This turns Bitcoin back into cash. Original money system. Any comparisons with money laundering are misguided because it gives users back their privacy - privacy they didn't had because of the fact that blockchain is public. Today they have some privacy while using banking system - average criminals don't have access to their financial information. With new privacy tools for Bitcoin no-one will have access to that information. Just a side effect of "no privileged third parties" system.
If this is money laundering - than cash is money laundering. Plain and simple.
Cash can be and is tracked. This takes it a step further. I won't be surprised if governments outlaw the use of tumblers or go after everyone with tainted bitcoin (which given a possible high percentage of dirty bitcoin would make them unfeasible). Otherwise, you've given for-profit cybercriminals the last piece to routinely execute perfect crimes.
Well, effectively outlawing tumblers involves investigating people that pay with tumbler-tainted coins. I mean it more in a Patriot Act type legislation sense rather than probable cause [0]. Obviously, if you've got non-tumbled coins with a direct criminal taint then I'm pretty sure that's probable cause already.
Just to be clear - coins are not forever tainted in such context. i.e. someone extorts 1 BTC, the victim reports it - it's now tainted. The criminal pays the 1 BTC for pizza, police arrests him. The coin owned by the pizza place is a clean coin again now.
[0] tho I guess in some cases it could very well fulfill it (>50% probability of a crime having been committed)
To be fair, money laundering is associated with cash in countries where people mostly pay with plastic. Admittedly, the reverse association is fairly weak, as I doubt that bringing up cash will make people think of money laundering all that often.
Or ya know.. Use privacy tools like you do for the internet. Email is sent over unencrypted communications but there are plenty of ways to make it private.
What's with this "we need something new" instead of improving what we have? Ready to jump into another new cryptocurrency that promises the latest and greatest "blockchain tech"? I thought you guys said Ethereum was gonna be the next big thing
Bitcoin is inherently not a privacy minded technology, being able to track every transaction ever is a feature, not something to discard. It's also a feature no 'privacy tool for the internet' (eg. tor) can easily change.
Bitcoin has too much momentum to plausibly be replaced in the near future. More likely is that bitcoin integrates ZKP-based cryptographic privacy once it becomes viable.
Conversely, if you're interested in making some btc analysis apps, we've done some cool internal visual (graph) analytics experiments at Graphistry.
Would be happy to share a dev key to our viz API: leo@gr...stry.com . Some examples of what's possible: https://github.com/graphistry/pygraphistry . Gets fun when you combine it with a Spark cluster and the full blockchain :)
I mean I get what you're saying, but there's actually a picture next to the article of a washing machine with a Bitcoin logo among the suds inside. Considering that it thus clearly doesn't mind the "money laundering" interpretation, why do you?
Just because the article equates privacy with crime doesn't mean privacy is equal to crime. Privacy isn't equal to crime, and it's an attack on fundamental human rights to claim it is. Whether it's the article or Animats making the attack is irrelevant.
There is a great deal of both law and precedent against perfect privacy in financial transactions, because of the strong association between such perfect privacy and criminality, and the very effective cover which the former affords the latter.
Perhaps you feel the case should be otherwise. That's reasonable. But it is also a wildly heterodox view not generally sympathetic to those who are not already privacy absolutists or likely to become so, and you may find it worth your while to consider whether this particular hill is the one you want to die on.
..and the very effective cover which the former affords the latter.
This is an argument against web proxies, VPNs, all encryption, safes, door locks, window blinds, tamper evident tape, and just about every other privacy/security technology ever invented.
Why is economic value transfer so special a use case that we must hamstring it in the name of crime prevention?
For a reason which, standing on a train station platform as I was, I failed to note in my prior comment: anonymous, untraceable money transfer not only makes it easier to conceal crime, but acts as a uniquely powerful inducement to same. Making it possible to contract a murder, for example, in perfect forward secrecy, removes a significant deterrent against doing so at all. One may hasten to argue that such things are already possible today. They are. They are also quite difficult to achieve, which need not be the case with effectively anonymized cryptocurrencies.
Further, that which facilitates the contravention of a nation's laws, in a way which renders detection and prosecution of the crime effectively impossible, is of its nature a direct attack on that nation's sovereignty. No government which wishes to maintain its power intact can long suffer such an infraction. I suspect that's why the toplevel commenter who started this thread spoke in such fashion. Bitcoin dodged one bullet already in the fallout from the Silk Road debacle. This looks like it might be another.
