Something I don't understand. What's the point of obfuscation if ultimately you can be caught when you try to convert it to fiat?
If I have Btc and I convert it to monero to prevent tracking, how do I get it back to money in my bank account without being traceable?
Let me give you a realistic answer. There are soft and hard criminals. For example: soft criminals buy drugs, hard criminals sell drugs. The soft criminals convert from traditional to digital money (plus maybe a little obfuscation), order and hope for the best. The hard criminals have to solve the difficult problem of reversing that conversion. They'll just have some homeless person open a bank account and then use that for the conversion. If the homeless person gets busted, it better keep its mouth shut - or else.
The idea is to not convert it into fiat. Create a parallel economy where monero is the actual currency, not some intermediary currency. Price things in monero.
Where would the trust come from? I mean the trust that people really do what they say they're going to do in the real world - like ship you the goods, do the work you paid for, don't immediately kick you out of the servers you paid to access etc. A shadow economy doesn't run itself, who's going to stick their neck out to even try to make it work?
Crypto lets you decouple trust from ownership, that's one of its main selling points.
You can have a Visa-like network that supports chargebacks, but design it in a way that the dispute arbitrators cannot seize your money. If you report a transaction, they can either decide to release the money to the merchant or return it back to you, but the contract logic prevents them from doing anything else with that money. If both sides agree that the transaction has successfully taken place, it can be released automatically, despite the arbitrators' wishes.
This is something you can't do in trad fi, so we use laws and legal contracts as "hacks" to make it somewhat possible.
This sounds terrible outside for very rare edge cases. It adds so much friction to disputed transactions. And in the end rather than beholden to the law you’re beholden to a third party arbiter. Sounds terrible in a sector rife with grifters and scams.
That's a completely separate issue. It's got nothing at all to do with the currency being used. USD has exactly the same problems, as does every other currency on earth.
Society's answer to that is violence. More specifically, the threat of violence. If people don't do what's expected of them, at some point people with guns will show up and the violence will commence, and it will continue until the desired order is restored.
Stuff like laws and courts are just extra steps towards that violence. No matter the context, the threat of violence looms eternal and that's what makes people behave reasonably.
There is no threat of violence if the trading parties maintain anonimty. And even if they don't, there is little realistic threat unless the victim can prove to authorities who the offending party was.
Where does the trust come from for transacting in dollars, or Spanish pieces of eight? I'm not saying the monero economy is likely but there's absolutely no reason why it couldn't theoretically happen
Courts, law enforcement and contract law. All of which will take a dim view of using a currency which appears designed wholly to make their function harder.
That's the wrong answer. The existence of tokens predates the existence of government. It's the next step after barter. The correct answer is reputation. A vendor who cheats his customers builds up a bad reputation, and the only way he can keep doing it is by changing customer bases, for example by moving to a different town. Think of the traveling snake oil salesman who moves on once people realize his remedies don't work.
The courts etc are there so we don’t have to create a posse and ride out to find the snake oil salesman. You _can_ have commerce without them but it’s much higher friction. So if a crypto wants me to abandon the existing systems it needs to show it creates less friction.
There's no need for a mob, government-backed or not. A vendor who scams his customer base is harvesting its good will, and eventually it will run out and he'll no longer able to do business.
Crypto’s use case isn’t for the layman. It’s for countries that aren’t aligned with America to have a separate currency system. Doubly useful for bypassing sanctions.
A crypto advocate would argue smart contracts can fulfil that role, but also that applies in developed countries but not in the countries where the vast majority of the world population lives.
I think if a true crypto economy does emerge anywhere it's likely to be Nigeria, Lebanon etc - places with a significant population of educated entrepreneurial people but where the state is run abysmally and you can't rely on those institutions anyway
It seems to me that the crypto absolutists have it backwards. You can’t solve the problem of failed states by changing the technology of currency, because the state is there to solve for the counterparty risk at the point of exchange.
The alternative to governments monopoly on violence for enforcement, no matter if you exchange in monero or giant stone discs, is broad use of vigilante violence.
So while crypto seems like an interesting technology for moving money around, it seems like it doesn’t solve for the point of exchange problem and thus crypto that focuses on making that difficult for government mediation are bound to be only useful for illegal activities.
There is no counterparty risk for the seller in the traditional sense with bitcoin or monero, they're bearer assets, once the transaction is confirmed in your wallet there's no risk for you. You don't need to use violence to make sure you get paid?
