6 ms·

Bitcoin's Fatal Flaw: Why Financial Surveillance Is Inevitable Without Privacy

14 points by aminoche 2y ago

aminoche 2y ago
Bitcoin was supposed to be the financial revolution that freed us from banks and governments. Instead, it’s becoming the most powerful surveillance tool in history. Every transaction is public. Every wallet is trackable. Chain-analysis firms are mapping financial behavior with surgical precision. And regulators love it. Monero is the last stand. If privacy doesn’t become the default in digital finance, it will soon be criminalized and erased. The internet made the same mistake: TCP/IP was built for openness, not privacy. Now, decades later, Tor and I2P are playing catch-up against mass surveillance. Monero is trying to fix Bitcoin’s mistakes before history repeats itself. We are at a crossroads. If Bitcoin remains transparent by design, financial surveillance will become irreversible. If Monero gets crushed, there is no Plan B. I wrote a deep dive into this issue—how we got here, what happens next, and why this moment is critical. Would love to hear your thoughts.
- globular-toast 2y ago
  Are you aware of GNU Taler?
  - beeflet 2y ago
    The problem with digicash-type of solutions based on blind signatures like GNU Taler, is that you need a centralized service to operate them. Digicash failed because banks wouldn't adopt it, and you have to recognize that centralized infrastructure profits off of the payment data and is susceptible to regulation and lock-in. I am optimistic about GNU Taler (clearly it has superior privacy and throughput versus cryptocurrencies), but you have to be aware of the possibility of re-creating the existing financial system.
    - jxjnskkzxxhx 2y ago
      What's wrong with the existing financial system?
      - beeflet 2y ago
        If you've been reading the news, you might laugh if I told you that the original goals of cryptocurrency were to combat the high fees, surveillance, and insecurity associated with centralized payment infrastructure. But that just goes to show how deeply original goals of cryptocurrency have been undermined by speculators and gamblers.
        jxjnskkzxxhx 2y ago
        I pay zero fees tho. And centralised Vs decentralized doesn't really affect my use, it's just an implementation detail.
        beeflet 2y ago
        The vendors you spend at have to pay for credit card processing fees. That cuts into the margin for the business and ultimately the consumer pays for that, whether they recognize it or not. Issues like surveillance and insecurity are largely political and by the time they are realized on an individual level they are too late to solve. It is pretty easy track down protestors when the government has access to the network of all their transactions. Not to mention control: payment processors are private companies and can simply choose not to do business with you, locking you out of the market. With a typical bank, your money is protected by "open source" information like your name, address, and such. If you can copy information from a credit card you have everything you need to authorize a transaction: skimming is a major issue. When this security inevitably breaks down, it's called "identity theft" and the responsibility is pushed onto the consumer who has no agency to secure themselves. In a cryptocurrency, it's a keypair so the information needed to authorize the transaction (private key) is separate from the information needed to verify it (public key). And the end user has ownership of the keypair so they can take initiative in their own security. If they want to use a certain hardware token, they can do that. If they want to outsource some security to a third party, they can do that voluntarily with a multi-signature scheme.
- npoc 2y ago
  The Bitcoin network, bitcoin's base layer has to be at most pseudo-anonymous in order to prove the total amount of bitcoin. This is fine, because the Bitcoin network will not be used for everyday transactions. They will be performed on a higher-level network such as Lightning, Paypal etc. which are optimised for smaller, frequent transactions, rather than large transactions like the base layer. Monero has no proof of supply, and so I would have little confidence in storing my value in it.
  - beeflet 2y ago
    Nonsense. The range proofs are the proof of supply. If you have a cryptocurrency where the range proofs don't work, you obviously have bigger problems than the supply. I wouldn't store your value in a cryptocurrency. They're currencies not gold bars or value generating assets. They require a value transfer to the miners in order to be secure. The bitcoin base layer is not pseudo-anonymous because chain analysts have access to data from exchanges and can de-anonymize the rest of users and transactions from this data. So it is transparent, but only for powerful institutions and not society at large. The lightning network is not private. I mean it's private, but only in the sense that you are still broadcasting your transactions publicially but without paying others to permanently record them. Using centralized services like paypal to send bitcoin is just recreating the existing financial infrastructure bitcoin was meant to solve. It is self-defeating. There is no purpose to bitcoin unless people can practically self-custody and use it for transactions.
