Cryptocurrencies and privacy

  • Thread starter fluidistic
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  • #1
fluidistic
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I would like to point out that most (all minus one?) cryptocurrencies do not allow transactions to be anonymous, or at least, not without using crazy high level geekiness tricks.
But there is (at least) one, apparently, that does it: Monero. Monero has thus attracted the attention of scammers and bad people buying/doing illegal things, I am guessing more so than Bitcoin as of today. With this pretext in mind, Monero is being chased down by governments (an example of yesterday or 2 days ago is the delisting of Monero from Kraken in the UK. Kraken is a well known cryptocurrency exchange website, where people can trade cryptocurrencies).
In a future where people will use more and more cryptocurrencies, I am worried that it might be very hard to use anonymous cryptocurrencies even in countries where "freedom" is supposed to exist. Cash is disappearing (and its anonymity tained by cameras coupled with facial recognition), and Monero-like cryptocurrencies are the closest cryptocurrencies to cash that there can be.
There is a free book, "Mastering Monero" which lists a few drawbacks of non anonymous cryptocurrencies. I share this passage with you, I found it inspiring...:

• Price manipulation: Sofia is the only mechanic in a small
town. One of her customers paid for an oil change with Bitcoin.
Sofia later looked up his address on the ledger and saw that
the customer's wallet contained enough Bitcoin for a new
Lamborghini. Next time he needed a repair, she doubled her
prices. If the customer had used Monero, Sofia would have been
unable view his balance or use such information to manipulate
prices.
• Financial surveillance: Oleg's parents send him some Bitcoin to
pay for textbooks, then continue to snoop on his Bitcoin address
and activity. A few months later, Oleg sends some leftover Bitcoin
to the public donation address for an organization that does not
align with his parents' political views. He does not realize that
they are still monitoring his Bitcoin activity until he receives a
furious email from his parents, berating him. If Oleg had used
Monero, his family would not have been upset due to prying
into his transaction activity.
• Supply chain privacy: Kyung-seok owns a small business
providing family catering services for local events. A large food
company uses blockchain tracing to identify most of his regular
clients. The corporation uses this list to contact Kyung-seok's
customers, offering similar deals for 5% less. If Kyung-seok's
business used Monero instead, its transaction history could
not have been exploited by rival businesses seeking to steal his
customers.

• Discrimination: Ramona finds her dream apartment,
conveniently close to her new job in a great neighborhood.
Every month, she promptly pays her rent in Bitcoin. However the
landlord notices that some of the payments track back to a legal
online casino. The landlord personally despises gambling, and
unexpectedly chooses to not renew Ramona's lease. If Ramona
paid rent with Monero instead, the landlord would not be able
to review its history and discriminate based on her legal source
of income.
• Transaction security/privacy: Sven sells a guitar to a stranger,
and gives the buyer a Bitcoin address from his long-term savings
wallet. The buyer checks the blockchain, sees the large sum
of money that Sven has saved up, and consequently robs him
at gunpoint. If Sven had instead given a Monero address for
payment, the buyer would not have been able to view Sven's
wealth.
• Tainted coins: Loki sells some of his artwork online to save up
for college. When he pays tuition, he is shocked to receive a
“payment INVALID” error from the school. Unbeknownst to
Loki, one of his paintings was purchased using some Bitcoin that
was stolen during an exchange hack the previous year. Since the
school rejects any payment from a blacklist of “tainted” Bitcoins,
they refuse to mark the bill “paid.” Loki is in an extremely
difficult position: the Bitcoin that he saved has already been
transferred out of his account, yet the tuition bill is still unpaid.
This entire situation would have been avoided if Loki sold his
paintings for Monero instead, since its fungibility precludes
tracking or blacklists.
In the future, I hope people do not give up the privacy they could have if they used anonymous cryptocurrencies.
 

Answers and Replies

  • #2
phinds
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In the future, I hope people do not give up the privacy they could have if they used anonymous cryptocurrencies.
So you're good w/ money launders, drug lords, blackmailers, spammers, and other various miscreants being able to hide their transactions.
 
  • #3
BWV
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• Discrimination: Ramona finds her dream apartment,
conveniently close to her new job in a great neighborhood.
Every month, she promptly pays her rent in Bitcoin. However the
landlord notices that some of the payments track back to a legal
online casino. The landlord personally despises gambling, and
unexpectedly chooses to not renew Ramona's lease. If Ramona
paid rent with Monero instead, the landlord would not be able
to review its history and discriminate based on her legal source
of income.
• Transaction security/privacy: Sven sells a guitar to a stranger,
and gives the buyer a Bitcoin address from his long-term savings
wallet. The buyer checks the blockchain, sees the large sum
of money that Sven has saved up, and consequently robs him
at gunpoint. If Sven had instead given a Monero address for
payment, the buyer would not have been able to view Sven's
wealth.
• Tainted coins: Loki sells some of his artwork online to save up
for college. When he pays tuition, he is shocked to receive a
“payment INVALID” error from the school. Unbeknownst to
Loki, one of his paintings was purchased using some Bitcoin that
was stolen during an exchange hack the previous year. Since the
school rejects any payment from a blacklist of “tainted” Bitcoins,
they refuse to mark the bill “paid.” Loki is in an extremely
difficult position: the Bitcoin that he saved has already been
transferred out of his account, yet the tuition bill is still unpaid.
This entire situation would have been avoided if Loki sold his
paintings for Monero instead, since its fungibility precludes
tracking or blacklists.

Or maybe just use Visa or ACH?
 
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  • #5
StevieTNZ
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I'm pretty sure discrimination on the grounds of where the income comes from to pay rent would be illegal in most (normal) countries.
 
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  • #6
russ_watters
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It's never occurred to me that I should want complete anonymity in my financial transactions. I still don't see it.
 
  • #7
fluidistic
Gold Member
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So you're good w/ money launders, drug lords, blackmailers, spammers, and other various miscreants being able to hide their transactions.
If there is the hidden fact that everyone has to give up on their financial anonymity as well, then yes.

About.the argument to use visa or ach, then you lose the benefits of cryptocurrencies of not having to rely on a 3rd party.

Alright, I can think of several other situations where one would prefer to do anonymous transactions but they are likely not goingbto convince you if the book's ones do not.

Sure, I can understand that you do not care about having a total anonymity, but you should certainly not expect the average Joe to want the same. I personally would rather make anonymous payments if I had the choice, all the time. For some people it might be a life or death difference, so I am in favor of at least having the choice and letting people choose, too.
 
  • #8
Office_Shredder
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I have to say, I hadn't considered all the potential negatives of how public Bitcoin was, this was educational.

That said, some seen maybe fine. Prices being immediately public have been enormously beneficial for the stock market, having it be true in other places might be good?
 

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