What you actually have is the opposite problem (in a sense) - the transaction is irreversible, the seller will receive payment and keep it even if they shouldn't (i.e fraud). So there is more risk for the buyer than in a fiat system where transactions can be reversed by legal processes
That’s all counterparty risk. If you deliver the payment before the service/good the buyer takes on the risk. The opposite is true if the payment or good is delivered first.
You can dial the risk in either direction with any payment scheme (20% down balance due on delivery etc) but you can’t eliminate it.
Right yep, I understand what you mean. Yes, ultimately you need some kind of dispute mechanism that probably requires actual human intervention.
A good example is how disputes work on P2P crypto exchanges like bisq - you have a crypto contract of some kind that holds funds in escrow, but ultimately disputes are resolved by a team of actual humans who look at the facts and make a decision, not everything can be "code is law"
Courts and law enforcement certainly provide these things, but they are not required. The inherent design of blockchains makes them trustworthy (an oversimplified statement), which is even better.
Blockchains don’t, and can’t, solve for the risk of the off chain component of an exchange.
The transactions aren’t atomic so someone is taking on counterparty risk. One of governments prime responsibilities is dealing with that risk, no matter the currency in question.
The point is being like a submarine: nobody really knows where you are moving (transactions) and where you will surface (which other crypto or fiat).
On the example you give, large majority of people just pay and accept payments using monero natively. When you are talking about large amount of money, then it is worth a visit to places like El Salvador where you have a bank account with BTC. The conversion tends to take place in exchanges outside 1st world supervision and from El Salvador you can convert BTC to other currencies according to the exchange values or just use it with a credit card.
If you want to convert smaller amounts in Europe without tracing, mostly a matter of settling the transactions with small providers albeit you should be prepared to pay a fee between 20% to 30% as commission for the service.
Well, what you're asking about is basically a business. Most folks make bank just by setting up that kind of circle. I'd suggest reading up on front businesses like luxury restaurants that sit empty most of the time. it's such a classic play, everyone knows it. If you've got BTC and want to get it back into your bank account, hit me up anytime.
Fungibility and traceability are orthogonal. Equities markets transactions are highly traceable and also highly fungible.
Bitcoin's fungibility is limited by its incredibly slow transaction speed. (This is true of all cryptocurrencies AFAIK -- even the fastest ones that are only capable of 100K TPS at best.)
Correcting myself: I said "fungible" but meant "liquid." Bitcoin is reasonably fungible today, though not as easily as fiat currency. Traceability hasn't done much to reduce Bitcoin's fungibility AFAICT.
#2: the author wrote "This attack is not realistic. ... This is why everyone needs to run their own node"
#3: "digital forensic approach can still reveal sensitive information by examining off-chain artifacts such as memory and wallet files"
So...
#1 seems to have been mitigated.
#2 seems to not be an issue if you run your own node.
#3 seems to not be an issue if you don't let others do forensic analysis on your own computer (not the Blockchain).
It's good that people do this research to help make Monero better. I am not criticizing the people that published what OP linked to. But of course OP's post is like saying "What makes you think paint is safe? Here's a post about how paint used to include lead."
The fact that it's delisted from most exchanges because of its privacy features; if it was as traceable as Bitcoin, then the feds would allow it. What I see from these links is that it's not fully "traceable" and more educated guessing via heuristics.
Lightning (A layer-2 network based on Bitcoin) is similarly untraceable as Monero, without being an actual cryptocurrency. Yet the fed doesn't seem to concerned, probably also because few people and institutions understand Lightning, and the fed is not one of them or doesn't want to go against Bitcoin.
Old paper, old link. Most of it is not relevant anymore today. They also do not compare, as Lightning is NOT a cryptocurrency nor does it try to be. It is still Bitcoin.
Please kindly provide evidence for your claims and please be factual to point the current privacy concerns still open today and what has been addressed (if at all).
Lightning is a token representing bitcoin, same as USDT representing USD.
The fungibility of Bitcoin is achieved through layer-2 networks, such as Lightning. No, it is not another cryptocurrency, it is just another technological layer. You are still transfering bitcoins.
Trumps "Bitcoin payment" portrayed extensively by the media was done in the Lightning network.
The current implementation of monero's tech is less advanced than zcash, but stealth addresses are as secure as ECC gets. The idea comes from ECDH.