    - npoc 2y ago
      > Nonsense. The range proofs are the proof of supply. If you have a cryptocurrency where the range proofs don't work, you obviously have bigger problems than the supply. Would you mind explaining how I might do a full audit of the total Monero supply using range proofs? > I wouldn't store your value in a cryptocurrency. They're currencies not gold bars or value generating assets. They require a value transfer to the miners in order to be secure. bitcoin on the Bitcoin network is not really a currency - the transaction fees are independent of the transaction size making small value exchanges extremely expensive, and large value exchanges extremely cheap. It's a crypto-asset that's optimised for storing large amounts of value of large amounts of time (similar to gold, but much improved). > The lightning network is not private. I mean it's private, but only in the sense that you are still broadcasting your transactions publicially but without paying others to permanently record them. The lightning network does not use public broadcasting of transactions. It works in a similar way to the Tor network, with an onion protocol. > Using centralized services like paypal to send bitcoin is just recreating the existing financial infrastructure bitcoin was meant to solve. It is self-defeating. There is no purpose to bitcoin unless people can practically self-custody and use it for transactions. No it doesn't recreate infinite money printing, which is the problem bitcoin solves, and why it will ultimately suck all the value out of fiat currencies. People can already practically self-custody, there is no need to use it for everyday transactions - it will have enormous success simply as a savings tool. In addition, it is fully auditable, meaning you can have your bitcoin fully or partially custodied by a third-party but have full access to the public keys for the bitcoin wallet, proving your money is where the custodian says it is. Something that's practically impossible with gold/fiat.
- TeMPOraL 2y ago
  There can't be financial privacy as long as there is a need to pay taxes - and therefore to be able to tell if you're paying them (and in the correct amount). There can't be a financial system if there are no taxes, because financial system is maintained by some form of government, which needs money to operate, and both are function of scaling up human societies. Therefore, financial system and financial privacy are mutually exclusive in practice.
- nona 2y ago
  While I was originally interested in the promise of bitcoin as a means of exchanging money bypassing banks, these days I'm wondering if complete secrecy is still a good idea. Are taxes – any taxation at all – a good idea? I would say yes – funding common infrastructure and services as charities or private companies seems doomed to fail. Making all financial transactions secret would make tax evasion rampant. What about money coming from criminal enterprises, ie. money laundering. What about extreme concentration of money, having an outsized and untraceable influence on our political system and increasing regulatory capture to the extreme. I'm not against disruption of our financial system in principle, but it seems we'll first need to also come up with good answers on how we organize society. A society of working poor, with a small but extremely wealthy elite doesn't seem like a good deal – even for the extremely wealthy.
  - beeflet 2y ago
    You don't need to implement a sales or income tax in order to subsidize the government's operations. One proposal by "single tax" based on property tax, proposed by a certain Henry George has interesting merits. One such merit is that it is pretty hard to hide from a property tax. https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax I think that in this century we've become accustomed to the existing credit card payment systems that have access to all of our payment data and are allowed to do with it what they wish (and by extension, the government also can subpoena our payment data in investigations). But if you look back in history this is a pretty new idea. Giving the government access to every single payment you make is pretty dangerous if you have a change of regime into something more authoritarian like in the case of China. I think that if cryptocurrency can provide about the same level of fungibility and privacy as ordinary cash, that would be fine. You can track marked bills with some level of effort (kind of analogous to an EAE attack in the cryptocurrency world) but the general principle is that not every transaction is automatically logged in some easily inspectable database and sold to the highest bidder.
  - borgdefenser 2y ago
    We had currency secrecy in the past with physical cash. It is probably inevitable with currency secrecy that you get something like the mafia. At least physical cash though put a constraint on the scale of the mafia. A global, secret, digital currency will inevitably lead to organized crime on the scale of the currency. It is just an absolutely terrible idea. The appeal is in the abstract because it is easy to ignore the downside risks in the abstract.
- Yizahi 2y ago
