Topic: Isn’t KYC anti-ethical to Bitcoin? - page 2. (Read 839 times)

Is it theoretically possible to untangle this chain?   address A-B-C-D and so on.
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For common users, if you have a low amount (not thousands of btc) you can get "clean " coins, not attached to you.

You can send 2 Btc to a mixer, For example, and receive several small amount of 0.02 or 0.05 btc, which were never linked to those 2 btc you had. Those small chips come from other addresses,  those are other coins. Then  they are not linked to you.
As o_e_l_e_o said, large amount make jt Harder to mix and someone may break it easier.

KYC was never meant to be a part of Bitcoin, but then again, satoshi wasn't talking about Taproot, SegWit, or the Lightning Network either. It's the userbase that decides how Bitcoin will proceed. And the users clearly don't mind using centralized exchanges and payment providers where you exchange your coins for fiat. Whenever fiat is involved, you can expect KYC and AML regulations to be respected.

I don't see it as unethical if you know about the requirement from the beginning. If an exchange requires that you verify your identity, you can either do it, or you can try your luck with a DEX that doesn't request that. In reality, most people will just to what the CEX says and provide them with the info they ask for.

An example of unethical behavior would be an exchange being advertised as not having KYC requirements, but once you deposit some money into it, they ask you to undergo KYC and explain the source of the funds. If the majority of bitcoin users said NO to KYC, CEXs wouldn't hold such a significant position in the whole crypto economy and they would be forced to change their practices. Unfortunately, that won't happen.       

It depends both on what mixer you use, and how you use the mixer.

First of all, there are a number of mixers which have been proven to be breakable. There is a great write up about this here: https://bitcointalksearch.org/topic/breaking-mixing-services-5117328. The only mixer that user was not able to break was ChipMixer, since they use a unique mixing process when compared to all other mixers.

Secondly, it also depends on how you use the mixer. If you deposit a unique amount of bitcoin to the mixer, let's say 1.376 BTC, and then you immediately withdraw the exact same amount of coins. Someone could reasonably assume those two transactions are linked. If you send your mixed coins back to an address you've already used, or you combine your mixed coins with unmixed coins somewhere down the line, or you send your mixed coins to somewhere you've completed KYC, and so on, then you can completely negate all the benefits the mixer brings. You can also leak information in other ways, such as using custodial wallets or SPV wallets, via your IP address, and so on.

Best practice when using a mixer is to deposit a set amount of coins, and then slowly withdraw different amounts at different times to different places, and make sure you never link mixed and unmixed coins together. Do this over Tor. Run your own node or use a wallet such as Wasabi which protects your privacy.

Is it theoretically possible to untangle this chain?   address A-B-C-D and so on.

Bitcoin originally has the redeeming quality of anonymity, however, as time passes by, anonymity isn't really much prioritized by the users most especially the newbies who are only after profit. This is because before even entering crypto, they are used to central organizations that require KYC to be able to use their platform. In addition, to some users, it isn't really much of a big deal even for those who are pioneers in the crypto world. I think it really just boils down to the matter of preferences. There are people who know the risks of KYC, yet they still choose to do it because they have no other choice, otherwise they will not be able to utilize the platform because they will not be verified if they won't undergo such. There are also people who know the risks but don't really mind as long as they benefit. There are also people who just basically go with the flow. The reasons for each one differs and that's totally okay as long as they know they are responsible for whatever will happen to their funds for signing up to such.

There are still exchangers that don't require KYC but there are only a few of them left because of legality issues such as avoiding AMLA and obeying the local government. Anyone could opt to do whatever they think would make their account secure and more convenient while being used because we're all entitled to that. After all, we are not really being forced to undergo such. We still have choices and it just depends on us whether we will prioritize convenience or safeness.

No it's not about the crime or abuse but it's about the profit. Exchanges probably would not care who uses their platform as long as they gain something from those transactions. It was only after regulators mandating strict measures against money laundering that they started implementing KYC. They have to follow or they will be forced to shutdown.

How is risking your identity being stolen and becoming liable for thousands of dollars in loans and credit you didn't take out or having your identity used for money laundering in any way good for your security?

Lol. This couldn't be more wrong. Every large exchange has had both customer information and customer assets stolen, hacked, leaked, or sold. You have zero privacy and zero security with a centralized exchange, regardless of how large they are.

