Topic: BTC Needs A Privacy Layer - page 2. (Read 763 times)

This is a reply to pooya87's replies from the other page of this topic.

Realistically, we can not convince a majority to move to a new experience all of a sudden.  Convincing a verified user to move from a Binance verified account to Bisq is a burden and will realistically not work unless a version of Bisq fast enough, better than Binance in liquidity, technical specifications user-friendliness pops up.  Also, even if a very user-friendly exchange comes to surface anytime soon, how many people do you think would leave an exchange with such low fees for a blockchain that gets congested and such a significant variety of sats/vByte every day with at least 10 minutes of waiting per trade?  I am using Bisq pretty often myself, however I rarely get good rates or liquidity without moving very large sums.  And then, the trade takes so long it sometimes gets annoying.

Centralized Exchanges will not disappear.  In fact, they will likely grow even larger than they are today.  In consequence, if we make Bitcoin more private, we will know for sure which exchange values our privacy and which doesn't.  o_e_l_e_o is more than right.  Realistically, users will always prefer a two-minute account setup over writing down words on a paper, downloading software on their smartphones or personal computers and then assuming the risk for every single action of theirs.  Centralized Exchanges have Customer Support and offer you much simpler details than a Decentralized one would.  Also, try convincing a majority that Decentralized Exchanges are better when all they see on Google News spotlights is articles talking about how much supposed illicit activity there is on there.

I rather think the problem lays in Bitcoin's protocol and not in the existence and usage of Centralized Exchanges.  As mentioned above, if the majority verifies their identity on Centralized Exchanges and they do not have a problem with platforms seizing our funds, then I as a privacy advocate do not have a right to privacy no more.  As a consequence, I am being told that I can achieve the desired privacy with Bitcoin but on my side it gets much more difficult than it sounds.

I can not call this fungibility when you are allowed to deposit your 1 Bitcoin on a Centralized Exchange and be allowed to trade and withdraw it freely while I am always afraid that my Chip-Mixed or Coin Joined Bitcoins are going to be seized anywhere I go, be it stores or exchanges.  Around the forum there are way too many people who mention how easy it is to gather privacy with Bitcoin and only a few real examples of it working as mentioned.

Here is one challenge: try to deposit at least 0.005 Bitcoins coming directly from Coin Join outputs on three different centralized exchanges without getting your funds seized or questioned on any of the three exchanges.  Anyone who is using Wasabi or Samourai knows this challenge can not be won.

Bitcoin is not fungible anymore and whoever says otherwise is wrong.  Furthermore, the situation above forces me to move on to Decentralized Exchanges and private cryptocurrency blockchains.  A while later, the same ones who earlier told me that achieving privacy is easy calls out Monero and Bisq for having an increasingly large volume and number of users, exploding in a said illicit activity I am now apparently part of.  Privacy is so easy to achieve, eh?

-
Regards,
PrivacyG

But then you are no longer decentralized, since there is a third party (the escrow) who has complete control over your coins. The advantage of a platform such as Bisq or LocalCryptos is their non custodial escrow set ups: 2-of-2 multisig between buyer and seller in the case of Bisq, and a locking script requiring codes from both buyer and seller in the case of LocalCryptos. The only way to cut this out altogether is to trade directly with another person, which is fine if you know and trust them, but often that isn't the case. I don't see how a fiat supporting DEX wouldn't become a haven for scammers if it had no escrow.

You're probably right because I'm not good at reading Java but the "seed nodes" and the way they are being used all over the code always seemed to me like servers that aren't just used to find peers but also to coordinate trades (so they receive all trade information).

For trading with fiat, sure. But that should require and escrow fee not an exchange fee.
For trading with cryptocurrencies however this additional fees shouldn't exist.
This also proves the existence of the centralized servers that you connect to and are fully aware of all your trades (is not 100% P2P, there is a middle man who knows everything).

Well, it will be interesting to see what they manage to come up with. As I say, I don't follow the project, but please keep us updated if they make any changes or announcements. I'd be very keen to check out whatever they implement, especially if they do manage to implement decentralized and peer-to-peer fiat-to-crypto trades without requiring KYC.

Bisq doesn't have centralized servers. The software that you run connects peer-to-peer directly to other users over Tor. I'll concede the point about the middle man and fees, though, although I'm not sure how you eliminate them when one side of the trade is using fiat. The only way I can see is if you place complete trust in the other party to release the bitcoin after they have received your fiat payment.

This would be the ideal world. It is easy to do when trading between cryptocurrencies, but how do you do it when one side of the trade is fiat? Maybe there will be a way to trustlessly swap between bitcoin and central bank digital currencies in the future, although I doubt very much that governments are going to like or permit that.