  A few libertarians wanted to free humans from greedy banks and govts. But suddenly they have discovered that banks and govts are a feature, not a problem. Fully trustless society is a hellish dystopia, of the likes portrayed in the sci-fi books. And systems with at least some amount of trust function better if the trusted entity is government or at least some known person, and not come criminal sitting in the non-extradition offshore operating token network from a single laptop with zero oversight and zero restrictions. PS: but cudos where they are due - at least Monero folks have a clear purpose, a clear vision and they are executing according to it. Unlike slimy gamblers from BTC and other tokens, who all pivoted to scams and frauds and completely abandoned any notion of the original whitepaper about decentralized private currency.
ArtTimeInvestor 2y ago
In terms of every day transactions, Bitcoin is just the base layer. Like TCP/IP is the base layer for using Hacker News. Nobody is crafting TCP packets manually when using a website. For every day transactions, protocols higher up in the stack will be used, like the Lightning Network. The author makes it sound like you need to be tech-savvy to use the Lightning Network. That is not true. Using the Lightning Network is just like using any other software. Lightning is just a protocol. The user is not exposed to it. Just like a user is not exposed to SSL, HTTP and TCP when using a website.
- beeflet 2y ago
  The difference is that if you want sovereignty of your own bitcoin on the lightning network you need to run the lightning daemon yourself, open a channel, and maintain it and deal with closures of the payment channel. Payment channels are useful for some things, but you have to admit they are pretty much abandoning the typical cryptocurrency use case of just sending money to an address, even if the recipient is offline. If we use this HTTP/email protocol comparison, an ordinary SPV wallet is like a web browser and a lightning network node is like a web server. Actually an email client/mail server is a better example.
  - ArtTimeInvestor 2y ago
    When you open up a Lightning channel with another node, that node becomes your gateway to the world wide web of Lightning nodes. Just like your internet provider becomes your gateway to the web when you buy their service. Do it with a reputable node, and they will not maliciously close it just to steal a few dollars from you by closing the channel with an outdated state. They will want to keep their reputation. Just like your internet provider does not deny you service after a day when you paid for a month.
    - beeflet 2y ago
      >that node becomes your gateway to the world wide web of Lightning nodes My point is that you need to constantly have your lightning node running to service the channel. Whereas before with SPV or something you don't need a constant connection to the bitcoin network, and you can just receive transactions offline. That basic use case is necessarily gone in lightning. >just to steal a few dollars It's never just "a few dollars" because the amount in the channel needs to be much greater than the fees to open and close it. It is always a serious amount of money. This is the type of issue that gradually gets worse as bitcoin becomes more widely used, which it won't (because of issues like this). The thing about payment channels is that bitcoiners use them to make up for the low transaction throughput caused by bitcoin's outdated 1MB block size, but payment channels are most efficient when the fees to open and close the channel are low, and there is little risk associated with closing a channel. Want to break the lightning network? Just open a massive number of channels, then maliciously close them all at the same time. Because bitcoin's transaction throughput is so low, you can create enough channels such that not everyone will be able to close the channel at low enough fees.
deleted 2y ago
[deleted]
devops000 2y ago
I am more worried about confiscation from government or money that can be stolen or lost. Is there any crypto currency that cannot be stolen by third-party and only myself is able to access/transfer?
- dns_snek 2y ago
  That's any cryptocurrency by its very definition.
  - npoc 2y ago
    Not unless it's truly decentralised.
- npoc 2y ago
  Yes, bitcoin. Bitcoin is the only truly decentralised digital asset that governments can't control or stop. You can self-custody it by keeping 12 words secret. You can even add multiple passphrases so that you can split the "keys" to your bitcoin across multiple locations with plausible deniability that the passphrases even exist. The options are endless. You can store your 12-word mnemonic in the physical domain, and the passphrase(s) in the digital domain. You can even store it in your head if you like (12 short words are surprisingly easy to remember)
  - akimbostrawman 2y ago
    How can btc be the "only truly decentralized" when its impossible for the average person to be part of that network in a meaningful way without a warehouse of ASICS? Meanwhile superior alternatives like monero can actually be supported and acquired with everyday hardware because they actually preventing centralization by being ASIC resistant. BTC is also a very poor choice to be used private and anonymous because every transactions is tracable forever by design, again unlike monero.
    - TiredOfLife 2y ago
