Entirely traceable money is easier to trace than borderline untraceable money? Great.
- pclmulqdq 4y ago
  Most people still have no idea that a blockchain is 100% traceable. People get freaked out when you tell them the contents of their wallets.
  - aliqot 4y ago
    some blockchains are 100% traceable.
    - AlexandrB 4y ago
      s/some/most/, especially if you're counting by market cap or number of users.
    - t-3 4y ago
      Got examples? I can't see how an untraceable blockchain could still be considered a blockchain (or what use it would be). Isn't the whole point to be perfectly traceable?
      - sodality2 4y ago
        Monero has public transactions but the recipients and senders' addresses are encrypted so you can't really trace it to wallets
        aliqot 4y ago
        Every UTXO is also randomized as far as input selection and distribution and also the way they're labeled as they travel through the system. For the simplest example, reference early monero code (at the time BMR, and MRO) where Borromean Ring Signatures were used, where the same operation is performed multiple times per-input effectively mixing inputs at the atomic level, rather than in later iterations (RingCT, Arcturus, etc) that extended this further to obscure also the amounts of these inputs and to trim some of the inefficiencies of Borosigs.
Jamie9912 4y ago
Wow, Sherlock Holmes?
superkuh 4y ago
Yeah, it's entirely built on the idea that every transaction is known by everyone. I think Lance is a bit confused. Maybe he should look into Monero. The point of Bitcoin is to enable anyone to exchange value with anyone. And it does that very well. When the US justice department declared that credit card companies had to stop processing donations to wikileaks I could still donate through bitcoin.
- insanitybit 4y ago
  I don't think they're confused, I think the vast majority of people involved in crypto or who are spectators of crypto are confused. I have repeatedly heard that crypto enables "anonymous" transactions for years. Also he literally links the original paper, quoting the part where it talks about transactions being harder to trace. "without telling who the parties are".
  - convery 4y ago
    The "without telling who the parties are" is more about non-personal identifiers. Similar to how knowing your IP address doesn't really identify you by itself, you need to go through (often several levels of) other parties to get that info. Which in addition is ephemeral, others will be assigned your IP and tracing which requests were made by you vs. someone else is a lot harder than tracing a credit-card.
    - z3c0 4y ago
      This seems to be lost on a lot of folks, which I find strange in a tech-centric forum. Bitcoin is perfectly pseudonymous, as it strives to be, and not anonymous, which it has never attempted to be.
      - insanitybit 4y ago
        My recollection is that Satoshi wanted people to rotate public keys after every use exactly to have anonymity.
RektBoy 4y ago
Water is wet, whoaaaa Cpt.Obvious
- simonh 4y ago
  Well yes, but we still get people regularly claiming here that anonymity is one of the great benefits of crypto, so there are a lot of people out there that still need to find this out.
  - lawn 4y ago
    There's crypto and then there's crypto. Monero and Bitcoin both use a blockchain, but with entirely different traceability and anonymity properties.
dragonelite 4y ago
Only the people that don't know what the words "open" and "ledger" means.
- c0mptonFP 4y ago
  You can have open ledgers without compromising anonymity, via ZK cryptography.
Ptchd 4y ago
Is he talking about Monero?
freddealmeida 4y ago
Of course it is. Also water is wet. Your gf will hate you. And, silly things do not need to be stated.
nigerianbrince 4y ago
cammikebrown 4y ago
How about Monero?
jollyllama 4y ago
Unless there are automated tumblers. Then they'll just sanction you.
mellosouls 4y ago
Lots of comments here guffawing at the lack of revelation, but anonymity is central to blockchain-related popular understanding (and endless crypto pr).
ivanhoe 4y ago
In theory traceability is not a problem if you can maintain a complete anonymity of your online persona - which in practice most people can't.
- Nokinside 4y ago
  If you own significant sums of money and its completely anonymous, or the origin is untraceable, you can't use it. Just like drug cartels know how to collect and store anonymous money but find it very hard to use it. Every time you try to buy something expensive or normal financial assets, you have to explain where the money is from or you may lose it. Try to buy a house with anonymous crypto and find out.
  - ivanhoe 4y ago
    But crypto wasn't invented for rich people and drug lords to launder the money, so why would anyone give a shit about their problems in the first place? It still would make a lot of sense for regular folks who prefer their online habits not to be tracked by corporations and sold around.
tromp 4y ago
> Unfortunately, this aspect of his brilliant design was one of the first things to be undermined by subsequent blockchain operators. Many cryptocurrencies that have been created since are unlimited in supply, including some of the most heavily speculated ones like Solana, Dogecoin and Shiba Inu. > This is worse than what the central banks have done. No, it's not. Even a coin that is emitted one per second forever is disinflationary. Not only is the yearly supply inflation rate perfectly predictable (unlike fiat), it also steadily converges toward zero (again, unlike fiat). In the long term, the difference between finite and infinite supply is negligible as long as the yearly supply never increases [1]. [1] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...
- andsoitis 4y ago
  Even if a single crypto coin is limited in supply, there's an infinite number of (potential) suppliers of coin.
  - tromp 4y ago
    Less than a hundred [1] that are not copy-pastes of prior projects with some irrelevant tweaks, which can for the most part be ignored. [1] https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHplJudr9kSGQYAoJvaKnfRhI4/edit#gid=0 https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHp...
  - jjk166 4y ago
    If I print a trillion schrute bucks, have I devalued the US dollar? If I print another trillion schrute bucks, does the US dollar suffer inflation, or does the schrute buck? Yes people can make an infinite number of currencies, but they are all parallel systems. Making a new coin doesn't inflate the supply of bitcoin, it is just one more thing that bitcoin could potentially be exchanged for. And in practice it seems unlikely that more than a few thousand could be adopted by enough people to have a value appreciably different from zero.
  - EVa5I7bHFq9mnYK 4y ago
    Indeed, there are tens of thousands of various coins created, but 74% of wealth stays in just two of them - Bitcoin and ETH (if we exclude centralized tokens USDT, USDC, XRP, BNB etc). It's something like geometric series.
z3c0 4y ago
I found this article to be poorly-written and deliberately inflammatory. I'll gloss over the regular criticism of "stop conflating cryptocurrencies with blockchains". It makes continual leaps from Satoshi Nakamoto's intentions to short-comings of non-BTC cryptocurrencies, and then snowballs this into the tremendously non-sequitur subheading Bitcoin has failed. Cryptocurrencies and DeFi platforms are now more vulnerable to privacy breaches and hacking than traditional banking. Personally, all I see are a string of obvious scams collapsing. These scams were perpetrated by imposters pretending to be a part of a movement so that they could better tug on their victims' heartstrings. But I fail to see how the goals of these imposters should be conflated with the intentions of Satoshi Nakamoto, purely because the imposters bastardized Nakamoto's tech. Also - the title is barely the subject of the article, but even if it were, I don't think that it, in any way, stands contrary to the goals of Bitcoin. I could see it being an issue for a blockchain meant for privacy, like Monero, but I didn't see any such reference in the article.
- RuggedPineapple 4y ago