The weakness in monero's cryptography is dependence on ring signatures, which will be improved with the FCMP++ upgrade. In other words, it is an issue of sender privacy. Stealth addresses protect recipient privacy.
Alice and Bob may have a surprise in store --- the trust issues, the cost issues and the hoops they'll need to jump through in order to buy Monero, store it in a custodial wallet and then convert it back into fiat if needed.
I didn't find a major trust or cost issue. I just use kraken. Or you can use any other fiat-to-crypto exchange and then take it to a crypto-to-crypto exchange.
I think the bigger obstacle to most people is just the idea that cryptocurrency is difficult, and the idea that buisnesses are trustworthy by default.
This article left me more confused than enlightened. I recommend reading https://risencrypto.github.io/Monero/ instead as it actually explains how the cryptography fits into Monero.
The root of the word "crypto" goes all the way in history as "to hide".
Monero has since many years been the only option worthy of truly being called a cryptocurrency. Doesn't even make sense to use anything where anyone can see all the value in your private wallet and where you are spending them.
The rest should really be designated as "virtual coins" or just call them "casino coins" because that is their use case.
Something I don't understand. What's the point of obfuscation if ultimately you can be caught when you try to convert it to fiat? If I have Btc and I convert it to monero to prevent tracking, how do I get it back to money in my bank account without being traceable?
Let me give you a realistic answer. There are soft and hard criminals. For example: soft criminals buy drugs, hard criminals sell drugs. The soft criminals convert from traditional to digital money (plus maybe a little obfuscation), order and hope for the best. The hard criminals have to solve the difficult problem of reversing that conversion. They'll just have some homeless person open a bank account and then use that for the conversion. If the homeless person gets busted, it better keep its mouth shut - or else.
The idea is to not convert it into fiat. Create a parallel economy where monero is the actual currency, not some intermediary currency. Price things in monero.
Where would the trust come from? I mean the trust that people really do what they say they're going to do in the real world - like ship you the goods, do the work you paid for, don't immediately kick you out of the servers you paid to access etc. A shadow economy doesn't run itself, who's going to stick their neck out to even try to make it work?
Crypto lets you decouple trust from ownership, that's one of its main selling points.
You can have a Visa-like network that supports chargebacks, but design it in a way that the dispute arbitrators cannot seize your money. If you report a transaction, they can either decide to release the money to the merchant or return it back to you, but the contract logic prevents them from doing anything else with that money. If both sides agree that the transaction has successfully taken place, it can be released automatically, despite the arbitrators' wishes.
This is something you can't do in trad fi, so we use laws and legal contracts as "hacks" to make it somewhat possible.
This sounds terrible outside for very rare edge cases. It adds so much friction to disputed transactions. And in the end rather than beholden to the law you’re beholden to a third party arbiter. Sounds terrible in a sector rife with grifters and scams.
That's a completely separate issue. It's got nothing at all to do with the currency being used. USD has exactly the same problems, as does every other currency on earth.
Society's answer to that is violence. More specifically, the threat of violence. If people don't do what's expected of them, at some point people with guns will show up and the violence will commence, and it will continue until the desired order is restored.
Stuff like laws and courts are just extra steps towards that violence. No matter the context, the threat of violence looms eternal and that's what makes people behave reasonably.
There is no threat of violence if the trading parties maintain anonimty. And even if they don't, there is little realistic threat unless the victim can prove to authorities who the offending party was.
Where does the trust come from for transacting in dollars, or Spanish pieces of eight? I'm not saying the monero economy is likely but there's absolutely no reason why it couldn't theoretically happen
Courts, law enforcement and contract law. All of which will take a dim view of using a currency which appears designed wholly to make their function harder.
>Courts, law enforcement and contract law.
That's the wrong answer. The existence of tokens predates the existence of government. It's the next step after barter. The correct answer is reputation. A vendor who cheats his customers builds up a bad reputation, and the only way he can keep doing it is by changing customer bases, for example by moving to a different town. Think of the traveling snake oil salesman who moves on once people realize his remedies don't work.
The courts etc are there so we don’t have to create a posse and ride out to find the snake oil salesman. You _can_ have commerce without them but it’s much higher friction. So if a crypto wants me to abandon the existing systems it needs to show it creates less friction.
There's no need for a mob, government-backed or not. A vendor who scams his customer base is harvesting its good will, and eventually it will run out and he'll no longer able to do business.