      You can run a shallow bitcoin node. You run it once every couple months let it catch up. Do your transactions and close
tromp 2y ago
You can get most of the privacy benefits of Monero without its complexity and chain bloat [1], and with a much fairer emission to boot [2]. [1] https://forum.grin.mw/t/scalability-vs-privacy-chart https://forum.grin.mw/t/scalability-vs-privacy-chart [2] https://phyro.github.io/grinvestigation/why_grin.html https://phyro.github.io/grinvestigation/why_grin.html
- beeflet 2y ago
  whats the advantage over MWEB on LTC? The transaction graph is the main problem. It's currently broken on monero according to the chainalysis leaks until something like FCMP++ is implemented also I think XMR does have some scriptless scripts. The atomic swaps are one example
  - tromp 2y ago
    MWEB complicated the simple Mimblewimble protocol to emulate Bitcoin's non-interactive tx, foregoing the robustness and privacy benefits (payjoins) of interactive tx. The atomic swap uses adaptor signatures (a scriptless script feature) on the BTC side only.
OutOfHere 2y ago
Supporting Mimblewimble / MWEB privacy might be a good next move for Bitcoin. Apparently it works for Litecoin. Alternatively, one other option is to use Litecoin, with or without MWEB, for transactions - it supports them better than Bitcoin.
1vuio0pswjnm7 2y ago
Text-only: https://substack.com/api/v1/posts/by-id/158569486 https://substack.com/api/v1/posts/by-id/158569486
- aminoche 2y ago
  Thanks for sharing!
aminoche 2y ago
Every pushback here assumes privacy is something you ‘add’ rather than something you ‘enforce’ at the protocol level. That’s exactly how we ended up with a mass-surveillance internet. TCP/IP wasn’t built for privacy, so privacy became a niche concern, not a default. Encryption, Tor, VPNs—these are defensive patches against a system that was never designed for them. Now Bitcoin is making the same mistake. People assume Lightning fixes this, but that’s just history repeating itself. Lightning is the financial equivalent of a VPN. It improves individual privacy for those who use it, but it doesn’t change the fact that the underlying system remains transparent and traceable. Chain analysis still works. State surveillance still works. Just like ISPs can fingerprint VPN traffic, financial surveillance firms can (and already do) identify Lightning channel activity. What’s happening here is more than a technical debate. It’s a battle over whether financial privacy will follow the same path as internet privacy—something theoretically possible, but practically abandoned by 99% of users. Bitcoin is TCP/IP. Monero is I2P. One is dominant because it was first. The other is superior for privacy but struggles because mass adoption cements early design choices. If you think Bitcoin’s privacy can be solved later, look at the internet. The window for embedding privacy at the base layer always closes faster than expected. If Monero doesn’t win this battle soon, it will follow I2P—technically superior, ideologically correct, but too late to matter. Bitcoin’s biggest flaw isn’t scalability—it’s surveillance baked into the protocol. The transparency that once made it revolutionary is now its Achilles' heel, setting the stage for financial panopticons controlled by governments and corporations. The Lightning Network? A band-aid on a bullet wound. It adds a layer of obfuscation, but at its core, Bitcoin remains an open ledger ripe for tracking and control. It’s like using a VPN on an unencrypted connection—marginally better, but still fundamentally exposed. Monero gets privacy right, but it’s stuck in the shadows, largely ignored by the mainstream. And here’s the real problem: the world is sleepwalking into a future where every financial move is monitored, logged, and controlled. If privacy isn’t embedded at the protocol level now, it never will be. Bitcoin changed the game, but if it doesn’t evolve, it risks becoming the trojan horse for financial surveillance. The cypherpunk dream isn’t about “number go up”—it’s about financial freedom. And without privacy, there is no freedom.
- deleted 2y ago
  [deleted]
aminoche 2y ago
Bitcoin’s transparency isn't just an oversight; it's strategic necessity. Yes, it enables surveillance but that same visibility is precisely what allowed Bitcoin to become a mainstream financial powerhouse rather than a fringe curiosity. The uncomfortable truth? Absolute privacy sounds appealing until it hits the cold, political reality: total anonymity is kryptonite to regulators, institutions, and mass adoption. What I didn't fully acknowledge earlier is that transparency, despite its risks, is Bitcoin’s Trojan horse, its necessary concession to widespread legitimacy. Monero might promise a purer dream, but purity without pragmatism risks relegating cryptocurrency to irrelevance. The solution isn't blind faith in either extreme but a strategic synthesis: Zero-Knowledge Proofs, Taproot, and advanced mixing technologies layered onto Bitcoin’s transparent base. Privacy shouldn't replace transparency…it should refine it. Navigating this paradox is where the real genius lies, and that's what's needed to push my argument from compelling to undeniable.
- aminoche 2y ago
  Followed up here: https://news.ycombinator.com/item?id=43296129 https://news.ycombinator.com/item?id=43296129
immaculate121 2y ago
[dead]