Paying criminals was possible before cash was invented, and it will continue to be possible into the future. We even have movies that have hitmen being paid in gold, diamonds, favors, and other exchangeable assets as major plot devices.
> difficult to achieve
Our ancestors successfully exchanged goods and debt thousands of years ago. I doubt modern humans will have any difficulty inventing new non-cash methods of paying for services.
This isn't theoretical, because we already see soap and other easy to fence goods used as exchangeable assets.
Products like cigarettes and soap are appealing because they can
perform some of the major functions of money. Since there is a
consistent demand and market for them [...] they retain their value.
[...] Since they have standard sizes, they can also be used as a
unit of account. [...]
In areas where fences or other buyers are always willing to purchase
stolen products, soap is just as good as money.
This concern about the anonymity of cash is propaganda. While everyone is concerned that a few poor or middle class people might get away with laundering petty amounts of money, the real thieves move far larger amounts of non-cash, very trackable money to corrupt politicians and offshore havens.
>>This isn't theoretical, because we already see soap and other easy to fence goods used as exchangeable assets.
How about scaling it? Do you wanna carry a lorryful of soap/cigarettes to buy an iPhone or how? One odd person may still choose to do so and one odd seller may accept such a payment. But it is sufficient just to imagine millions of people doing it tens/hundreds of times a day/week to understand how it becomes not only weird but also almost foolish.
e.g. going to on a picnic, carry a truckload of soap/cigarette packs to pay at airport, hotels, restos and so on and hope that there are enough people out there to accept payment using such goods.
Anonymity or not, the other important properties of cash are flexibility, versatility, convenience and unparalleled liquidity. Economics 101.
Hey, I'm not asking you to like or agree with what I'm saying. I'm just pointing out that, if I were a Bitcoin guy, something like this would make me super nervous.
That's because something like this makes it super easy for any government that wants to to say something like "Look. We've already seen that Bitcoin is heavily used in criminal activity, everything from drug deals to contract murder to traffic in child pornography. Now we have people building technology around Bitcoin to make it impossible for law enforcement to tell when it's used in those crimes and others, and also impossible to use Bitcoin transfer records as evidence in prosecuting the people who commit them. It's time to acknowledge the truth about Bitcoin. It's not a currency. It's not a new form of money. It has no legitimate purpose. It's just a tool for criminals to get away with their crimes."
Please don't waste your time and mine by arguing with me that this is deeply tendentious, inaccurate, unfair, unjust, against privacy, immoral, and fattening. For the sake of us all getting on with our lives, I freely concede that it is all those things. Does it matter? As I've already pointed out, what we're talking about here is something that will get right up the nose of pretty much any government in the world. Few governments are notably sympathetic to the rhetoric of privacy absolutism. I think it would behoove those with an interest in Bitcoin to consider how they might respond, more persuasively and usefully than such rhetoric can manage, in the event the US government (for example) proves not yet too spavined to muster some backbone in reacting to the idea of untraceable Bitcoin transfers.
(As an aside, it's things like this that are a big part of why I keep my money safely away from Bitcoin. It's technologically impressive, to be sure, and someone is going to do something amazing with a blockchain someday. But Bitcoin also shows a very strong tendency to attract people who are comfortable addressing a wide range of subjects, from the way governments work to the way money works to the way information security works, purely on the basis of wishful thinking. This makes things exciting! SpaceX's static test yesterday got exciting, too. Such events often strongly reward observation - ideally from a long way upwind.)
> For a reason which, standing on a train station platform as I was, I failed to note in my prior comment: anonymous, untraceable money transfer not only makes it easier to conceal crime, but acts as a uniquely powerful inducement to same. Making it possible to contract a murder, for example, in perfect forward secrecy, removes a significant deterrent against doing so at all. One may hasten to argue that such things are already possible today. They are. They are also quite difficult to achieve, which need not be the case with effectively anonymized cryptocurrencies.
There's overwhelming evidence at this point that deterrents have little-to-no effect in crime prevention, so this argument falls flat before it can begin.
> Further, that which facilitates the contravention of a nation's laws, in a way which renders detection and prosecution of the crime effectively impossible, is of its nature a direct attack on that nation's sovereignty. No government which wishes to maintain its power intact can long suffer such an infraction.
This is a ridiculous assertion. Anonymous money doesn't defeat armies, or redraw borders, or overturn laws. Cash has existed for literally thousands of years and many sovereign nations have risen and fallen during those times.
> There is a great deal of both law and precedent against perfect privacy in financial transactions, because of the strong association between such perfect privacy and criminality, and the very effective cover which the former affords the latter.