  >Personally, all I see are a string of obvious scams collapsing. I think you and rational people agree, it's just the rational people see the whole space as a scam, and they're not wrong. It's been, from it's very start, a Dunning-Kruger trap sold on lies. First it was supposed to be a currency, but was created from the ground up to be deflationary, which is a death knell for a currency and leads to perpetual recession. Then it was an asset that can only go up, until the price crashed and people realized its intrinsic value is 0 and there is no floor. Then it was an inflation hedge that would keep you up when markets went down, except it turned out to be largely correlated to the market. Every use case they come up with is a bag of magic beans with the sole intention of getting you to carry their bags. I've heard it described as digital beanie babies and that moniker is more apt then most could have imagined.
  - saurik 4y ago
    I mean, I would argue that the use cases people come up with simply pre-suppose the idea that "absolute power corrupts absolutely" and that there will be at least some people out there who would--or at least should--value avoiding giving those players such power. If, tomorrow, everyone suddenly forgot what e-mail was and someone suddenly tried to invent it there would be a ton of people angry that it served no purpose and would ever catch on because it would be full of spam and people would have to run their own email servers instead of using centralized messaging servers and all the same arguments people make about crypto would re-surface ("well, maybe people could run servers on behalf of other people" "well doesn't that undermine your precious decentralization?" "somewhat, sure, but federation is still valuable" etc.).
beauHD 4y ago
Putting on my conspiracy robe, I would posit Bitcoin was created by an intelligence agency. You need cryptography smarts and the ability to glue all the various components together aswell as keep it all hush, something an intel agency can do with ease. How else do you uncover vast criminal networks? It was purposefully made to ensnare cyber-criminals. Now as for Monero, I would imagine it has them shaking in their boots.
- midasz 4y ago
  Monero has to become fiat at some point right?
- cowtools 4y ago
  I doubt it. Bitcoin was simply the combonation of two well-understood things: hashcash and cryptographic signatures.
- not1ofU 4y ago
  agree, because bitcoin / silk road and tor all popped up at the more or less the same time. and they all need each other as a boot strap. Also - Satoshi - who? no one knows, really? Dread Pirate Roberts, name insinuates that the role (of site administrator) was handed over to him. There has been speculation that he was not the creator of the site. Tor - created by the Navy. Why? - Black money / create an "open source", super duper encrypted method of communicating that cannot be broken (unless you control 70% of the exit nodes, whoopsies), get people invested in using it. How many of the dealers that supplied on silkroad where "free-lance" and scooped up later (along with their product and cash)
SevenNation 4y ago
That's because when most people use "blockchain" or "DeFi" they're using AML/KYC entities that post their transaction logs to public servers. Law enforcement eats this up because it saves them the trouble of getting warrants for investigations. Bad for customers to be sure. Most have no idea what they're doing and have fallen for a scam hook, line, and sinker. They (loudly, incessantly) proclaim to their friends the benefits of a new money paradigm while deriving all sustenance through the umbilical cord of OldFi. ChromaFlair on a Model T. The article itself is a hot mess of muddled thinking. It starts by talking about the Bitcoin white paper (not a "manifesto"), then asking the absurd question: "Why can't DeFi make good on the promise?" The reason is that "DeFi" is about as far from Bitcoin as "car" is from "carpet." The Bitcoin white paper describes the application of proof of work to the problem of electronic cash. The vast majority of DeFi projects are just centralized ledgers operating through trusted institutions. They are the very definition of "mint" in the white paper - a single, corruptible player that sets the rules - arbitrarily if need be.
- arberx 4y ago
  Sounds like you've never used a DeFi application...Yes, the bridging between on-chain/off-chain still happens through centralized entities, but things like uniswap are entirely run on-chain and don't require any central authority or centralized ledger.
  - cowtools 4y ago
    privacy through voluntary swaps is not sybil-proof
- louwrentius 4y ago
  What is the point you are trying to convey?
  - counttheforks 4y ago
    Don't use AML/KYC entities?
senectus1 4y ago
well yes... Its a public Ledger.
agentultra 4y ago
> The recent spate of losses suffered by crypto exchanges and digital wallets ... have been on-going for years. Complex systems introduce a huge amount of attack surface. Verifying systems is expensive and slow. And this was all a scam anyway. This is mostly an article about the exchanges and gets a few details wrong but the overall gist is that the federal agencies and regulators are cracking down and finding out what the black hats knew all along.
adamsmith143 4y ago
The entire point was to have public ledgers showing every transaction on the chain. Who is this a surprise to exactly?
BLKNSLVR 4y ago
For clarity: 1. Bitcoin addresses are 100% traceable from the first to the last transaction that's ever taken place. 2. Tracing a Bitcoin address to an individual depends on the individual's OpSec. For example: bank account to exchange to Bitcoin is traceable with the help of the exchange's KYC records, assuming they have them. From there, any further Bitcoin transactions can be traced to an individual. Buying Bitcoin with cash in person may make traceability to an individual more difficult, but then you'd have to trust who you're meeting in person to not take photos / videos or have a meeting place swarming with CCTV, and both parties not already be using individually traceable Bitcoin addresses. Monero and / or exchanges with little to no KYC (therefore, use at your own risk) may allow for some level of 'cutout' in the traceability. Or tumblers or coin mixers or other shady, questionably trustworthy services.
- kjkjadksj 4y ago
  They have bitcoin atms now, just wear a surgical mask when you go into the headshop that has them and you are anonymous.
  - merely-unlikely 4y ago
    The ones I've seen require an ID. Not sure how universal that is though
helf 4y ago
“No shit”. Wait, you mean something that literally tracks any and all actions in a literal chain of history that is immutable is easy to track?!? You mean that pattern recognition can be applied to even “randomized” in both size, time, and destination of transactions can be done to track like how they can track burner phones? I’m shocked! Shocked I say!
- axxto 4y ago
  Care to expand on the burner phone part?
  - helf 4y ago
    People think "burner phones" are not traceable. They watch too much CSI etc. Pattern matching has been successfully applied to phone logs between seemingly randomized src and dst phones. I'm busy at work and terrible at communicating clearly but what I am trying to say is that even when person A is using multiple phones and person B is also using multiple phones, there is still enough of a pattern involved such as call lengths, time of calls, etc to be able to sniff out and match these seemingly random devices to specific users. I would have to dig up papers/reports on times this has been successfully done and reported publically. But my point is that even running shit through coin mixers etc there is a high probability of there /still/ being enough latent information floating around to suss out a track between src and dst of blockchain transactions.
  - password4321 4y ago
    An example of bad opsec: The Hezbollah Connection https://www.nytimes.com/2015/02/15/magazine/the-hezbollah-connection.html https://www.nytimes.com/2015/02/15/magazine/the-hezbollah-co... https://archive.ph/4uWfM#selection-1937.0-1937.13 https://archive.ph/4uWfM#selection-1937.0-1937.13 Section 5+ > they could see that a given assassin had an “operational phone in his front pants pocket” and “in the back pocket a phone that he used to call his girlfriends.”
- breck 4y ago
  This is really concerning. How are people going to use blockchain to do nefarious things if it's easier to track?
photochemsyn 4y ago