Bisq is probably the most decentralized exchange but it is not truly/fully decentralized.
In a fully decentralized exchange (just like a fully decentralized cryptocurrency) there is no server to connect to and there is no middle man who receives exchange fees (Bisq doesn't check these boxes).
Instead everything happens 100% peer to peer where traders connect to each other and execute scripts (smart contracts) that ensure their safe trade and the only fees they end up paying are the transaction fees (whether it is on-chain or on second layer like lightning network).

I don't have any links with more information but I can see that Fiat option is coming soon in their desktop wallet, like you can see in screenshot I made below.
Not sure how all this will work in real life situations, but I saw that Visa Payment Solution Gleec made partnership with them few days ago.

I've never used AtomicDex because I don't have any interest in the vast majority of altcoins, but it certainly looks like a nice design. Can you provide any links I can read about them adding fiat support though? I quick search of their website, github and subreddit doesn't turn up anything relevant.

It will be used as a base layer, alongside bitcoin. Bisq has supported other base layers in the past, such as LTC and Doge. You can read the relevant github discussion here:


See also:

I am following AtomicDex project, there is no website to use, just download wallet for atomic swaps between Bitcoin with bunch of other altcoins, and they are going to add Fiat trading soon.
Let's see how that works in real life, but it looks very simple to use, there should be no kyc verification, it's much simpler to use than Bisq and there is no need for Bitcoin security deposit.

As I said Liquid (that is not decentralized) will be used as base protocol and Bitcoin main chain will only be used as alternative option.

I know, but that's kind of my point. Any DEX is going to be inherently more complicated to set up and use than a CEX where you can just create an account and hit "buy". The method to getting more people using DEXs is to address that imbalance rather than just create more DEXs. I'm kind of out of the loop here because I've only ever used DEXs and I've used them for so long that they just second nature to me now. What are the biggest hurdles to a newbie using a DEX for the first time? How do we address that?

They are implementing support for it, not moving to it altogether. Bisq as it exists currently will continue to exist and still function as it does (and actually with some improvements to the high fees you mentioned by reducing the number of on-chain transactions required): https://twitter.com/wiz/status/1385980688428507143

I should clarify when I'm talking about DEXs I'm talking about DEXs which allow trading between fiat and bitcoin (or some other cryptocurrency). Bitcoin to altcoin trades are easy to perform in a decentralized and private manner.

Bisq exchange is far from perfect, people need to have Bitcoin security deposit to use it and is it almost unusable when fees are high, not to mention they will soon move to fully centralized Liquid blockstream as their base protocol.
Dex exchanges can actually work very well as we saw in case with other altcoins despite high fees, so we know it's possible for people to switch from centralized exchanges to dex.
There is nothing bad in having a competition with more dexes or improving something and making it better, since this is opensource space afterall.

I don't disagree with that, but we already have Bisq, which fulfills all those criteria and is truly decentralized. Adding more exchanges doing the same thing will only serve to spread the already low DEX volume even more thinly. Bisq can be used by anyone, at any time, anywhere in the world. Adding more DEXs doesn't solve the issue of people not using them.

I don't disagree with this, but it mirrors the old fiat v bitcoin argument. How do you get people to start setting up their own wallets and storing their own keys when they are so used to just swiping a bank card and having a bank deal with all the complicated stuff? How do you get people to start running their own Bisq client and setting up their own trades when they are so used to just hitting "buy" and having a centralized exchange deal with all the complicated stuff?

Using a DEX is, by definition, always going to be more complicated than trading on a CEX, and it can only be simplified so far.

Did you check XMR in the last years, or you've just read some extremely old news on this?
Monero has GUI wallet for quite some time and I find it super friendly. I've even looked up a guide for you, which, although it has the images in Spanish, I think, can give you quite a good idea.



For years people were expecting institutional investors come and put their money into Bitcoin. Now they have come. Banks are inevitable in this.
But the devs are just fine. They did well and they know that community has to also consent the changes, else chaos can come out i.e. a lot of forks.
On the other hand, LN is seen by many as a way too big step towards centralization, so the future won't be all nice and shiny. Still I think that LN can be more private than on-chain tx.


This is off-topic, but I'll answer:
It's known fact that 2/3 of mining is OK. And the rest of the miners will most probably don't care. All in all this is a strangely weak PR move and basically that's all.

I agree but the problem is not with lack of DEX it is with lack of good truly decentralized exchanges. What we have right now is either not decentralized at all (despite being called that) or is partially decentralized and using it is a hassle.
So we first need to make them 100% decentralized and then we have to improve the user experience so that they could use it just as easily as they use CEX.