14 points by aminoche 2y ago

Bitcoin was supposed to be the financial revolution that freed us from banks and governments. Instead, it’s becoming the most powerful surveillance tool in history. Every transaction is public. Every wallet is trackable. Chain-analysis firms are mapping financial behavior with surgical precision. And regulators love it. Monero is the last stand. If privacy doesn’t become the default in digital finance, it will soon be criminalized and erased. The internet made the same mistake: TCP/IP was built for openness, not privacy. Now, decades later, Tor and I2P are playing catch-up against mass surveillance. Monero is trying to fix Bitcoin’s mistakes before history repeats itself. We are at a crossroads. If Bitcoin remains transparent by design, financial surveillance will become irreversible. If Monero gets crushed, there is no Plan B. I wrote a deep dive into this issue—how we got here, what happens next, and why this moment is critical. Would love to hear your thoughts.

globular-toast 2y ago
Are you aware of GNU Taler?
- beeflet 2y ago
  The problem with digicash-type of solutions based on blind signatures like GNU Taler, is that you need a centralized service to operate them. Digicash failed because banks wouldn't adopt it, and you have to recognize that centralized infrastructure profits off of the payment data and is susceptible to regulation and lock-in. I am optimistic about GNU Taler (clearly it has superior privacy and throughput versus cryptocurrencies), but you have to be aware of the possibility of re-creating the existing financial system.
  - jxjnskkzxxhx 2y ago
    What's wrong with the existing financial system?
    - beeflet 2y ago
      If you've been reading the news, you might laugh if I told you that the original goals of cryptocurrency were to combat the high fees, surveillance, and insecurity associated with centralized payment infrastructure. But that just goes to show how deeply original goals of cryptocurrency have been undermined by speculators and gamblers.
      - jxjnskkzxxhx 2y ago
        I pay zero fees tho. And centralised Vs decentralized doesn't really affect my use, it's just an implementation detail.
        beeflet 2y ago
        The vendors you spend at have to pay for credit card processing fees. That cuts into the margin for the business and ultimately the consumer pays for that, whether they recognize it or not. Issues like surveillance and insecurity are largely political and by the time they are realized on an individual level they are too late to solve. It is pretty easy track down protestors when the government has access to the network of all their transactions. Not to mention control: payment processors are private companies and can simply choose not to do business with you, locking you out of the market. With a typical bank, your money is protected by "open source" information like your name, address, and such. If you can copy information from a credit card you have everything you need to authorize a transaction: skimming is a major issue. When this security inevitably breaks down, it's called "identity theft" and the responsibility is pushed onto the consumer who has no agency to secure themselves. In a cryptocurrency, it's a keypair so the information needed to authorize the transaction (private key) is separate from the information needed to verify it (public key). And the end user has ownership of the keypair so they can take initiative in their own security. If they want to use a certain hardware token, they can do that. If they want to outsource some security to a third party, they can do that voluntarily with a multi-signature scheme.
npoc 2y ago
The Bitcoin network, bitcoin's base layer has to be at most pseudo-anonymous in order to prove the total amount of bitcoin. This is fine, because the Bitcoin network will not be used for everyday transactions. They will be performed on a higher-level network such as Lightning, Paypal etc. which are optimised for smaller, frequent transactions, rather than large transactions like the base layer. Monero has no proof of supply, and so I would have little confidence in storing my value in it.
- beeflet 2y ago
  Nonsense. The range proofs are the proof of supply. If you have a cryptocurrency where the range proofs don't work, you obviously have bigger problems than the supply. I wouldn't store your value in a cryptocurrency. They're currencies not gold bars or value generating assets. They require a value transfer to the miners in order to be secure. The bitcoin base layer is not pseudo-anonymous because chain analysts have access to data from exchanges and can de-anonymize the rest of users and transactions from this data. So it is transparent, but only for powerful institutions and not society at large. The lightning network is not private. I mean it's private, but only in the sense that you are still broadcasting your transactions publicially but without paying others to permanently record them. Using centralized services like paypal to send bitcoin is just recreating the existing financial infrastructure bitcoin was meant to solve. It is self-defeating. There is no purpose to bitcoin unless people can practically self-custody and use it for transactions.
  - npoc 2y ago