Here's an amusing exercise: count up how many top FBI executives over the neoliberal period (roughly beginning in the mid-1970s under Ford/Carter) have gone to work for various Wall Street-linked investment banks, hedge funds, law firms, etc. after 'retirement' (the number is comparable to that of generals and admirals who migrated to the corporate boards of defense contractors post-'retirement'). This reality supports the notion that the FBI's central role is to serve as the enforcement arm of the organized white-collar crime cartel known as 'Wall Street'. A competing monetary system relative to the Federal Reserve isn't something these interests are all that thrilled about. Hence, regardless of the soundness or unsoundness of various cryptocurrency approaches, ex-FBI officials should hardly be viewed as independent credible third-party voices on the issue.
- imtringued 4y ago
  >A competing monetary system relative to the Federal Reserve isn't something these interests are all that thrilled about That is true but honestly cryptocurrency isn't a threat to the Fed at all.
- LastTrain 4y ago
  I stopped at "neoliberal"
  - photochemsyn 4y ago
    Well, that's the point at which the USA really began migrating from a fundamentally industrial-centric economy to a fundamentally financial-centric economy, in terms of where the profits and power accumulated.
- shadowgovt 4y ago
  That's a lot of words to levy a simple ad hominem. Regardless of the truth or falsehood of your observation, publicly-verified blockchain-backed currencies are easily traced (especially now that they've become valuable enough for companies with money to invest in solving the problem). The possibility that the messenger has a vested interest in amplifying this message is orthogonal to the truth of it.
lettergram 4y ago
Nothing will beat taking a bunch of cash and exchanging it for goods. Yes you could theoretically be traced by serial codes, but entirely impractical at any scale. That’s why government and banks will push for banking apps and going entirely digital.
- EVa5I7bHFq9mnYK 4y ago
  And people should fight for their freedoms, otherwise it ends like China with total digital surveillance and total government control.
Barrin92 4y ago
in Seeing Like a State James Scott talks about the concept of legibility as the most important feature of any authority. An uneditable, global ledger is pretty much the ultimate bureaucratic tool. Any historic emperor would have killed for a blockchain. It is the ultimate record keeper. Much confusion about crypto as some privacy preserving or decentralizing tool ignores the fact that increasing legibility will ultimately always enable centralization because it makes possible the creation of more sophisticated, larger structures.
socialismisok 4y ago
Is this a surprise to anyone? The ledger is public and therefore subject to all sorts of statistical analyses that cash is not.
alexb_ 4y ago
I have refused to shop at numerous stores because they make a point of not accepting cash. Cash is incredibly important for modern society due to actually being untraceable and allowing for private transactions. Plus, a society without cash is one where you are forced to use central banking. Blockchain is just trying to imitate cash digitally, which as it turns out is really hard to do. So it just ends up that people use central services anyways. The point is, cash is hard to trace. And that's a good thing. I personally refuse to shop anywhere that refuses cash, and I encourage you to do the same if possible.
- cbm-vic-20 4y ago
  Twenty years ago, a friend of mine noted that if cash were invented today, it would be illegal.
- codyb 4y ago
  I think it's illegal in NYC to not accept cash and I fully support that. There are a lot of unbanked people here that have enough on their plates without further discrimination. And also cash is king and coins and bills are very neat.
  - Test0129 4y ago
    > There are a lot of unbanked people here Would you support removing cash if everyone was given a bank account? Perhaps with the government? OPs point was that cash not being accepted means you have no privacy in a place you might want it. Governments love credit cards, easy pay, etc. Especially in the case where your transactions are kept with you forever so that future governments can punish you.
    - KirillPanov 4y ago
      > Would you support removing cash if everyone was given a bank account ... that couldn't be closed, limited, frozen, or surveilled? Sure! But otherwise, not a chance. Giving somebody "a bank account" is just giving them a pretty piece of paper. All the useful properties of that pretty piece of paper are revocable at a whim.
boh 4y ago
Honestly this almost reads like an Onion headline. You mean a publicly available ledger is less anonymous than physical paper money that doesn't require any kind of identification to use? Who would've thought?
solumunus 4y ago
Seems obvious.
paulgerhardt 4y ago
The state of the art in this is different than the state of adoption. Ie we already have paper money backed by blockchain currencies such as bitcoin using self custodial, rotatable private keys at https://offline.cash https://offline.cash. This gives one the benefits of paper money alongside the benefits of decentralized currencies.
j0hnyl 4y ago
The whole point of a blockchain is that it can be traced, so this should come as no shock. Anonymity is another story altogether and imo can only be achieved if participants don't move their funds between crypto <> fiat. Of course, no one is really "all in" on crypto in that way, but maybe one day more folks will be.
kumarski 4y ago
Nonsense. Go to GBTC ATM shops in Barcelona, they'll do KYC-less $100K transactions for 4% transaction fees. I was shocked and walked out of the shop. If you come to South Florida, you'll find that there was an era where cartels would pay high schoolers to roll up to ATM's and empty them of cash one by one. Crypto ATMs have 7%-15% fees with no KYC up to 1k USD and have grown about 5x-10x in the last 5 years in the USA. Ask yourself, do Somalis in Minneapolis care about cryptocurrency or did the proliferation of Crypto ATMs in the city and subsequent drought of court cases around Al Shabab money laundering in the region have some sort of relevant relationship? If you go to China, from what I've been told, there's private OTC massive wechat groups that have coded words for crypto transactions. In India, it's the same now, you can liquidate crypto on the street with ease. The real problem now for the market cap of cryptos is the ultimate draw down in the growth rate of KYC'd accounts in demographically high gdp growth countries. India implemented 1% per trade, zero loss deduction, 30% cap gains taxes on crypto...essentially incentivizing indigenous stock ownership over any and all crypto assets. Portugal implemented crypto short term capital gain taxes as well. It might be easier to trace than paper money, but it's still a world class indefatigable money laundering substrate that trades well with watches and other asset classes. Customs agents at major ports of entries have not been checking watches. Miami etc...
- Sohcahtoa82 4y ago
  > Crypto ATMs have 7%-15% fees with no KYC up to 1k USD and have grown about 5x-10x in the last 5 years in the USA. FWIW, "Crypto ATM" is sort of a misnomer. AFAIK, no crypto ATM in the USA allows you to sell cryptocurrencies and pull out cash. You can only buy them, which as far as I'm concerned, is the easy part.
  - kumarski 4y ago
    not a misnomer at all. They are crypto ATMs, and that's what the industry knows them for.
pier25 4y ago
What about tumblers?
ksec 4y ago
It may be useful to remember, from 2014 to 2018, 95%+ of HN comments were for Digital Payment and Anti-Paper Money.
Nifty3929 4y ago
The main problem is that in the US, it is nearly illegal to engage in a private, anonymous financial transactions - whether in Bitcoin, Dollars, or anything else. There is a loophole for small transactions in paper money, but that loophole is slowly being closed. This is not a technology problem. It is a policy problem.
O__________O 4y ago
Largely issue is not the loss of anonymity, which average person does not care about, but economically, long-term, blockchain-based financial systems will likely create more centralized systems, not less. If I am missing something, would be interested in understanding why.
anonym29 4y ago
For open blockchains, sure. Cash was the OG anonymous money. There's a reason that neither CipherTrace, Chainalysis, nor Integra FEC got the IRS bounty for successfully tracing Monero transactions with all privacy features enabled. The latter two got a $500k grant to try, with $125k available for successfully tracing, but neither claimed that final $125k. This also isn't an either/or where one crypto will win out. Different cryptos will continue to focus on different use cases. Bitcoin is one step removed from FIAT and just as traceable, but it's the first step you need to go from BTC to other cryptocurrencies - XMR for privacy, ETH for dApps and smart contracts, XRP to see what a CBDC will look like, LUNA for involuntarily donating your money to some south Korean guy, etc.
