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Chainalysis CTO said blockchain is easier to trace than paper money

lancengym.medium.com

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Re: Chainalysis CTO said blockchain is easier to trace than paper money

#291

Post by gist »

O__________O wrote: post #131
alexb_ wrote: post #80

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…

My understanding is that much like tracing blockchain transactions, cash is much easier to trace for governments than most people realize. For example, it is my understanding, most banks and ATMs scan serial numbers when receiving or distributing cash; oddly, banks will not give you itemized list of serial numbers of the bills they distributed, which would be useful in cash seizures. Also my understanding that most c…

> most banks and ATMs scan serial numbers when receiving or distributing cash

That is potentially a clue. But in itself would not answer to a legal certainty (that one fact) that a bill with a serial number in a nefarious transaction means the person who withdrew it (from the ATM) made the transaction.

1) I can withdraw $300 from an ATM and purchase a coffee (using $5 of that). That $5 might be refunded as change to someone who then uses it (to buy chinese food) and then as change to another person. And that person purchases something that they shouldn't.

2) Of course at scale with large amounts (say $300 withdrawn 10 times to equal $3000) used in a nefarious transaction yes they could trace back but they still wouldn't have proof that the person withdrawing it didn't pass it to someone else (who then used it). Further they can't require you (in the US) to disclose what you did with the money after you withdrew it. However they might try to convince you you have to answer and tell them.

3) That said of course like with anything again yes it would point them in some way to you and then might be able to find another way to then focus on you and get what they need (in order to get a warrant to do a search or get other records released).

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#292

Post by ericd »

notch656a wrote: post #219
ericd wrote: post #204

Earlier quoted context omitted.

What about when it comes to paying taxes on those earnings?

Gains can be reported to the IRS without revealing their source.

Sounds like a recipe for an audit, at least once they can clear their backlog. At which point, I'm pretty certain they're going to want to know more than "generic cap gains sale"/"revenue paid to me in cryptocurrency". They pretty clearly do not want anonymity in the flow of money.

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#293

Post by anonporridge »

calibas wrote: post #286
anonporridge wrote: post #266

Earlier quoted context omitted.

Bitcoin advocates have generally been exceedingly clear about these kinds of things. To the point of begging people to listen. From "not your keys, not your coins" to "KYC/AML bought coins are easy to trace" to "please, for the love of god, don't give your coins to the centralized Celsius to try to eek out an extra 10% gains you greedy dumbass". People consistently don't listen. Crypto pumpers on the other hand tend…

All the "Bitcoin advocates" that I've ever talked to couldn't tell a merkle tree from an oak.

That speaks more about the people you're surrounded by than it does the incredible people actually doing the very interesting work of developing the bitcoin ecosystem behind the scenes.

It is a shame that your only exposure to the space comes from pump monkeys who don't understand that a blockchain is barely more than a distributed linked list (hell, it's basically just glorified git) and the real innovation was not the data structure, but the integration of proof of work to create Byzantine fault tolerance.

I'm pretty sure the only difference between a Merkle tree and an Oak is the theoretically infinite branching. Is that right? /s

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#294

Post by superkuh »

Spivak wrote: post #60
superkuh wrote: post #8

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.

> When the US justice department declared that credit card companies had to stop processing donations to wikileaks I could still donate through bitcoin. If any appreciable amount of money was sent this way you would see blacklisting of bitcoin addresses where sending / receiving money from that address would get you in legal trouble. Bitcoin creates a situation where you cannot be physically prevented from sending th…

Right. It calls their bluff and makes them actually present a case in a court of law. There are no regulations or laws involved when the DOJ tells payment processors to blacklist journalists they don't like and the payment processors are happy to comply without it.

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#295

Post by LittlePeter »

NegativeK wrote: post #132
soupfordummies wrote: post #126

Earlier quoted context omitted.