    > Nonsense. The range proofs are the proof of supply. If you have a cryptocurrency where the range proofs don't work, you obviously have bigger problems than the supply. Would you mind explaining how I might do a full audit of the total Monero supply using range proofs? > I wouldn't store your value in a cryptocurrency. They're currencies not gold bars or value generating assets. They require a value transfer to the miners in order to be secure. bitcoin on the Bitcoin network is not really a currency - the transaction fees are independent of the transaction size making small value exchanges extremely expensive, and large value exchanges extremely cheap. It's a crypto-asset that's optimised for storing large amounts of value of large amounts of time (similar to gold, but much improved). > The lightning network is not private. I mean it's private, but only in the sense that you are still broadcasting your transactions publicially but without paying others to permanently record them. The lightning network does not use public broadcasting of transactions. It works in a similar way to the Tor network, with an onion protocol. > Using centralized services like paypal to send bitcoin is just recreating the existing financial infrastructure bitcoin was meant to solve. It is self-defeating. There is no purpose to bitcoin unless people can practically self-custody and use it for transactions. No it doesn't recreate infinite money printing, which is the problem bitcoin solves, and why it will ultimately suck all the value out of fiat currencies. People can already practically self-custody, there is no need to use it for everyday transactions - it will have enormous success simply as a savings tool. In addition, it is fully auditable, meaning you can have your bitcoin fully or partially custodied by a third-party but have full access to the public keys for the bitcoin wallet, proving your money is where the custodian says it is. Something that's practically impossible with gold/fiat.
TeMPOraL 2y ago
There can't be financial privacy as long as there is a need to pay taxes - and therefore to be able to tell if you're paying them (and in the correct amount). There can't be a financial system if there are no taxes, because financial system is maintained by some form of government, which needs money to operate, and both are function of scaling up human societies. Therefore, financial system and financial privacy are mutually exclusive in practice.
nona 2y ago
While I was originally interested in the promise of bitcoin as a means of exchanging money bypassing banks, these days I'm wondering if complete secrecy is still a good idea. Are taxes – any taxation at all – a good idea? I would say yes – funding common infrastructure and services as charities or private companies seems doomed to fail. Making all financial transactions secret would make tax evasion rampant. What about money coming from criminal enterprises, ie. money laundering. What about extreme concentration of money, having an outsized and untraceable influence on our political system and increasing regulatory capture to the extreme. I'm not against disruption of our financial system in principle, but it seems we'll first need to also come up with good answers on how we organize society. A society of working poor, with a small but extremely wealthy elite doesn't seem like a good deal – even for the extremely wealthy.
- beeflet 2y ago
  You don't need to implement a sales or income tax in order to subsidize the government's operations. One proposal by "single tax" based on property tax, proposed by a certain Henry George has interesting merits. One such merit is that it is pretty hard to hide from a property tax. https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax I think that in this century we've become accustomed to the existing credit card payment systems that have access to all of our payment data and are allowed to do with it what they wish (and by extension, the government also can subpoena our payment data in investigations). But if you look back in history this is a pretty new idea. Giving the government access to every single payment you make is pretty dangerous if you have a change of regime into something more authoritarian like in the case of China. I think that if cryptocurrency can provide about the same level of fungibility and privacy as ordinary cash, that would be fine. You can track marked bills with some level of effort (kind of analogous to an EAE attack in the cryptocurrency world) but the general principle is that not every transaction is automatically logged in some easily inspectable database and sold to the highest bidder.
- borgdefenser 2y ago
  We had currency secrecy in the past with physical cash. It is probably inevitable with currency secrecy that you get something like the mafia. At least physical cash though put a constraint on the scale of the mafia. A global, secret, digital currency will inevitably lead to organized crime on the scale of the currency. It is just an absolutely terrible idea. The appeal is in the abstract because it is easy to ignore the downside risks in the abstract.
Yizahi 2y ago
A few libertarians wanted to free humans from greedy banks and govts. But suddenly they have discovered that banks and govts are a feature, not a problem. Fully trustless society is a hellish dystopia, of the likes portrayed in the sci-fi books. And systems with at least some amount of trust function better if the trusted entity is government or at least some known person, and not come criminal sitting in the non-extradition offshore operating token network from a single laptop with zero oversight and zero restrictions. PS: but cudos where they are due - at least Monero folks have a clear purpose, a clear vision and they are executing according to it. Unlike slimy gamblers from BTC and other tokens, who all pivoted to scams and frauds and completely abandoned any notion of the original whitepaper about decentralized private currency.