tengbretson 4y ago
Yeah but it's decentralized financial surveillance!
blantonl 4y ago
Anonymous Addresses != Private
ii550 4y ago
Bitcoin is going away? Good riddance.
EVa5I7bHFq9mnYK 4y ago
First, they said Bitcoin bad because anonymous (think of the children!). Next, bitcoin bad because not anonymous. Can we please choose one?
c7b 4y ago
Could we change the headline to "Chainalysis CTO said blockchain is easier to trace than paper money"? It's factually more relevant because that's his current employer.
rcarr 4y ago
I thought this was the whole point of crypto, a completely public and traceable system to stop people doing shady shit, particularly aimed at shady people in the finance world. It’s kind of ironic that it’s ended up that the biggest crypto users are also the planet’s shadiest people. I’d be interested to know how much money would be in crypto markets if drugs were legalised globally when the original Bitcoin paper dropped. My guess would be less than a quarter of what we’ve got now and that crypto would be looked at with even more disinterest than Zuckerberg’s Metaverse. People can shout and scream about it all they want but it’s just not going to be the tech utopia people dream of. As soon as it gains any kind of significant traction, central banks will release their own coins, allow people a grace period to transfer existing Bitcoin/Ethereum into central bank coin after which they’ll outlaw transactions in coins that aren’t backed by a central bank. The elites will not simply roll over and give up control of the money supply. They’ll stop it in its tracks long before it gets enough traction to take over as a legitimate alternative. Realistically, I’d say somewhere in the ball park of 1/3 to 2/3 of global gdp would have to be in crypto for the people to have enough power to just ignore the central banks and governments. Even then, the big players would have to be able to convince the right lawyers and military personnel to bet on crypto because it would most likely be a long and bloody takeover. Blockchain might have other legitimate uses, but I just do not see it taking over standard currencies unless there is some kind of central authority that maintains control over it. I hope I’m proved wrong, and that we can live in a less corrupt world as a result. But I can’t see a path to getting there. Every other successful piece of tech ends up with large controlling players e.g Facebook for social, Google for search. The general public does not have the time or patience to learn the ins and outs of decentralised tech. They do not care about tech nor should they. Firefighters, nurses and factory workers do not want to be finishing 12 hour shifts to read up for hours on how to set up a mastodon account. They have bigger things to worry about like doing their jobs, keeping a roof over their heads and feeding their families. They only care about what tech can do for them. They want convenience. Which means opinionated decisions on how something should be. Which inevitably leads to the quelling of decentralisation and individuality in favour of a few big power players. I don’t see why crypto would be any different.
frank_bb 4y ago
jawadch93 4y ago
[dead]
mring33621 4y ago
aaaaaaaaaaaaab 4y ago
nova22033 4y ago
Assistant director, not director
verisimi 4y ago
"easier to trace than paper money".... and that was always the point. You wouldn't be able to track and trace everyone's interactions without it! It's essential for technocracy.
baby 4y ago
This is why I don’t understand why governments seem to be against cryptocurrencies in general. And as for consumers and privacy: check the work being done with zero-knowledge proofs and stablecoins, where everything is encrypted except to the IRS or whoever should have be able to view transactions. To my knowledge this work is also attempting to replicate cash by not divulging anything under a certain threshold per day.
npc54321 4y ago
npc54321 4y ago
lifeisstillgood 4y ago
I do struggle with the "you coppers will never track me with my new cryptocoin!" mentality I see around (and on this thread). I do not subscribe that the view that "innocent have nothing to fear". If our transactions are visible for all to see then huge amounts of privacy issues become salient. It's just that I don't believe secrecy is the solution. Firstly, there is no digital secrecy. But mean maybe you have years long perfect opssec, but each of your partner transactions now need to be perfect. It's just not gonna work. Secondly, why don't live in a secret world - the people I interact with know what I am doing each day - it's just either not worth their while to exploit me, or they are too polite, or exploiting their knowledge of me is kind of the point (my regular cafe just sees me sit down and the order is in). Yes the digital world made the marginal cost of exploitation much lower so third parties have got in on the act. Anyway, the point is that it's either not feasible, likely or even desirable to move like a ghost through the world. Technology will not magically fix our political problems - haters gonna hate, totalitarian governments gonna totalitarian. Our politics need to be solved with politics. I remember when we thought email and the web would create peaceful communities, when facebook would free the Arab world. And realpolitik always came back. Please - let's not hope that some clever coding will fix deep seated political problems - especially with, of all things, money. Let's get back to the brass tacks - informed, organised mass democracy. It's hard and dirty and means talking to other human beings. Not HN ideal :-) Edit: TLDR Do I want the director of the FBI to track my online spending? No! Do I want the director of the FBI to track the money laundering by international cartels and criminals? Yes! What's the difference? Democracy, individual rights, the rule of law, transparent law enforcement, strong institutions and so on.
- notch656a 4y ago
  I object to the whole notion of laundering. Prosecute the underlying crime. Obscuring the source/nature of money (aka privacy) should not be a crime.
  - lifeisstillgood 4y ago
    Oh come on! Privacy and secrecy are not the same thing. Privacy is where everybody else legally agrees to pretend we don't know what you are doing. Secrecy is ... an illusion that the CIA are struggling with. I am reminded of a quote from Iain M Banks, where the hero was talking to a sentient nebula, and the background includes how the fleshy races would discuss if the nebula was "truly sentient", partly on philosophical grounds "but mostly because they could do immensely profitable things with a cloud of gas a million cubic parsecs in size"
ViceCitySage 4y ago
Wish more people knew about Monero. It pretty much replaced Bitcoin on the dark web and other markets where private, anonymous transfers of money is essential. Every crypto on most KYC exchanges exposes every transaction on its public ledger. Monero and minuscule amount of other coins use cryptographic techniques to hide wallets and their history. Most other coins won't add this as they will be blacklisted like Monero. Monero has an added bonus of having good tokenomics (cough cough PirateChain). It is pretty much what most people think Bitcoin is without being a scam.
- TomSwirly 4y ago
  So a coin deliberately designed to evade all government regulation - what the rest of us call "laws". This seems highly negative for society. We already lose hundreds billions of dollars a year to tax evasion.
  - ViceCitySage 4y ago
    Crypto before going mainstream and investors getting involved was a middle finger to corrupt establishments that manipulate and steal the value of our money. Bitcoin was created and emerged as a reaction to the 2008 financial crisis and Central Banks like the Federal Reserve. Monero as a project is driven to go back to Bitcoin's original philosophy and improve on it. Also, not every law in the books is just and governments use plenty of our money for nefarious purposes.
  - alfnor 4y ago
    I'd happily pay taxes for my nootropics.
  - willmadden 4y ago
    It's more complicated than you describe. You are assuming laws are not selectively enforced and state actors and their sponsors are benevolent. Neither is remotely true.

