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The treasury is expanding the Patriot Act to attack Bitcoin self custody

tftc.io

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Re: The treasury is expanding the Patriot Act to attack Bitcoin self custody

#51

Post by moduspol »

elif wrote: post #23
moduspol wrote: post #11

Earlier quoted context omitted.

> creating and using single-use wallets, addresses, or accounts, and sending [cryptocurrency] through such wallets, addresses, or accounts through a series of independent transactions One could argue that's how normal Bitcoin wallets work. The addresses are deterministic based on your passphrase (or derived private key). The addresses don't need to get reused because there's no real value in doing so, and no real cos…

What you quoted is regarding the use of a SERIES of single use wallets. What is the "normal Bitcoin" use case for funneling money through a chain of throwaway wallets?

The quote is "single-use wallets, addresses, or accounts." If you download any normal Bitcoin wallet today, it'll use a series of words to derive a series of private keys that are used by the wallet. Each one gets a different address.

Then your wallet software is smart enough to treat all the addresses derived as a single wallet. When you go to make a payment, it makes it from the various addresses owned by the wallet. When you want to accept money, you can generate the next address in the series and give a fresh address to someone new.

The net result is that it's not clear from someone looking at the blockchain which addresses actually belong to YOUR wallet and which transactions are you sending money to someone else or yourself.

AFAIK this is how basically all Bitcoin wallets have worked for years. Electrum and Base (formerly bread wallet) as well as Ledger's wallet are the main ones I've used.

EDIT: Just to address this:

> What is the "normal Bitcoin" use case for funneling money through a chain of throwaway wallets?

It makes it so that someone publicly looking at the blockchain can't provably tell how much Bitcoin you have.

We still have to give addresses to people to receive money, so if we were only allowed to have a few, it wouldn't be hard to trace which people own which wallets. And then now you've got a big physical security risk because the world can see how much money you are able to give if they invade your home, kidnap a family member, etc. It'd be like having to put a sign out in front of your house that says, "$600,000 in cash is in here." And they could see the cash.

Re: The treasury is expanding the Patriot Act to attack Bitcoin self custody

#52

Post by cypherpunks01 »

Thorrez wrote: post #27

>Loading up a single address with too many UTXOs degrades the entropy of a public-private key pair and makes it easier to brute force a user's private key. Is there a realistic risk there? If I use an address a million times, how much weaker is it? And how feasible would it be for an attacker to brute for it?

Strictly speaking, loading an address with many UTXOs has no effect on security of the receiving address at all (beyond increasing its public profile).

The security concerns start happening after an address spends a UTXO. Before a P2WPKH (segwit) address is used, only the public key hash is known. In order to spend from it, the full public key needs to be revealed. That's why it's recommended to use single-use addresses, because a quantum computing attack or elliptic curve vulnerability could be used against an address where the attacker knows the public key, but would not work against an address where the pubkey has not yet been revealed.

So, the main security change happens after you spend from an address the first time. Subsequently, there are theoretical vulnerabilities that could occur after an address is spent from many times, but really only if the signer is malicious like dark skippy, or faulty and doesn't properly follow RFC 6979 deterministic signatures, leaking some signature entropy which could be used to crack the private key. The latter has happened with some bad custom wallet implementations, but these attacks are even further in the realm of theoretical, not super realistic, require faulty software/firmware to be implanted into signing devices.

Re: The treasury is expanding the Patriot Act to attack Bitcoin self custody

#53

Post by diggan »

padjo wrote: post #21
tw04 wrote: post #3

[flagged]

Yep, the belief that governments would just give up control of money always seemed incredibly naive to me too.

On the other hand, doesn't all "wouldn't it be nice if it was like this?" look naive and wild before they were implemented/fought through?

Things like "Womens right to vote", "Civil rights" or even democracy was seen as completely backwards and naive at one point in history (and still is in some places), but today we kind of see it as something good to strive for, most of the times.

I'm not saying it's 100% the same for cryptocurrencies, but isn't there a chance it's something similar at least?

Re: The treasury is expanding the Patriot Act to attack Bitcoin self custody

#54

Post by moduspol »

esafak wrote: post #20
btbuildem wrote: post #2

Not a huge surprise, unfortunately.

I'm surprised because I thought the Trump administration was hot on crypto.

The vast majority of (especially less tech-savvy) crypto people are in it for the speculation. They have no interest in self-custody.

Re: The treasury is expanding the Patriot Act to attack Bitcoin self custody

#55

Post by tantalor »

mothballed wrote: post #8
elif wrote: post #5

I'm confused how the connection was made between "here are our guidelines for suspicious activity" and "self custody is outlawed"

It can be hard to figure out exactly what is outlawed with banking interactions. It seems a lot of the KYC/AML stuff is based on industry best practices and guidelines. There's no law you need a state ID with address to open a bank account, but when I tried to open up a bank account without an address I found it basically impossible. The bank will then cite that these practices are what they're held to as law, becaus…

De facto vs. de justo

Re: The treasury is expanding the Patriot Act to attack Bitcoin self custody

#56

Post by diggan »

ceejayoz wrote: post #18
rvnx wrote: post #9

Earlier quoted context omitted.

The solution is to store your money on a wallet where you do not have the private key. This way if you cannot access your funds nobody will be able to coerce you.

Their solution to that is "rot in jail for a long time, then". https://en.wikipedia.org/wiki/H._Beatty_Chadwick

Demonstrating that if you wait long enough (14 years in that case), you can get away without loosing the funds, even from the state?

> On July 10, 2009, Chadwick was ordered released from prison by Delaware County Judge Joseph Cronin, who determined his continued incarceration had lost its coercive effect and would not result in him surrendering the money.

Re: The treasury is expanding the Patriot Act to attack Bitcoin self custody

#58

Post by cypherpunks01 »

Mistletoe wrote: post #15
koakuma-chan wrote: post #12

As someone who hasn't read the article, is holding bitcoin in your own wallet going to become illegal? Also, which wallet do you guys recommend, I use Coinbase but it sucks.

Use a hardware wallet like Trezor.

Yes, and for even higher security, use a bitcoin-only airgapped hardware wallet like Coinkite's Coldcard or Foundation's Passport Core.
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