Crypto’s use case isn’t for the layman. It’s for countries that aren’t aligned with America to have a separate currency system. Doubly useful for bypassing sanctions.
It's also a useful mechanism by which criminals can store their wealth so that it can't easily be seized by law enforcement.
A crypto advocate would argue smart contracts can fulfil that role, but also that applies in developed countries but not in the countries where the vast majority of the world population lives.
I think if a true crypto economy does emerge anywhere it's likely to be Nigeria, Lebanon etc - places with a significant population of educated entrepreneurial people but where the state is run abysmally and you can't rely on those institutions anyway
It seems to me that the crypto absolutists have it backwards. You can’t solve the problem of failed states by changing the technology of currency, because the state is there to solve for the counterparty risk at the point of exchange.
The alternative to governments monopoly on violence for enforcement, no matter if you exchange in monero or giant stone discs, is broad use of vigilante violence.
So while crypto seems like an interesting technology for moving money around, it seems like it doesn’t solve for the point of exchange problem and thus crypto that focuses on making that difficult for government mediation are bound to be only useful for illegal activities.
There is no counterparty risk for the seller in the traditional sense with bitcoin or monero, they're bearer assets, once the transaction is confirmed in your wallet there's no risk for you. You don't need to use violence to make sure you get paid?
What you actually have is the opposite problem (in a sense) - the transaction is irreversible, the seller will receive payment and keep it even if they shouldn't (i.e fraud). So there is more risk for the buyer than in a fiat system where transactions can be reversed by legal processes
That’s all counterparty risk. If you deliver the payment before the service/good the buyer takes on the risk. The opposite is true if the payment or good is delivered first.
You can dial the risk in either direction with any payment scheme (20% down balance due on delivery etc) but you can’t eliminate it.
Right yep, I understand what you mean. Yes, ultimately you need some kind of dispute mechanism that probably requires actual human intervention.
A good example is how disputes work on P2P crypto exchanges like bisq - you have a crypto contract of some kind that holds funds in escrow, but ultimately disputes are resolved by a team of actual humans who look at the facts and make a decision, not everything can be "code is law"
That is not where trust in the dollar comes from.
It comes from stability. Predictability.
Courts and law enforcement certainly provide these things, but they are not required. The inherent design of blockchains makes them trustworthy (an oversimplified statement), which is even better.
Blockchains don’t, and can’t, solve for the risk of the off chain component of an exchange.
The transactions aren’t atomic so someone is taking on counterparty risk. One of governments prime responsibilities is dealing with that risk, no matter the currency in question.
I think crypto already exists as a parallel economy. Especially between certain states.
You use monero not to exchange for fiat but, for example, oil.
It's developed naturally through reputation systems, escrow, etc.
Yes and some VPNs can be paid in monero
The point is being like a submarine: nobody really knows where you are moving (transactions) and where you will surface (which other crypto or fiat).
On the example you give, large majority of people just pay and accept payments using monero natively. When you are talking about large amount of money, then it is worth a visit to places like El Salvador where you have a bank account with BTC. The conversion tends to take place in exchanges outside 1st world supervision and from El Salvador you can convert BTC to other currencies according to the exchange values or just use it with a credit card.
If you want to convert smaller amounts in Europe without tracing, mostly a matter of settling the transactions with small providers albeit you should be prepared to pay a fee between 20% to 30% as commission for the service.
Well, what you're asking about is basically a business. Most folks make bank just by setting up that kind of circle. I'd suggest reading up on front businesses like luxury restaurants that sit empty most of the time. it's such a classic play, everyone knows it. If you've got BTC and want to get it back into your bank account, hit me up anytime.
> If you've got BTC and want to get it back into your bank account, hit me up anytime.
That's exactly how people get caught.
Well, public offering on the internet, Money laundering as a service :-D
Bitcoin's traceability ruins its fungibility.
Fungibility and traceability are orthogonal. Equities markets transactions are highly traceable and also highly fungible.
Bitcoin's fungibility is limited by its incredibly slow transaction speed. (This is true of all cryptocurrencies AFAIK -- even the fastest ones that are only capable of 100K TPS at best.)
Correcting myself: I said "fungible" but meant "liquid." Bitcoin is reasonably fungible today, though not as easily as fiat currency. Traceability hasn't done much to reduce Bitcoin's fungibility AFAICT.
Equities markets don't have to deal with "tainted" transactions, because every transaction is like a government-approved deed or title transfer.