A permanent public ledger of all transactions -- I was never clear why that was private. Could anybody explain why it is considered hard to trace?

jklinger410 4y ago

Too bad I can't send paper with my phone. Apples to oranges, dumbass.

_5uxp 4y ago

So we are reading "Bitcoin has failed." for the 24982424 time and this time from a VC that writes on medium? Bad take.

jqpabc123 4y ago

Functional money is built around trust and consensus. A critical weakness of crypto is that the actors involved are *less* trustworthy than government. And this lack of trust and transparency and oversight; combined with the fact that anyone and his brother can mint their own crypto, makes a general consensus on the value of crypto unlikely.

pclmulqdq 4y ago
The lack of trust means that the only thing left to guarantee (to a normal person) that the system is working is transparency.
- jqpabc123 4y ago
  transparency Has anyone seen the financial records for Tether?
  - bavell 4y ago
    I'm pro-crytpo but Tether is a scam imo.
    - jqpabc123 4y ago
      As Tether goes, so goes the entire crypto eco-system. Tether underwrites the entire crypto marketplace. It is involved in more than half of all crypto trades. And it's unlimited supply is totally controlled by crypto market makers with every incentive to use it to manipulate the crypto market. It's like giving NASDAQ and the NYSE control over the Federal Reserve. No possible conflict of interest there, right? https://www.theverge.com/22620464/tether-backing-cryptocurrency-stablecoin https://www.theverge.com/22620464/tether-backing-cryptocurre...
  - saurik 4y ago
    Tether is a centralized bank that happens to use a blockchain as a backend. When people say "crypto is transparent" that doesn't mean you can't build things that are not transparent that use crypto. Similarly, one can benefit from a fully-open laptop (with open firmware running Linux or whatever) even if it allows people to still develop closed source software that runs on it, and even if some of that software is merely a front for software that runs on it is just a client for some remote server whose behavior cannot be modeled... because on the locked down device (imagine an iPhone) you can never develop something whose behavior is transparent as you can never discount what the platform is letting the developer hide from you.
  - pclmulqdq 4y ago
    Tether is basically a bank with none of the regulations, not actually a blockchain. All transactions done in USDT are public, but the backing money isn't. But trust me, it's all there, and it's totally not in speculative Chinese bonds.
imdsm 4y ago
> A critical weakness of crypto is that the actors involved are less trustworthy than government. If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system, based on an agreed upon protocol with cryptographic controls. It isn't meant as an improvement to an existing system, but as an alternative system, and while we often hear of people who say it is a scam, that it won't work, that it can't work, the unbiased reality is that it is being used for value transactions and has been non-stop for over a decade now. The phrase "a general consensus on the value of crypto" is equal to "a general consensus on the value of money". Crypto (as in cryptocurrencies, cryptoassets, and, in general, blockchain based digital ledgers) is a vast subject. Nothing stops someone from creating their own paper currency or non-blockchain digital currency (Nectar points, air miles). There are for sure questions to be asked here about how unregulated, crowd managed currencies can be integrated into existing societies were money is heavily regulated, but that is another subject.
- AlexandrB 4y ago
  > If anything, "crypto" is based on the idea that people can't be trusted, and is thus a trustless system, based on an agreed upon protocol with cryptographic controls. Those controls only address problems created by the distributed nature of crypto (double spend), but don't touch the most common types of financial fraud which is why wash trading and rug pulls are so common. Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly.
  - imdsm 4y ago
    They address more than just double spend attacks, but also ownership and control. Without a private key, in a protocol where every transaction must be signed, no changes can be made to a ledger where balances are associated with corresponding public keys. The human issues that we have from use of the system, fraud, P&D schemes, non-custodial wallets (exchanges) etc, aren't fundamental issues with the technology itself, but with the periphery. Cash can be used to buy drugs, bank accounts can be used for money laundering, financial markets can be manipulated. We must be cognisant of the fact that where there are people, there will be misuse. Crypto is no different. > Crypto effectively assumes that people can't be trusted to exchange currency fairly, but can (and indeed must) be trusted to do everything else (pricing, disclosure, governance, etc.) fairly. Must we assume that pricing is to be trusted? What pricing is this, exchange pricing? If you're using centralised exchanges then the issue is whether you trust the centralised exchange to keep an honest order book, and whether you're able to determine whether the exchange rate reflects the value of the token/asset. Many people have recently begun trading on financial markets, see Gamestop, wallstreetbets etc, without the proper knowledge required to ensure they're making the right decisions. This is no different from buying BTC because your neighbour told you it'll hit $100k by Christmas. These are societal problems from people who want to get rich quick and almost always get hurt trying.

prvit 4y ago

Entirely traceable money is easier to trace than borderline untraceable money? Great.

pclmulqdq 4y ago
Most people still have no idea that a blockchain is 100% traceable. People get freaked out when you tell them the contents of their wallets.
- aliqot 4y ago
  some blockchains are 100% traceable.
  - AlexandrB 4y ago
    s/some/most/, especially if you're counting by market cap or number of users.
  - t-3 4y ago
    Got examples? I can't see how an untraceable blockchain could still be considered a blockchain (or what use it would be). Isn't the whole point to be perfectly traceable?
    - sodality2 4y ago
      Monero has public transactions but the recipients and senders' addresses are encrypted so you can't really trace it to wallets
      - aliqot 4y ago
        Every UTXO is also randomized as far as input selection and distribution and also the way they're labeled as they travel through the system. For the simplest example, reference early monero code (at the time BMR, and MRO) where Borromean Ring Signatures were used, where the same operation is performed multiple times per-input effectively mixing inputs at the atomic level, rather than in later iterations (RingCT, Arcturus, etc) that extended this further to obscure also the amounts of these inputs and to trim some of the inefficiencies of Borosigs.

Jamie9912 4y ago

Wow, Sherlock Holmes?

superkuh 4y ago

Yeah, it's entirely built on the idea that every transaction is known by everyone. I think Lance is a bit confused. Maybe he should look into Monero. The point of Bitcoin is to enable anyone to exchange value with anyone. And it does that very well. When the US justice department declared that credit card companies had to stop processing donations to wikileaks I could still donate through bitcoin.

insanitybit 4y ago
I don't think they're confused, I think the vast majority of people involved in crypto or who are spectators of crypto are confused. I have repeatedly heard that crypto enables "anonymous" transactions for years. Also he literally links the original paper, quoting the part where it talks about transactions being harder to trace. "without telling who the parties are".
- convery 4y ago
  The "without telling who the parties are" is more about non-personal identifiers. Similar to how knowing your IP address doesn't really identify you by itself, you need to go through (often several levels of) other parties to get that info. Which in addition is ephemeral, others will be assigned your IP and tracing which requests were made by you vs. someone else is a lot harder than tracing a credit-card.
  - z3c0 4y ago
    This seems to be lost on a lot of folks, which I find strange in a tech-centric forum. Bitcoin is perfectly pseudonymous, as it strives to be, and not anonymous, which it has never attempted to be.
    - insanitybit 4y ago
      My recollection is that Satoshi wanted people to rotate public keys after every use exactly to have anonymity.

RektBoy 4y ago

Water is wet, whoaaaa Cpt.Obvious

simonh 4y ago
Well yes, but we still get people regularly claiming here that anonymity is one of the great benefits of crypto, so there are a lot of people out there that still need to find this out.
- lawn 4y ago
  There's crypto and then there's crypto. Monero and Bitcoin both use a blockchain, but with entirely different traceability and anonymity properties.

dragonelite 4y ago

Only the people that don't know what the words "open" and "ledger" means.

c0mptonFP 4y ago
You can have open ledgers without compromising anonymity, via ZK cryptography.

Ptchd 4y ago

Is he talking about Monero?

freddealmeida 4y ago

Of course it is. Also water is wet. Your gf will hate you. And, silly things do not need to be stated.

nigerianbrince 4y ago

cammikebrown 4y ago

How about Monero?

jollyllama 4y ago

Unless there are automated tumblers. Then they'll just sanction you.

mellosouls 4y ago

Lots of comments here guffawing at the lack of revelation, but anonymity is central to blockchain-related popular understanding (and endless crypto pr).

ivanhoe 4y ago

In theory traceability is not a problem if you can maintain a complete anonymity of your online persona - which in practice most people can't.

Nokinside 4y ago
If you own significant sums of money and its completely anonymous, or the origin is untraceable, you can't use it. Just like drug cartels know how to collect and store anonymous money but find it very hard to use it. Every time you try to buy something expensive or normal financial assets, you have to explain where the money is from or you may lose it. Try to buy a house with anonymous crypto and find out.
- ivanhoe 4y ago
  But crypto wasn't invented for rich people and drug lords to launder the money, so why would anyone give a shit about their problems in the first place? It still would make a lot of sense for regular folks who prefer their online habits not to be tracked by corporations and sold around.

tromp 4y ago

> Unfortunately, this aspect of his brilliant design was one of the first things to be undermined by subsequent blockchain operators. Many cryptocurrencies that have been created since are unlimited in supply, including some of the most heavily speculated ones like Solana, Dogecoin and Shiba Inu. > This is worse than what the central banks have done. No, it's not. Even a coin that is emitted one per second forever is disinflationary. Not only is the yearly supply inflation rate perfectly predictable (unlike fiat), it also steadily converges toward zero (again, unlike fiat). In the long term, the difference between finite and infinite supply is negligible as long as the yearly supply never increases [1]. [1] https://john-tromp.medium.com/a-case-for-using-soft-total-supply-1169a188d153 https://john-tromp.medium.com/a-case-for-using-soft-total-su...

