Bitcoins/Litecoins/Virtual Currencies

Rangoth said:

i have a genuine question about this piece And I’m not trying to start a BTC purist war. But on the uncensorable/anonymous thing.….i know there is no way to prevent wallet A from interacting on the chain but wouldn’t it actually HURT people over cash because the way governments would do it is by saying “anyone accepting an incoming transaction from wallet A faces x/y/z charges and fines”?

unlike cash which is a fungible asset, even if they don’t know who owns wallet A, all they need to do is flag it as a ”non allowed transaction wallet” and any legit business that doesn’t want to get in trouble would stop accepting funds from there? And it’s not like the owner of wallet A can just move their bitcoin to wallet B because now that wallet gets flagged.

the only cash equivalent I can think of is flagging certain serial numbers, but the average store doesn’t check that so only banks would and they would have to pass a law stating all stores must now check serial numbers?

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So layer 1 Bitcoin is not anonymous. The ledger is open for anyone with a node (or access to a mempool explorer) to view. The trick to the above is connecting a person's identity with an address. Once that connection is made, layer 1 transactions will be traceable unless steps are taken to obfuscate ownership. Mixers and various methods of pegging in and out of layer 2 protocols (Lightning and Liquid being the most relevant currently) are the only real methods to disconnect identity from an address. Privacy with Bitcoin also requires a fair amount of caution to be done right and isn't feasible for most right now with the available tools. This is improving every year though.

None of the above would be as much of an issue if immoral KYC/AML regulations were abolished. Exchanges are essentially massive honeypots of data on who owns what and where they live, what they look like, etc. it's very stupid and history won't be kind on these laws.

That being said Lightning provides quite a bit of privacy for spenders (less for receivers) and is already in a solid position for more mainstream use, granted through mostly custodial solutions. Tether recently disclosed they earned 9% APR, in Bitcoin, from running their Lightning node so I would expect more players to get involved there over time which will further reduce fees and increase liquidity.

Everything in Bitcoin has tradeoffs. I may disagree with D Dalren , quite strongly if I'm honest, but at least he understands that. So no need for going full maxi today. I think that the misunderstandings around altcoin use cases will largely collapse soon but XRP is still around somehow so who knows if the cockroaches ever get exterminated.

Sorry if I got lost a bit in there, but once an address is declared non grata it’s over, right? No one will touch you, even a layer 2? I understand the non-inflationary and implicit trust system of the chain, but everything about it on all layers just seems MORE traceable than cash. With any crypto, with any coin, once you know the owner of an address it’s over. You could then track and punish where every single fraction of a coin goes….right?

Flobee said:

So no need for going full maxi today.

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Disappointing. I come here largely for your fanaticism.

Arden said:

Disappointing. I come here largely for your fanaticism.

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Hoping Maxi's spread like the plague. Good for bitcoin price to go up and helps to set a stable floor price when we all sell.

Dalren said:

Hoping Maxi's spread like the plague. Good for bitcoin price to go up and helps to set a stable floor price when we all sell.

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Couldn't agree more, actually. As ridiculous as I find maxis, we wouldn't be where we are without them. You can't turn something without clear intrinsic value into the world's best store of value without absolute bedrock levels of faith from a large number of people.

I still like to give Flobee shit on occasion though, since he's our board's resident true blue maxi.

Can’t speak to what you should do or how this will all shake out, but I noticed the same and dumped all ETH for BTC about a year back

Rangoth said:

Sorry if I got lost a bit in there, but once an address is declared non grata it’s over, right? No one will touch you, even a layer 2? I understand the non-inflationary and implicit trust system of the chain, but everything about it on all layers just seems MORE traceable than cash. With any crypto, with any coin, once you know the owner of an address it’s over. You could then track and punish where every single fraction of a coin goes….right?

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Layer 1 is very censorable on a social level yes. If a government decides an address is "dirty" then it can be traced and censored. There are a ton of ways around this though, which is why ransomware often demands Bitcoin payments, not some coin. A simple example is doing a submarine swap into Liquid, then through Liquid to a Lightning address or even through Tether on Liquid to a Lightning address. All of that happens off chain and would require compromise of Liquid (possible), tracking the movement of Tether (also possible) then tracking down Lightning spend addresses (much more difficult).

Above example isn't bullet proof and I didnt mention mixers, coinjoin, payjoin, etc for obfuscating an addess. Its a complicated topic, but the simple answer is yes an address can be "blacklisted", but no its not as simple as you've portrayed.

Also just a general commentary on the Maxi topic... tell me those of you who've been in this thread a few years, who's position has moved more? Mine or the general consensus of the rest of you? Nearly every poster here is a whole lot more maxi than you were 5 years ago. I don't see any reason that that trend will change.

I don’t know your opinion so can’t say. I can say that from the beginning I was skeptical on how it would all play out in the real world but I did always believe BTC would find a place in it somehow. I always knew shitcoins where shit but did make some money off them until it became more work than it was worth unless you were on the inside. I never believed in the NFT art bullshit, that was always a scam, though people made and lost millions there too. I did expect more of the auto-contract and defi style banking to become more mainstream and maybe it still will as people get more comfortable.