Bitcoin's transaction rate is artificially limited.
What makes you think Monero is untraceable?
- https://arxiv.org/pdf/2408.05332
- https://darkwebinformer.com/chainalysis-successful-deanonymi...
-https://www.sciencedirect.com/science/article/pii/S266628172...
Your post seems like F.U.D.
#1: "between 2019 and 2023"
#2: the author wrote "This attack is not realistic. ... This is why everyone needs to run their own node"
#3: "digital forensic approach can still reveal sensitive information by examining off-chain artifacts such as memory and wallet files"
So...
#1 seems to have been mitigated.
#2 seems to not be an issue if you run your own node.
#3 seems to not be an issue if you don't let others do forensic analysis on your own computer (not the Blockchain).
It's good that people do this research to help make Monero better. I am not criticizing the people that published what OP linked to. But of course OP's post is like saying "What makes you think paint is safe? Here's a post about how paint used to include lead."
#1 and #2 are public results by market leading blockchain analytics companies that have an alphabet soup of agencies as their major clients.
Do you think they published their current state of the art?
Their current state of art leaks regularly, they inherently have to share it with their customers who are very leaky.
This reply seems like textbook F.U.D.
The fact that it's delisted from most exchanges because of its privacy features; if it was as traceable as Bitcoin, then the feds would allow it. What I see from these links is that it's not fully "traceable" and more educated guessing via heuristics.
I will admit that as far as signal goes that appears to be a big one.
Lightning (A layer-2 network based on Bitcoin) is similarly untraceable as Monero, without being an actual cryptocurrency. Yet the fed doesn't seem to concerned, probably also because few people and institutions understand Lightning, and the fed is not one of them or doesn't want to go against Bitcoin.
It is nowhere near the privacy offered by Monero: https://raphtyosaze.medium.com/privacy-in-lightning-network-...
Old paper, old link. Most of it is not relevant anymore today. They also do not compare, as Lightning is NOT a cryptocurrency nor does it try to be. It is still Bitcoin.
Please kindly provide evidence for your claims and please be factual to point the current privacy concerns still open today and what has been addressed (if at all).
Lightning is a token representing bitcoin, same as USDT representing USD.
It is NOT bitcoin, never was.
> Lightning is a token representing bitcoin
No, it is NOT. It is not even blockchain based. Not providing anything, as you can easily google all of this yourself.
The fungibility of Bitcoin is achieved through layer-2 networks, such as Lightning. No, it is not another cryptocurrency, it is just another technological layer. You are still transfering bitcoins.
Trumps "Bitcoin payment" portrayed extensively by the media was done in the Lightning network.
I'm no expert, but this sounds significantly weaker than ZCash at first glance.
Monero is always private by default.
The "coin" you mention is not private by default, therefore "weaker".
That's true.
The current implementation of monero's tech is less advanced than zcash, but stealth addresses are as secure as ECC gets. The idea comes from ECDH.
The weakness in monero's cryptography is dependence on ring signatures, which will be improved with the FCMP++ upgrade. In other words, it is an issue of sender privacy. Stealth addresses protect recipient privacy.
Alice and Bob may have a surprise in store --- the trust issues, the cost issues and the hoops they'll need to jump through in order to buy Monero, store it in a custodial wallet and then convert it back into fiat if needed.
I didn't find a major trust or cost issue. I just use kraken. Or you can use any other fiat-to-crypto exchange and then take it to a crypto-to-crypto exchange.
I think the bigger obstacle to most people is just the idea that cryptocurrency is difficult, and the idea that buisnesses are trustworthy by default.
Because your auntie is using BTC to pay for her coffee? If anything she's using cashapp.
This article left me more confused than enlightened. I recommend reading https://risencrypto.github.io/Monero/ instead as it actually explains how the cryptography fits into Monero.
Monero is the only real cryptocurrency.
The root of the word "crypto" goes all the way in history as "to hide".
Monero has since many years been the only option worthy of truly being called a cryptocurrency. Doesn't even make sense to use anything where anyone can see all the value in your private wallet and where you are spending them.
The rest should really be designated as "virtual coins" or just call them "casino coins" because that is their use case.
They are not even coins. Coins do not get a pseudonym of their users attached for ever.
When you transfer monero to someone else there isn't a trace of where the money was before nor to whom it belonged.
You might be confusing monero with all the virtual "coins" out there.