ArtTimeInvestor 2y ago

In terms of every day transactions, Bitcoin is just the base layer. Like TCP/IP is the base layer for using Hacker News. Nobody is crafting TCP packets manually when using a website. For every day transactions, protocols higher up in the stack will be used, like the Lightning Network. The author makes it sound like you need to be tech-savvy to use the Lightning Network. That is not true. Using the Lightning Network is just like using any other software. Lightning is just a protocol. The user is not exposed to it. Just like a user is not exposed to SSL, HTTP and TCP when using a website.

beeflet 2y ago
The difference is that if you want sovereignty of your own bitcoin on the lightning network you need to run the lightning daemon yourself, open a channel, and maintain it and deal with closures of the payment channel. Payment channels are useful for some things, but you have to admit they are pretty much abandoning the typical cryptocurrency use case of just sending money to an address, even if the recipient is offline. If we use this HTTP/email protocol comparison, an ordinary SPV wallet is like a web browser and a lightning network node is like a web server. Actually an email client/mail server is a better example.
- ArtTimeInvestor 2y ago
  When you open up a Lightning channel with another node, that node becomes your gateway to the world wide web of Lightning nodes. Just like your internet provider becomes your gateway to the web when you buy their service. Do it with a reputable node, and they will not maliciously close it just to steal a few dollars from you by closing the channel with an outdated state. They will want to keep their reputation. Just like your internet provider does not deny you service after a day when you paid for a month.
  - beeflet 2y ago
    >that node becomes your gateway to the world wide web of Lightning nodes My point is that you need to constantly have your lightning node running to service the channel. Whereas before with SPV or something you don't need a constant connection to the bitcoin network, and you can just receive transactions offline. That basic use case is necessarily gone in lightning. >just to steal a few dollars It's never just "a few dollars" because the amount in the channel needs to be much greater than the fees to open and close it. It is always a serious amount of money. This is the type of issue that gradually gets worse as bitcoin becomes more widely used, which it won't (because of issues like this). The thing about payment channels is that bitcoiners use them to make up for the low transaction throughput caused by bitcoin's outdated 1MB block size, but payment channels are most efficient when the fees to open and close the channel are low, and there is little risk associated with closing a channel. Want to break the lightning network? Just open a massive number of channels, then maliciously close them all at the same time. Because bitcoin's transaction throughput is so low, you can create enough channels such that not everyone will be able to close the channel at low enough fees.

deleted 2y ago

[deleted]

devops000 2y ago

I am more worried about confiscation from government or money that can be stolen or lost. Is there any crypto currency that cannot be stolen by third-party and only myself is able to access/transfer?

dns_snek 2y ago
That's any cryptocurrency by its very definition.
- npoc 2y ago
  Not unless it's truly decentralised.
npoc 2y ago
Yes, bitcoin. Bitcoin is the only truly decentralised digital asset that governments can't control or stop. You can self-custody it by keeping 12 words secret. You can even add multiple passphrases so that you can split the "keys" to your bitcoin across multiple locations with plausible deniability that the passphrases even exist. The options are endless. You can store your 12-word mnemonic in the physical domain, and the passphrase(s) in the digital domain. You can even store it in your head if you like (12 short words are surprisingly easy to remember)
- akimbostrawman 2y ago
  How can btc be the "only truly decentralized" when its impossible for the average person to be part of that network in a meaningful way without a warehouse of ASICS? Meanwhile superior alternatives like monero can actually be supported and acquired with everyday hardware because they actually preventing centralization by being ASIC resistant. BTC is also a very poor choice to be used private and anonymous because every transactions is tracable forever by design, again unlike monero.
  - TiredOfLife 2y ago
    You can run a shallow bitcoin node. You run it once every couple months let it catch up. Do your transactions and close

tromp 2y ago

You can get most of the privacy benefits of Monero without its complexity and chain bloat [1], and with a much fairer emission to boot [2]. [1] https://forum.grin.mw/t/scalability-vs-privacy-chart https://forum.grin.mw/t/scalability-vs-privacy-chart [2] https://phyro.github.io/grinvestigation/why_grin.html https://phyro.github.io/grinvestigation/why_grin.html

beeflet 2y ago
whats the advantage over MWEB on LTC? The transaction graph is the main problem. It's currently broken on monero according to the chainalysis leaks until something like FCMP++ is implemented also I think XMR does have some scriptless scripts. The atomic swaps are one example
- tromp 2y ago
  MWEB complicated the simple Mimblewimble protocol to emulate Bitcoin's non-interactive tx, foregoing the robustness and privacy benefits (payjoins) of interactive tx. The atomic swap uses adaptor signatures (a scriptless script feature) on the BTC side only.