andsoitis 4y ago
Even if a single crypto coin is limited in supply, there's an infinite number of (potential) suppliers of coin.
- tromp 4y ago
  Less than a hundred [1] that are not copy-pastes of prior projects with some irrelevant tweaks, which can for the most part be ignored. [1] https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHplJudr9kSGQYAoJvaKnfRhI4/edit#gid=0 https://docs.google.com/spreadsheets/d/1geg5HHgDO-ht0u6CSTHp...
- jjk166 4y ago
  If I print a trillion schrute bucks, have I devalued the US dollar? If I print another trillion schrute bucks, does the US dollar suffer inflation, or does the schrute buck? Yes people can make an infinite number of currencies, but they are all parallel systems. Making a new coin doesn't inflate the supply of bitcoin, it is just one more thing that bitcoin could potentially be exchanged for. And in practice it seems unlikely that more than a few thousand could be adopted by enough people to have a value appreciably different from zero.
- EVa5I7bHFq9mnYK 4y ago
  Indeed, there are tens of thousands of various coins created, but 74% of wealth stays in just two of them - Bitcoin and ETH (if we exclude centralized tokens USDT, USDC, XRP, BNB etc). It's something like geometric series.

z3c0 4y ago

I found this article to be poorly-written and deliberately inflammatory. I'll gloss over the regular criticism of "stop conflating cryptocurrencies with blockchains". It makes continual leaps from Satoshi Nakamoto's intentions to short-comings of non-BTC cryptocurrencies, and then snowballs this into the tremendously non-sequitur subheading Bitcoin has failed. Cryptocurrencies and DeFi platforms are now more vulnerable to privacy breaches and hacking than traditional banking. Personally, all I see are a string of obvious scams collapsing. These scams were perpetrated by imposters pretending to be a part of a movement so that they could better tug on their victims' heartstrings. But I fail to see how the goals of these imposters should be conflated with the intentions of Satoshi Nakamoto, purely because the imposters bastardized Nakamoto's tech. Also - the title is barely the subject of the article, but even if it were, I don't think that it, in any way, stands contrary to the goals of Bitcoin. I could see it being an issue for a blockchain meant for privacy, like Monero, but I didn't see any such reference in the article.

RuggedPineapple 4y ago
>Personally, all I see are a string of obvious scams collapsing. I think you and rational people agree, it's just the rational people see the whole space as a scam, and they're not wrong. It's been, from it's very start, a Dunning-Kruger trap sold on lies. First it was supposed to be a currency, but was created from the ground up to be deflationary, which is a death knell for a currency and leads to perpetual recession. Then it was an asset that can only go up, until the price crashed and people realized its intrinsic value is 0 and there is no floor. Then it was an inflation hedge that would keep you up when markets went down, except it turned out to be largely correlated to the market. Every use case they come up with is a bag of magic beans with the sole intention of getting you to carry their bags. I've heard it described as digital beanie babies and that moniker is more apt then most could have imagined.
- saurik 4y ago
  I mean, I would argue that the use cases people come up with simply pre-suppose the idea that "absolute power corrupts absolutely" and that there will be at least some people out there who would--or at least should--value avoiding giving those players such power. If, tomorrow, everyone suddenly forgot what e-mail was and someone suddenly tried to invent it there would be a ton of people angry that it served no purpose and would ever catch on because it would be full of spam and people would have to run their own email servers instead of using centralized messaging servers and all the same arguments people make about crypto would re-surface ("well, maybe people could run servers on behalf of other people" "well doesn't that undermine your precious decentralization?" "somewhat, sure, but federation is still valuable" etc.).

beauHD 4y ago

Putting on my conspiracy robe, I would posit Bitcoin was created by an intelligence agency. You need cryptography smarts and the ability to glue all the various components together aswell as keep it all hush, something an intel agency can do with ease. How else do you uncover vast criminal networks? It was purposefully made to ensnare cyber-criminals. Now as for Monero, I would imagine it has them shaking in their boots.

midasz 4y ago
Monero has to become fiat at some point right?
cowtools 4y ago
I doubt it. Bitcoin was simply the combonation of two well-understood things: hashcash and cryptographic signatures.
not1ofU 4y ago
agree, because bitcoin / silk road and tor all popped up at the more or less the same time. and they all need each other as a boot strap. Also - Satoshi - who? no one knows, really? Dread Pirate Roberts, name insinuates that the role (of site administrator) was handed over to him. There has been speculation that he was not the creator of the site. Tor - created by the Navy. Why? - Black money / create an "open source", super duper encrypted method of communicating that cannot be broken (unless you control 70% of the exit nodes, whoopsies), get people invested in using it. How many of the dealers that supplied on silkroad where "free-lance" and scooped up later (along with their product and cash)

SevenNation 4y ago

That's because when most people use "blockchain" or "DeFi" they're using AML/KYC entities that post their transaction logs to public servers. Law enforcement eats this up because it saves them the trouble of getting warrants for investigations. Bad for customers to be sure. Most have no idea what they're doing and have fallen for a scam hook, line, and sinker. They (loudly, incessantly) proclaim to their friends the benefits of a new money paradigm while deriving all sustenance through the umbilical cord of OldFi. ChromaFlair on a Model T. The article itself is a hot mess of muddled thinking. It starts by talking about the Bitcoin white paper (not a "manifesto"), then asking the absurd question: "Why can't DeFi make good on the promise?" The reason is that "DeFi" is about as far from Bitcoin as "car" is from "carpet." The Bitcoin white paper describes the application of proof of work to the problem of electronic cash. The vast majority of DeFi projects are just centralized ledgers operating through trusted institutions. They are the very definition of "mint" in the white paper - a single, corruptible player that sets the rules - arbitrarily if need be.

arberx 4y ago
Sounds like you've never used a DeFi application...Yes, the bridging between on-chain/off-chain still happens through centralized entities, but things like uniswap are entirely run on-chain and don't require any central authority or centralized ledger.
- cowtools 4y ago
  privacy through voluntary swaps is not sybil-proof
louwrentius 4y ago
What is the point you are trying to convey?
- counttheforks 4y ago
  Don't use AML/KYC entities?

senectus1 4y ago

well yes... Its a public Ledger.

agentultra 4y ago

> The recent spate of losses suffered by crypto exchanges and digital wallets ... have been on-going for years. Complex systems introduce a huge amount of attack surface. Verifying systems is expensive and slow. And this was all a scam anyway. This is mostly an article about the exchanges and gets a few details wrong but the overall gist is that the federal agencies and regulators are cracking down and finding out what the black hats knew all along.

adamsmith143 4y ago

The entire point was to have public ledgers showing every transaction on the chain. Who is this a surprise to exactly?

BLKNSLVR 4y ago

For clarity: 1. Bitcoin addresses are 100% traceable from the first to the last transaction that's ever taken place. 2. Tracing a Bitcoin address to an individual depends on the individual's OpSec. For example: bank account to exchange to Bitcoin is traceable with the help of the exchange's KYC records, assuming they have them. From there, any further Bitcoin transactions can be traced to an individual. Buying Bitcoin with cash in person may make traceability to an individual more difficult, but then you'd have to trust who you're meeting in person to not take photos / videos or have a meeting place swarming with CCTV, and both parties not already be using individually traceable Bitcoin addresses. Monero and / or exchanges with little to no KYC (therefore, use at your own risk) may allow for some level of 'cutout' in the traceability. Or tumblers or coin mixers or other shady, questionably trustworthy services.

kjkjadksj 4y ago
They have bitcoin atms now, just wear a surgical mask when you go into the headshop that has them and you are anonymous.
- merely-unlikely 4y ago
  The ones I've seen require an ID. Not sure how universal that is though

helf 4y ago

“No shit”. Wait, you mean something that literally tracks any and all actions in a literal chain of history that is immutable is easy to track?!? You mean that pattern recognition can be applied to even “randomized” in both size, time, and destination of transactions can be done to track like how they can track burner phones? I’m shocked! Shocked I say!