I don't understand how it's legal for vendors to actually refuse cash. I get it that there's multiple reasons they wouldn't want to and they can say it's their policy, etc but it's on the paper money itself "LEGAL tender for ALL debts public and PRIVATE". It's like when you hear the stories about people paying debts with buckets of coins. Obviously a huge PitA but technically allowed.

https://www.federalreserve.gov/faqs/currency_12772.htm > Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve Banks and national banks] are legal tender for all debts, public charges, taxes, and dues." This statute means that all U.S. money as identified above is a valid and legal offer of payment for debts…

Hmm what would happen if I sit down, eat some Taco's and when it is time to pay, I claim I have cash only? Aren't they a creditor in that case?

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#296

Post by yellowapple »

acdha wrote: post #224
yellowapple wrote: post #147

Earlier quoted context omitted.

> I don't understand why even this is sensible. Why not just use a database? Who's gonna run it? Any individual company in the chain has a vested interest in fudging the data, and the technical means to do so. A private third-party lacks oversight (and thus could also be given a vested interest in fudging data). A government agency could do it (assuming one's government is trustworthy, which is often a poor assumptio…

The problem is that blockchains cost more and add significant performance reliability problems without adding trust. You could solve this problem using PKI with orders of magnitude lower computational and storage cost, and that'd remove the requirement to have an always-on network service. However, that's still missing the point that this is fundamentally a problem about humans in the real world and the technology ca…

> The problem is that blockchains cost more

From each participant's perspective they cost far less, both in terms of implementation and ongoing maintenance, than attempting to build and run a centralized database oneself (and if you're gonna match a blockchain's trustworthiness, every participant would indeed need to run a database oneself).

> and add significant performance reliability problems

1. Nothing beats the performance of /dev/null.

2. They do the precise opposite of adding reliability problems; they're in fact notoriously difficult to bring down given the sheer degree of data replication.

> without adding trust.

The comment to which you replied describes at length how they add considerable degrees of trust. They only "don't add" trust if - again - every participant is running one's own database, at which point - if they're expected to agree with each other - you've got an ad-hoc, informally specified, bug-ridden, ludicrously expensive version of half of a blockchain.

> If my inspector is being paid off, he'll do the same thing for the blockchain record that he was doing with paper.

Which would then be public and uncensorable evidence against that inspector.

> If things are being tampered with in shipping, the same people will do the same things and you'll have the same dodgy goods arriving at their destination except they'd now have valid but inaccurate blockchain records.

And that inaccuracy would - upon detection - become public and uncensorable evidence against those tamperers.

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#297

Post by willmadden »

saurik wrote: post #85
insanitybit wrote: post #11

Earlier quoted context omitted.

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".

Well, "crypto" does allow that--and has for years!--using zero-knowledge proofs (as in Zcash), at least within some bounds (that I would say are quite reasonable for conversational purposes... hell: someone in the government seems to think this stuff works, hence the sanctions on Tornado Cash); Bitcoin , one very specific technology from crypto, however, does not.

This is the only informed comment in the entire thread.

I came here hoping for an interesting discussion about Monero, ZCash, Tornado Cash on Ethereum, and Halo/ZK proofs. Disappointing!

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#298

Post by calibas »

anonporridge wrote: post #293
calibas wrote: post #286

Earlier quoted context omitted.

All the "Bitcoin advocates" that I've ever talked to couldn't tell a merkle tree from an oak.

That speaks more about the people you're surrounded by than it does the incredible people actually doing the very interesting work of developing the bitcoin ecosystem behind the scenes. It is a shame that your only exposure to the space comes from pump monkeys who don't understand that a blockchain is barely more than a distributed linked list (hell, it's basically just glorified git) and the real innovation was not…

FYI, I regularly interact with people who actually understand blockchain and cryptocurrencies, so your assumptions are a little mistaken. None of those people are telling me to buy Bitcoin though, so I don't count them among "Bitcoin advocates".

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#299

Post by alfnor »

TomSwirly wrote: post #280
ViceCitySage wrote: post #278

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 Moner…

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.

I'd happily pay taxes for my nootropics.

Re: Chainalysis CTO said blockchain is easier to trace than paper money

#300

Post by willmadden »

TomSwirly wrote: post #280
ViceCitySage wrote: post #278

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 Moner…

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.

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.
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