OutOfHere 2y ago

Supporting Mimblewimble / MWEB privacy might be a good next move for Bitcoin. Apparently it works for Litecoin. Alternatively, one other option is to use Litecoin, with or without MWEB, for transactions - it supports them better than Bitcoin.

1vuio0pswjnm7 2y ago

Text-only: https://substack.com/api/v1/posts/by-id/158569486 https://substack.com/api/v1/posts/by-id/158569486

aminoche 2y ago
Thanks for sharing!

aminoche 2y ago

Every pushback here assumes privacy is something you ‘add’ rather than something you ‘enforce’ at the protocol level. That’s exactly how we ended up with a mass-surveillance internet. TCP/IP wasn’t built for privacy, so privacy became a niche concern, not a default. Encryption, Tor, VPNs—these are defensive patches against a system that was never designed for them. Now Bitcoin is making the same mistake. People assume Lightning fixes this, but that’s just history repeating itself. Lightning is the financial equivalent of a VPN. It improves individual privacy for those who use it, but it doesn’t change the fact that the underlying system remains transparent and traceable. Chain analysis still works. State surveillance still works. Just like ISPs can fingerprint VPN traffic, financial surveillance firms can (and already do) identify Lightning channel activity. What’s happening here is more than a technical debate. It’s a battle over whether financial privacy will follow the same path as internet privacy—something theoretically possible, but practically abandoned by 99% of users. Bitcoin is TCP/IP. Monero is I2P. One is dominant because it was first. The other is superior for privacy but struggles because mass adoption cements early design choices. If you think Bitcoin’s privacy can be solved later, look at the internet. The window for embedding privacy at the base layer always closes faster than expected. If Monero doesn’t win this battle soon, it will follow I2P—technically superior, ideologically correct, but too late to matter. Bitcoin’s biggest flaw isn’t scalability—it’s surveillance baked into the protocol. The transparency that once made it revolutionary is now its Achilles' heel, setting the stage for financial panopticons controlled by governments and corporations. The Lightning Network? A band-aid on a bullet wound. It adds a layer of obfuscation, but at its core, Bitcoin remains an open ledger ripe for tracking and control. It’s like using a VPN on an unencrypted connection—marginally better, but still fundamentally exposed. Monero gets privacy right, but it’s stuck in the shadows, largely ignored by the mainstream. And here’s the real problem: the world is sleepwalking into a future where every financial move is monitored, logged, and controlled. If privacy isn’t embedded at the protocol level now, it never will be. Bitcoin changed the game, but if it doesn’t evolve, it risks becoming the trojan horse for financial surveillance. The cypherpunk dream isn’t about “number go up”—it’s about financial freedom. And without privacy, there is no freedom.

deleted 2y ago
[deleted]

aminoche 2y ago

Bitcoin’s transparency isn't just an oversight; it's strategic necessity. Yes, it enables surveillance but that same visibility is precisely what allowed Bitcoin to become a mainstream financial powerhouse rather than a fringe curiosity. The uncomfortable truth? Absolute privacy sounds appealing until it hits the cold, political reality: total anonymity is kryptonite to regulators, institutions, and mass adoption. What I didn't fully acknowledge earlier is that transparency, despite its risks, is Bitcoin’s Trojan horse, its necessary concession to widespread legitimacy. Monero might promise a purer dream, but purity without pragmatism risks relegating cryptocurrency to irrelevance. The solution isn't blind faith in either extreme but a strategic synthesis: Zero-Knowledge Proofs, Taproot, and advanced mixing technologies layered onto Bitcoin’s transparent base. Privacy shouldn't replace transparency…it should refine it. Navigating this paradox is where the real genius lies, and that's what's needed to push my argument from compelling to undeniable.

aminoche 2y ago
Followed up here: https://news.ycombinator.com/item?id=43296129 https://news.ycombinator.com/item?id=43296129

immaculate121 2y ago

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