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You can't have "dirty bitcoin" from a mixer, because btc only has opcode and cannot run mixers natively. The base chain for tornado is etheruem. Now the mixers

You can't have "dirty bitcoin" from a mixer, because btc only has opcode and cannot run mixers natively. The base chain for tornado is etheruem. Now the mixers can hold various wrapped assets, like (Wbtc) which i can trade back to real bitcoin at some future time. But the concept of a mixer is i go in with an assets, and i come out the otherside with a pool of other assets and the keys to a random set of wallets on the otherside. Do you understand the amount of computation and data analysis you would have to do to determine if a coin is "Tainted" or not.

lxgr 3y ago
That's absolutely possible with Bitcoin, just not trustlessly: You need to trust the mixer to not run away with everybody's (or just your) coins. But if there is a trusted mixer, the operation is simple: Every participant in a round of mixing tells the mixer (out of band) where they will be sending coins from, and where they want output coins to be sent to. Everybody then sends all of their coins to the mixer, who then takes all of these coins as inputs, and the out-of-band communicated addresses as outputs. Now if 10 out of 100 input coins are tainted, the question is: Which of the 100 resulting coins are tainted? All of them? None of them? Or exactly 10 of them (but which ones)? "All of them" would effectively amount to a ban of mixers (which I consider to be quite likely, if hard to enforce). "None of them" means legitimizing mixers, and I doubt that US and European regulators have a lot of appetite for that at the moment.
- TrapLord_Rhodo 3y ago
  now using a "Trusted mixer" is how you get your door kicked in. None of them is the answer. It's different if you are using a protocol. I am free to execute code as I wish. But an entity "pooling funds together, and distributing them" is obviously a KYC trigger. If said entity is violated KYC laws, they can be punished under international money laundering laws.
  - deleted 3y ago
    [deleted]
  - lxgr 3y ago
    > It's different if you are using a protocol. I am free to execute code as I wish. You're absolutely not. Intentions and outcomes matter, and courts won't care if you achieved the outcome "money laundering" via on-chain code or good old face-to-face meetings and moneys in sports bags. Note that "writing code that can also be used to facilitate money laundering", "writing code that can reasonably only be used to facilitate money laundering", "writing code that facilitates money laundering and operating it yourself (or selling it for money or a licensing fee to somebody that does)" are all different points on a spectrum.
    - TrapLord_Rhodo 3y ago
      The main crux of my argument there was the KYC trigger. using centralized mizers, you have having a centralized wallet, without ZK-proofing the headers of the wallet, distributing funds. This can be traced, and in some miners or CIA database, all transactions from that wallet are flagged. > "All of them" would effectively amount to a ban of mixers. Again, centralized mixers will be banned. You can plug all the exits to your centralized currency, but you cannot stop someone from trading in the cryptosphere utilizing various "Decentralized mixers" with proper ZK proofs, and headless wallet ledgers.

lxgr 3y ago

That's absolutely possible with Bitcoin, just not trustlessly: You need to trust the mixer to not run away with everybody's (or just your) coins. But if there is a trusted mixer, the operation is simple: Every participant in a round of mixing tells the mixer (out of band) where they will be sending coins from, and where they want output coins to be sent to. Everybody then sends all of their coins to the mixer, who then takes all of these coins as inputs, and the out-of-band communicated addresses as outputs. Now if 10 out of 100 input coins are tainted, the question is: Which of the 100 resulting coins are tainted? All of them? None of them? Or exactly 10 of them (but which ones)? "All of them" would effectively amount to a ban of mixers (which I consider to be quite likely, if hard to enforce). "None of them" means legitimizing mixers, and I doubt that US and European regulators have a lot of appetite for that at the moment.

TrapLord_Rhodo 3y ago
now using a "Trusted mixer" is how you get your door kicked in. None of them is the answer. It's different if you are using a protocol. I am free to execute code as I wish. But an entity "pooling funds together, and distributing them" is obviously a KYC trigger. If said entity is violated KYC laws, they can be punished under international money laundering laws.
- deleted 3y ago
  [deleted]
- lxgr 3y ago
  > It's different if you are using a protocol. I am free to execute code as I wish. You're absolutely not. Intentions and outcomes matter, and courts won't care if you achieved the outcome "money laundering" via on-chain code or good old face-to-face meetings and moneys in sports bags. Note that "writing code that can also be used to facilitate money laundering", "writing code that can reasonably only be used to facilitate money laundering", "writing code that facilitates money laundering and operating it yourself (or selling it for money or a licensing fee to somebody that does)" are all different points on a spectrum.
  - TrapLord_Rhodo 3y ago
    The main crux of my argument there was the KYC trigger. using centralized mizers, you have having a centralized wallet, without ZK-proofing the headers of the wallet, distributing funds. This can be traced, and in some miners or CIA database, all transactions from that wallet are flagged. > "All of them" would effectively amount to a ban of mixers. Again, centralized mixers will be banned. You can plug all the exits to your centralized currency, but you cannot stop someone from trading in the cryptosphere utilizing various "Decentralized mixers" with proper ZK proofs, and headless wallet ledgers.