This is true, but "this is how we've always done it" is a very poor reason to do something.
The problem with this is that those in power determine what is considered criminal, which is only vaguely correlated with what is unethical enough to be worth criminalizing.
> But it is also a wildly heterodox view not generally sympathetic to those who are not already privacy absolutists or likely to become so, and you may find it worth your while to consider whether this particular hill is the one you want to die on.
If you were actually offering me advice for my own good, I'd take it for what it is. But you aren't. This is just a way of making it sound like privacy is not worth talking about. If you want to make an actual point against privacy I'd be happy to respond to it.
I don't appreciate your advice as advice, because it's clearly ignorant of my actual goals. The thing about mathematically-enforced privacy is that it doesn't have to become the orthodoxy to become effective.
To be able to buy and sell goods without anyone besides the person I'm buying and selling from knowing about it. Not because I want to do anything illegal, but for the same reason that you shut the door when you use the bathroom, and don't willingly install cameras pointing at your bed that broadcast to the entire internet. I'm not willing to give up my privacy just so governments can avoid doing the police work they're elected to do in order to prosecute crimes, or so corporations can bombard me with their shitty products.
Whether or not you equate what you do with your wallet with what you do in a bedroom or a bathroom, it's objectively possible to tell what you do in your bedroom or bathroom from what do do with your wallet in many cases. Condoms, birth control, pregnancy tests, pre-natal vitamins, STD tests, gay literature, sex toys, hemorrhoid cream, etc. all are frequently bought without anonymity, but give a great deal of information about what you're doing in your bedroom and bathroom. Maybe you're so "normal" that you've never bought any of these things, or maybe you're in a position where you wouldn't care if those purchases were made public, but if so, you're actually a pretty rare person.
The definition of "money laundering" is transforming "dirty money" into "clean money", and "dirty money" is by definition wrong, or at least illegal.
Anonymizing money for non-dirty purposes is something else. The mechanics might be identical to money laundering mechanics, but we shouldn't call it laundering.
I agree the imagery is not helpful. However, these privacy preserving tools are very important for digital currency.
Currently, if you receive money it is possible to trace it back to some event, be it a theft, or funds used in some legal or moral grey area.
While these tools will make it easier to launder money, they will remove this "taint".
It is possible and likely that governments will attempt to censor transactions using these "tainted" funds, seriously damaging fungibility.
Many believe that for digital currency to succeed, it must be fungible - the title of the Bitcoin whitepaper is "Bitcoin: A Peer-to-Peer Electronic Cash System".
The difficulty in tracing Bitcoin is probably holding the technology back as a routine payment system. Every few months, there's another big ripoff, and the money is rarely recovered. These are usually blamed on outside "hackers", but most of the time it's an inside job.
Untraceable remote money transfers to anonymous parties are the scammer's dream. This makes Bitcoin a scam magnet.
I would argue that this comes from attempts to centralize a fundamentally decentralized currency.
With a centralized currency, the central repositories of currency have ultimate control over the currency: if a mistake or fraudulent transfer occurs, they revert it.
With a decentralized currency, the central repositories of currency have no real control over the currency if they lose control of the keys.
The solution, of course, is don't centralize. At a low level of course, theft can still occur, but notably, if a bank decides to steal from you by i.e. introducing fees or whatever, you they can do that and you can't really do anything about it.
What would a decentralized way to buy BTC for USD/whatever look like? That sounds like a nightmare to design without a trusted 3rd party because you're mixing reversible and irreversible transactions.
Another would be to only store the centralized currency, and only facilitate transactions. So the person with USD deposits USD into the facilitator's account and provides a Bitcoin address to the facilitator. When the person with Bitcoin decides to make the trade, they make a Bitcoin deposit to the facilitator's account. The Bitcoin deposit automatically gets forwarded to the person who deposited the USD, and the USD gets forwarded to the person who had Bitcoin.
At no point in this transaction does the facilitator store Bitcoin.
Wouldn't that require the escrow agent (your facilitator) to either only make deals between active users (so that they can sign the transfer transaction from Alice [selling] to Betty [buying]) or for the escrow to have some multipart key with Alice that has a blank recipient address? I'm not sure we've gotten away from the escrow/exchange storing BTC there and it sounds like a very unliquid marketplace.
Yes, it would require deals to happen between active users. This does to some extent reduce liquidity, but I am skeptical that such liquidity is more valuable than security from having all your money stolen.
If this is money laundering - than cash is money laundering. Plain and simple.