We circled back to the root of the problem which is centralized exchanges are the problem, and also treating bitcoin as not-a-currency otherwise there is nothing more tainted that fiat, specially certain fiats such as US dollar and yet everyone is happy accepting it even though they could get in trouble accepting "dirty money"!

XMR needs to get it's UX/UI better and I think it would have serious potential.  It's just too much of a pain to transact with for the average Joe who has little-to-no tech skills.  It's a great piece of tech though.



One thing that's for sure is that the tentacles of the trad banking system are going to try to wrap themselves around BTC more and more in the coming years.  I just hope the devs and people working on BTC are aware of that and thinking about what adjustments or upgrades the protocol might need in order to maintain it's initial vision of sound money outside of any centralized control.  Saylor even hosted a meeting with Elon and N. America BTC miners to try to move towards a "greener" mining opperation.  https://twitter.com/michael_saylor/status/1396915801492439044?s=20

Bitcoin is not fungible. There is already a pool that only mines "clean" transactions. Of course, it doesn't matter much yet for its small hash rate and the only block I know they've mined was not perfectly "clean" too (by their rules), but it can be a dangerous trend for 5 or 25 years from now.
Monero is fungible, hence it's a problem for governments and it faces a lot more barriers Bitcoin had. It's still difficult to foresee what will its future look like, if any.

We can add as many DEXs as we like, but if people continue to be happy to sacrifice their privacy and security to centralized exchanges then it achieves nothing. We need to move the users, which is a very difficult thing to do. And if you want CEXs to stop spying on you then you need to stop the government from demanding that CEXs spy on you or be shut down, and you'll have an easier time brute forcing Satoshi's keys than you will convincing the government to stop their mass surveillance programs.

At the moment, maybe. But at any point, merchants/traders/other users could decide that cashing out "tainted" bitcoin via an exchange is too much of a risk and so they will only accept "clean" bitcoin.

Every single thing you said here are the problems with centralization which bitcoin set out to eliminate not to mitigate. Have we already forgotten why bitcoin was created?
Also we should solve the actual problem where it exist not somewhere else. For example if centralized exchanges are discriminating then we should solve the actual problem by either replacing CEX with DEX or adding more CEX that don't do the same thing maybe in other jurisdictions so that those CEXes that discriminate lose business and lose enough money to either have to shut down or be forced to change their rules.
That also doesn't change anything about bitcoin's fungibility as a currency. 1 bitcoin is always 1 bitcoin whether it is virgin coin, mixed coin or a "regular" coin when you want to use it as a currency not in some centralized service like for trading.

First of all any country that sees bitcoin as illegal sees all cryptocurrencies as illegal.
Secondly monero's usage and adoption is far less than bitcoin so it should also be less on their radar for discrimination.

When responding to the two articles in the OP, this is really the correct answer. The referenced articles are talking about mandatory reporting of transactions (deposits/withdrawals) exceeding thresholds to the government for the purpose of enforcing tax laws. Making on-chain transactions private will not result in more privacy. If anything, it would result in more mandatory reporting by exchanges, having a net effect of reducing privacy.

Exchanges have vast amounts of data on their customers bitcoin holdings. Taken with data from other exchanges, someone could probably deduct who owns the majority of addresses.

Privacy is a “virtue” that is nowadays omitted. Its violation is being taken for granted. What people don't get is that the more privacy shouldn't be bringing fear, at least not from the government. It's the relation between the people and the government that forms this bad-shaped opinion.

Bitcoin/Monero/Tor wouldn't destroy a healthy functioning state. It's already working unhealthy and Monero is a way for people to actually escape from the whole system. Bitcoin did it and it's being censored a million times in the past. Having a block chain that operates completely equivalently for each unit is a genius move. I don't want to offend the guy behind Bitcoin, but this is actual cash. I won't be surprised if Monero reaches in the triad by market cap.

I didn't know that they do that for coinjoins too. Now this is getting serious...

Bitcoin is already not fungible for the exact reason you point out - some exchanges and other centralized services will lock accounts and freeze deposits if the coins can be traced to darknet markets, coinjoins, etc., despite having no idea if the coins were in the possession of the user depositing them at the time. It is possible to sell "virgin" coins at a premium.

I have never experienced an issue with this, despite all my coins being mixed, coinjoined, or otherwise obfuscated, as I simply refuse to use any centralized exchange or service, or use a payment processor such as BitPay which discriminates against certain coins. I'm under no illusion that this will last forever though. If the merchants I use want to use a centralized exchange, then they won't want to accept my "tainted" bitcoin either, regardless of how stupid the blockchain analysis which "tainted" them in the first place is.

With some mining pools now only mining "whitelisted" transactions, we need more on-chain privacy urgently, before "tainted" bitcoins won't be accepted anywhere, can't be sold, or maybe even can't be moved at all.