axxto 4y ago
Care to expand on the burner phone part?
- helf 4y ago
  People think "burner phones" are not traceable. They watch too much CSI etc. Pattern matching has been successfully applied to phone logs between seemingly randomized src and dst phones. I'm busy at work and terrible at communicating clearly but what I am trying to say is that even when person A is using multiple phones and person B is also using multiple phones, there is still enough of a pattern involved such as call lengths, time of calls, etc to be able to sniff out and match these seemingly random devices to specific users. I would have to dig up papers/reports on times this has been successfully done and reported publically. But my point is that even running shit through coin mixers etc there is a high probability of there /still/ being enough latent information floating around to suss out a track between src and dst of blockchain transactions.
- password4321 4y ago
  An example of bad opsec: The Hezbollah Connection https://www.nytimes.com/2015/02/15/magazine/the-hezbollah-connection.html https://www.nytimes.com/2015/02/15/magazine/the-hezbollah-co... https://archive.ph/4uWfM#selection-1937.0-1937.13 https://archive.ph/4uWfM#selection-1937.0-1937.13 Section 5+ > they could see that a given assassin had an “operational phone in his front pants pocket” and “in the back pocket a phone that he used to call his girlfriends.”
breck 4y ago
This is really concerning. How are people going to use blockchain to do nefarious things if it's easier to track?

photochemsyn 4y ago

Here's an amusing exercise: count up how many top FBI executives over the neoliberal period (roughly beginning in the mid-1970s under Ford/Carter) have gone to work for various Wall Street-linked investment banks, hedge funds, law firms, etc. after 'retirement' (the number is comparable to that of generals and admirals who migrated to the corporate boards of defense contractors post-'retirement'). This reality supports the notion that the FBI's central role is to serve as the enforcement arm of the organized white-collar crime cartel known as 'Wall Street'. A competing monetary system relative to the Federal Reserve isn't something these interests are all that thrilled about. Hence, regardless of the soundness or unsoundness of various cryptocurrency approaches, ex-FBI officials should hardly be viewed as independent credible third-party voices on the issue.

imtringued 4y ago
>A competing monetary system relative to the Federal Reserve isn't something these interests are all that thrilled about That is true but honestly cryptocurrency isn't a threat to the Fed at all.
LastTrain 4y ago
I stopped at "neoliberal"
- photochemsyn 4y ago
  Well, that's the point at which the USA really began migrating from a fundamentally industrial-centric economy to a fundamentally financial-centric economy, in terms of where the profits and power accumulated.
shadowgovt 4y ago
That's a lot of words to levy a simple ad hominem. Regardless of the truth or falsehood of your observation, publicly-verified blockchain-backed currencies are easily traced (especially now that they've become valuable enough for companies with money to invest in solving the problem). The possibility that the messenger has a vested interest in amplifying this message is orthogonal to the truth of it.

lettergram 4y ago

Nothing will beat taking a bunch of cash and exchanging it for goods. Yes you could theoretically be traced by serial codes, but entirely impractical at any scale. That’s why government and banks will push for banking apps and going entirely digital.

EVa5I7bHFq9mnYK 4y ago
And people should fight for their freedoms, otherwise it ends like China with total digital surveillance and total government control.

Barrin92 4y ago

in Seeing Like a State James Scott talks about the concept of legibility as the most important feature of any authority. An uneditable, global ledger is pretty much the ultimate bureaucratic tool. Any historic emperor would have killed for a blockchain. It is the ultimate record keeper. Much confusion about crypto as some privacy preserving or decentralizing tool ignores the fact that increasing legibility will ultimately always enable centralization because it makes possible the creation of more sophisticated, larger structures.

socialismisok 4y ago

Is this a surprise to anyone? The ledger is public and therefore subject to all sorts of statistical analyses that cash is not.

alexb_ 4y ago

I have refused to shop at numerous stores because they make a point of not accepting cash. Cash is incredibly important for modern society due to actually being untraceable and allowing for private transactions. Plus, a society without cash is one where you are forced to use central banking. Blockchain is just trying to imitate cash digitally, which as it turns out is really hard to do. So it just ends up that people use central services anyways. The point is, cash is hard to trace. And that's a good thing. I personally refuse to shop anywhere that refuses cash, and I encourage you to do the same if possible.

cbm-vic-20 4y ago
Twenty years ago, a friend of mine noted that if cash were invented today, it would be illegal.
codyb 4y ago
I think it's illegal in NYC to not accept cash and I fully support that. There are a lot of unbanked people here that have enough on their plates without further discrimination. And also cash is king and coins and bills are very neat.
- Test0129 4y ago
  > There are a lot of unbanked people here Would you support removing cash if everyone was given a bank account? Perhaps with the government? OPs point was that cash not being accepted means you have no privacy in a place you might want it. Governments love credit cards, easy pay, etc. Especially in the case where your transactions are kept with you forever so that future governments can punish you.
  - KirillPanov 4y ago
    > Would you support removing cash if everyone was given a bank account ... that couldn't be closed, limited, frozen, or surveilled? Sure! But otherwise, not a chance. Giving somebody "a bank account" is just giving them a pretty piece of paper. All the useful properties of that pretty piece of paper are revocable at a whim.

boh 4y ago

Honestly this almost reads like an Onion headline. You mean a publicly available ledger is less anonymous than physical paper money that doesn't require any kind of identification to use? Who would've thought?

solumunus 4y ago

Seems obvious.

paulgerhardt 4y ago

The state of the art in this is different than the state of adoption. Ie we already have paper money backed by blockchain currencies such as bitcoin using self custodial, rotatable private keys at https://offline.cash https://offline.cash. This gives one the benefits of paper money alongside the benefits of decentralized currencies.

j0hnyl 4y ago

The whole point of a blockchain is that it can be traced, so this should come as no shock. Anonymity is another story altogether and imo can only be achieved if participants don't move their funds between crypto <> fiat. Of course, no one is really "all in" on crypto in that way, but maybe one day more folks will be.

kumarski 4y ago

Nonsense. Go to GBTC ATM shops in Barcelona, they'll do KYC-less $100K transactions for 4% transaction fees. I was shocked and walked out of the shop. If you come to South Florida, you'll find that there was an era where cartels would pay high schoolers to roll up to ATM's and empty them of cash one by one. Crypto ATMs have 7%-15% fees with no KYC up to 1k USD and have grown about 5x-10x in the last 5 years in the USA. Ask yourself, do Somalis in Minneapolis care about cryptocurrency or did the proliferation of Crypto ATMs in the city and subsequent drought of court cases around Al Shabab money laundering in the region have some sort of relevant relationship? If you go to China, from what I've been told, there's private OTC massive wechat groups that have coded words for crypto transactions. In India, it's the same now, you can liquidate crypto on the street with ease. The real problem now for the market cap of cryptos is the ultimate draw down in the growth rate of KYC'd accounts in demographically high gdp growth countries. India implemented 1% per trade, zero loss deduction, 30% cap gains taxes on crypto...essentially incentivizing indigenous stock ownership over any and all crypto assets. Portugal implemented crypto short term capital gain taxes as well. It might be easier to trace than paper money, but it's still a world class indefatigable money laundering substrate that trades well with watches and other asset classes. Customs agents at major ports of entries have not been checking watches. Miami etc...

Sohcahtoa82 4y ago
> Crypto ATMs have 7%-15% fees with no KYC up to 1k USD and have grown about 5x-10x in the last 5 years in the USA. FWIW, "Crypto ATM" is sort of a misnomer. AFAIK, no crypto ATM in the USA allows you to sell cryptocurrencies and pull out cash. You can only buy them, which as far as I'm concerned, is the easy part.
- kumarski 4y ago
  not a misnomer at all. They are crypto ATMs, and that's what the industry knows them for.

pier25 4y ago

What about tumblers?

ksec 4y ago

It may be useful to remember, from 2014 to 2018, 95%+ of HN comments were for Digital Payment and Anti-Paper Money.

Nifty3929 4y ago

The main problem is that in the US, it is nearly illegal to engage in a private, anonymous financial transactions - whether in Bitcoin, Dollars, or anything else. There is a loophole for small transactions in paper money, but that loophole is slowly being closed. This is not a technology problem. It is a policy problem.

