Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Defending Privacy in Crypto

blog.coinbase.com

Post reply on HN
Print view View original

81–87 of 87 posts

Re: Defending Privacy in Crypto

#81

Post by miracle2k »

Loic wrote: post #8

It is interesting that I have strictly no empathy for the people defending "privacy" in crypto. I have it fully for the ability to pay in cash for our every day stuff. Privacy in crypto is basically reallowing tax havens in the " digital " world where we spent years to try to curtain them in the " real " world. A good friend of us happens to be working at a high level at the EU commission. Discussing about Bitcoin/Cr…

"ability to pay in cash for our every day stuff" is curiously weak. "The war on cash" has resulted in a great number of restrictions over the years, precisely because it is such an effective way to avoid taxes. What does your support for "privacy" mean here? Which rules do you support rolling back? Which of the coming further restrictions will you oppose?

Re: Defending Privacy in Crypto

#82

Post by nappy »

ajvs wrote: post #25
nappy wrote: post #14

Earlier quoted context omitted.

Pure privacy, without limitation, in money transfers would be catastrophic. Despite the consternation of hyperextreme libertarians sitting in their armchairs, the ability for the government to collect tax revenue is a pretty good thing and has broad societal benefits. Also allowing free flow of funds to terrorist groups is bad.

North Korea already funds it's nuclear program with crypto so it's a bit late for that. Also despite crypto allowing for pure privacy already with coins like Monero, this hasn't stopped tax revenue. It's not a black-or-white issue, because only a tiny fraction of people will utilise this privacy due to technical hurdles and other limitations compared to paying with cash or card.

There's a reason Monero doesn't show up on exchanges that comply with US KYC rules.

Re: Defending Privacy in Crypto

#83

Post by searchableguy »

manholio wrote: post #72
searchableguy wrote: post #69

Earlier quoted context omitted.

Great idea. Tornado cash already implemented it years ago. :p https://tornado-cash.medium.com/tornado-cash-compliance-9abb...

> it is entirely up to you to either reveal your transactions to parties of your choice or keep them private forever. Keep in mind, that none of it is possible without the Tornado.cash Note and it is your responsibility to keep a record of it if you want to show the origin of funds later. That's just a digital timestamp service, only a small part of what I'm talking about. Mind you, I don't claim any novelty in the p…

It is more than a timestamp.

What you have proposed is technically infeasible to implement if you want to preserve properties of blockchain. It would be no different than a bank because KYC will add inherent centralization and fragmentation in the entire system.

So we need a compromise here because either way you cannot retroactively enforce KYC approved wallet to participate on-chain. If you do, it will be optional in that case the solution implemented by tornado is decent and does not require giving data to brokers who often sell it without permission.

Government can directly subpoena data from individuals when investigating them.

Any crypto to fiat ramp is already KYCed and businesses dealing with payments require KYC beyond a certain value transaction so in practice, the impact of KYC at on-boarding will be negligible. Not to mention, KYC can be easily faked by actors with significant stake in a globalised system.

Furthermore, the data does not support that money laundering is a bigger problem as percentage of transactions in crypto than traditional finance. The AML laws have been largely ineffective in practice in traditional finance with huge cost of compliance and degradation in experience for consumers & businesses.

So we need to think of a better solution to discourage money laundering than mass surveillance.

Re: Defending Privacy in Crypto

#84

Post by can16358p »

nl wrote: post #32
can16358p wrote: post #4

Good (and TBH unexpected) move by Coinbase. If we lose the foundations of privacy at this stage, the future of crypto would be severely affected. Crypto and digital assets should be free from regulation, even if it brings side effects (e.g. laundering). The moment we centralize crypto by state, we lose the war against corrupted states and centralization. While I don't support bad actors that use crypto in any way, I…

> Crypto and digital assets should be free from regulation, even if it brings side effects (e.g. laundering). It's far from clear to me why on earth crypto should be free from regulation at all.

Because governments and central entities are the most corrupted organizations on Earth.

Re: Defending Privacy in Crypto

#85

Post by TimeBearingDown »

nappy wrote: post #82
ajvs wrote: post #25

Earlier quoted context omitted.

North Korea already funds it's nuclear program with crypto so it's a bit late for that. Also despite crypto allowing for pure privacy already with coins like Monero, this hasn't stopped tax revenue. It's not a black-or-white issue, because only a tiny fraction of people will utilise this privacy due to technical hurdles and other limitations compared to paying with cash or card.

There's a reason Monero doesn't show up on exchanges that comply with US KYC rules.

Kraken…?

Re: Defending Privacy in Crypto

#86

Post by manholio »

searchableguy wrote: post #83
manholio wrote: post #72

Earlier quoted context omitted.

> it is entirely up to you to either reveal your transactions to parties of your choice or keep them private forever. Keep in mind, that none of it is possible without the Tornado.cash Note and it is your responsibility to keep a record of it if you want to show the origin of funds later. That's just a digital timestamp service, only a small part of what I'm talking about. Mind you, I don't claim any novelty in the p…

It is more than a timestamp. What you have proposed is technically infeasible to implement if you want to preserve properties of blockchain. It would be no different than a bank because KYC will add inherent centralization and fragmentation in the entire system. So we need a compromise here because either way you cannot retroactively enforce KYC approved wallet to participate on-chain. If you do, it will be optional…

KYC is by definition a form of centralization - the government endows a well known private entity with the authority to run financial transactions on behalf of individuals, subject to certain constraints and information gathering. Since any form of practical KYC involves centralization, my proposal is to have an open system where brokers can join and compete amongst themselves, and where hopefully you might find one that does not sell your data.

There is no logical compromise between a KYC value transfer system and a non-KYC system, you either have auditable customer identity or you don't, in which case all is lost due to the Sybil attack: the money launderer can create a limitless number of pseudonymous identities (for example in Bitcoin, wallets) and transfer value both om chain, and off chain, by selling those funded identities (see for example the method used by Chipmixer, where the actual value transfer happens after the "clean" coins have been injected into the blockchain, sometimes months after).

That fiat converters are obliged to follow KYC is irrelevant to the issue being discussed here: blockchains as money laundering machines. The police will never ask a successful criminal for their tornado proof because police will most often be unable to follow the proceeds of crime through the pseudonymous value mixer that is the blockchain.

> the data does not support that money laundering is a bigger problem as percentage of transactions in crypto than traditional finance. The AML laws have been largely ineffective in practice in traditional finance

Anti-money laundry coverage is spotty in the traditional financial system. Where it is employed, it's very effective in exposing criminals, curbing their profits, thus motivation for crime, or pushing them into risky and noisy beheaviours (ex. truckloads of cash). Current blockchains are by design unable to comply with the most basic AML requirements and it's sheer lunacy to brush that problem aside or claim that crypt is in way comparable to physical cash; it's crack cocaine vs weed.

Post reply on HN