O__________O 4y ago

Largely issue is not the loss of anonymity, which average person does not care about, but economically, long-term, blockchain-based financial systems will likely create more centralized systems, not less. If I am missing something, would be interested in understanding why.

anonym29 4y ago

For open blockchains, sure. Cash was the OG anonymous money. There's a reason that neither CipherTrace, Chainalysis, nor Integra FEC got the IRS bounty for successfully tracing Monero transactions with all privacy features enabled. The latter two got a $500k grant to try, with $125k available for successfully tracing, but neither claimed that final $125k. This also isn't an either/or where one crypto will win out. Different cryptos will continue to focus on different use cases. Bitcoin is one step removed from FIAT and just as traceable, but it's the first step you need to go from BTC to other cryptocurrencies - XMR for privacy, ETH for dApps and smart contracts, XRP to see what a CBDC will look like, LUNA for involuntarily donating your money to some south Korean guy, etc.

tengbretson 4y ago

Yeah but it's decentralized financial surveillance!

blantonl 4y ago

Anonymous Addresses != Private

ii550 4y ago

Bitcoin is going away? Good riddance.

EVa5I7bHFq9mnYK 4y ago

First, they said Bitcoin bad because anonymous (think of the children!). Next, bitcoin bad because not anonymous. Can we please choose one?

c7b 4y ago

Could we change the headline to "Chainalysis CTO said blockchain is easier to trace than paper money"? It's factually more relevant because that's his current employer.

rcarr 4y ago

I thought this was the whole point of crypto, a completely public and traceable system to stop people doing shady shit, particularly aimed at shady people in the finance world. It’s kind of ironic that it’s ended up that the biggest crypto users are also the planet’s shadiest people. I’d be interested to know how much money would be in crypto markets if drugs were legalised globally when the original Bitcoin paper dropped. My guess would be less than a quarter of what we’ve got now and that crypto would be looked at with even more disinterest than Zuckerberg’s Metaverse. People can shout and scream about it all they want but it’s just not going to be the tech utopia people dream of. As soon as it gains any kind of significant traction, central banks will release their own coins, allow people a grace period to transfer existing Bitcoin/Ethereum into central bank coin after which they’ll outlaw transactions in coins that aren’t backed by a central bank. The elites will not simply roll over and give up control of the money supply. They’ll stop it in its tracks long before it gets enough traction to take over as a legitimate alternative. Realistically, I’d say somewhere in the ball park of 1/3 to 2/3 of global gdp would have to be in crypto for the people to have enough power to just ignore the central banks and governments. Even then, the big players would have to be able to convince the right lawyers and military personnel to bet on crypto because it would most likely be a long and bloody takeover. Blockchain might have other legitimate uses, but I just do not see it taking over standard currencies unless there is some kind of central authority that maintains control over it. I hope I’m proved wrong, and that we can live in a less corrupt world as a result. But I can’t see a path to getting there. Every other successful piece of tech ends up with large controlling players e.g Facebook for social, Google for search. The general public does not have the time or patience to learn the ins and outs of decentralised tech. They do not care about tech nor should they. Firefighters, nurses and factory workers do not want to be finishing 12 hour shifts to read up for hours on how to set up a mastodon account. They have bigger things to worry about like doing their jobs, keeping a roof over their heads and feeding their families. They only care about what tech can do for them. They want convenience. Which means opinionated decisions on how something should be. Which inevitably leads to the quelling of decentralisation and individuality in favour of a few big power players. I don’t see why crypto would be any different.

frank_bb 4y ago

jawadch93 4y ago

[dead]

mring33621 4y ago

aaaaaaaaaaaaab 4y ago

nova22033 4y ago

Assistant director, not director

verisimi 4y ago

"easier to trace than paper money".... and that was always the point. You wouldn't be able to track and trace everyone's interactions without it! It's essential for technocracy.

baby 4y ago

This is why I don’t understand why governments seem to be against cryptocurrencies in general. And as for consumers and privacy: check the work being done with zero-knowledge proofs and stablecoins, where everything is encrypted except to the IRS or whoever should have be able to view transactions. To my knowledge this work is also attempting to replicate cash by not divulging anything under a certain threshold per day.

npc54321 4y ago

lifeisstillgood 4y ago

I do struggle with the "you coppers will never track me with my new cryptocoin!" mentality I see around (and on this thread). I do not subscribe that the view that "innocent have nothing to fear". If our transactions are visible for all to see then huge amounts of privacy issues become salient. It's just that I don't believe secrecy is the solution. Firstly, there is no digital secrecy. But mean maybe you have years long perfect opssec, but each of your partner transactions now need to be perfect. It's just not gonna work. Secondly, why don't live in a secret world - the people I interact with know what I am doing each day - it's just either not worth their while to exploit me, or they are too polite, or exploiting their knowledge of me is kind of the point (my regular cafe just sees me sit down and the order is in). Yes the digital world made the marginal cost of exploitation much lower so third parties have got in on the act. Anyway, the point is that it's either not feasible, likely or even desirable to move like a ghost through the world. Technology will not magically fix our political problems - haters gonna hate, totalitarian governments gonna totalitarian. Our politics need to be solved with politics. I remember when we thought email and the web would create peaceful communities, when facebook would free the Arab world. And realpolitik always came back. Please - let's not hope that some clever coding will fix deep seated political problems - especially with, of all things, money. Let's get back to the brass tacks - informed, organised mass democracy. It's hard and dirty and means talking to other human beings. Not HN ideal :-) Edit: TLDR Do I want the director of the FBI to track my online spending? No! Do I want the director of the FBI to track the money laundering by international cartels and criminals? Yes! What's the difference? Democracy, individual rights, the rule of law, transparent law enforcement, strong institutions and so on.

notch656a 4y ago
I object to the whole notion of laundering. Prosecute the underlying crime. Obscuring the source/nature of money (aka privacy) should not be a crime.
- lifeisstillgood 4y ago
  Oh come on! Privacy and secrecy are not the same thing. Privacy is where everybody else legally agrees to pretend we don't know what you are doing. Secrecy is ... an illusion that the CIA are struggling with. I am reminded of a quote from Iain M Banks, where the hero was talking to a sentient nebula, and the background includes how the fleshy races would discuss if the nebula was "truly sentient", partly on philosophical grounds "but mostly because they could do immensely profitable things with a cloud of gas a million cubic parsecs in size"

ViceCitySage 4y ago

Wish more people knew about Monero. It pretty much replaced Bitcoin on the dark web and other markets where private, anonymous transfers of money is essential. Every crypto on most KYC exchanges exposes every transaction on its public ledger. Monero and minuscule amount of other coins use cryptographic techniques to hide wallets and their history. Most other coins won't add this as they will be blacklisted like Monero. Monero has an added bonus of having good tokenomics (cough cough PirateChain). It is pretty much what most people think Bitcoin is without being a scam.

TomSwirly 4y ago
So a coin deliberately designed to evade all government regulation - what the rest of us call "laws". This seems highly negative for society. We already lose hundreds billions of dollars a year to tax evasion.
- ViceCitySage 4y ago
  Crypto before going mainstream and investors getting involved was a middle finger to corrupt establishments that manipulate and steal the value of our money. Bitcoin was created and emerged as a reaction to the 2008 financial crisis and Central Banks like the Federal Reserve. Monero as a project is driven to go back to Bitcoin's original philosophy and improve on it. Also, not every law in the books is just and governments use plenty of our money for nefarious purposes.
- alfnor 4y ago
  I'd happily pay taxes for my nootropics.
- willmadden 4y ago
  It's more complicated than you describe. You are assuming laws are not selectively enforced and state actors and their sponsors are benevolent. Neither is remotely true.