It is absolutely not for you own safety, and you have been brainwashed if you truly believe that. It is clearly for government surveillance purposes and centralized exchanges comply so they can continue to exist and make profits. Imagine telling people to leave crypto for trying to use it for what it was designed - peer to peer without any intermediaries.

Pseudo anonymity was the vision Satoshi Nakamoto having in mind when developing bitcoin but people in the crypto space do not live in isolation and the exchange as well, we all stay in a society where our Government still wants to regulate us and the exchanges.  For the exchanges to successfully operate they need their costumers to undergo KYC so that the Government will allow them to operate.

even if you wanted or not there are chances that KYC will be needed , when you are using exchange of in gambling site or even in some places where you need to purchase there is KYC obligatory so yes this is part of crypto and no one can escape the idea of Being expose not unless you are completely into Holding for long years.
and yes crypto is not completely anonymous so accept that fact because this is still more secrecy than banking.
at some part this is for our own safety so engage in kyc or leave crypto that's all you have to decide right?

the implementation of the KYC system is actually aimed at the positive side and the security of the members. because many issues of crime and crypto abuse caused the exchange to implement a KYC system.
when choosing a large exchange you don't need to hesitate to do KYC there because your privacy is definitely maintained and security for your assets can be optimal

Although Bitcoin is anonymous, it is not completely anonymous. Others can know your assets through your address. But KYC also has advantages. Some people like this setting.

Bitcoin adoption was difficult at first, so third party wallet providers and exchanges came onto the scene to supposedly help with that, but they killed all pseudo anonymity. So if you are serious about pseudo anonymity, you will have to go the extra mile to protect that. (Mixer Services)

Let's not forget that "Cash" has pseudo anonymity... so it is not something illegal. The problem is ... some people misuse the pseudo anonymity for criminal activities (as with cash) and that has given Bitcoin a bad reputation. (which is not fair at all, because the majority of people use it for legal purposes) 

I'm not really sure what "anti-ethical" means in this context. I had assumed the OP meant to use the word antithetical.

Still, there are plenty of things which are antithetical to bitcoin which are not forced on the user. The very first line of the whitepaper states that bitcoin should be "purely peer-to-peer" and allow payments "to be sent directly from one party to another without going through a financial institution". Every third party payment processor such as BitPay is antithetical to that aim, since they stop users trading peer-to-peer and require all payments to go through a "financial institution", which in this case is the payment processor. The same can be said for any exchange which allows direct transactions between accounts on their platform. In the same way, completing KYC is antithetical to the aims laid out in the bitcoin whitepaper, as I explained above.

Now, I'm not saying that companies shouldn't be free to offer these services, and I'm not saying that users shouldn't be free to compromise their security and privacy in the name of convenience by using these companies if that is what they want to do, but you can't possibly argue that inserting an unnecessary "trusted" third party financial institution in to your transaction when you otherwise do not need one is in keeping with the philosophy behind bitcoin. (I put "trusted" in quotes because I don't trust a single one of these such companies.)

I believe nothing is “anti-ethical” if if wasn’t forced on the user. It’s your choice to use an exchange, or a service under their terms, and if given no other choice, we have the tools to increase the anon-set. I believe Lightning will become one of these important tools.

For me, I think that KYC isn't that bad at all, I mean not a lot of people care too much about bitcoin so I really don't see how it's going to be a problem plus with KYC, we can easily dispel the argument that bitcoin funds terrorist due to it's anonymity which isn't true since there's already a KYC.

Yes, KYC is the governments effort to control crypto for tax and regulation reasons. However I see this effort as an impossible goal achievement because the blockchain community is already far ahead in terms of decentralised finance and decentralised wallets. We already can trade anonymously and in a few years we will have other ways to trade in ways that the government cannot track. KYC is a fruitless attempt at control.

DEXs and peer to peer trading will only become more popular, not less.

There is no security benefit to the individual from completing KYC; only risks.

Every so called "reputable" exchange has still managed to leak customer KYC details through hacking, scamming, or selling.

We're forced to live with it because no one puts up a fight. If everyone who used bitcoin flat out refused to complete KYC at any point, you can guarantee Coinbase and Binance would find a work around and start lobbying governments for change by tomorrow.

I don't like it but it appears we're forced to live with it.

In a parallel universe where there were no KYC rules at all, money launderers would probably be transferring millions between crypto and fiat bank accounts and governments would probably introduce a total ban on bitcoin transactions (China has already done exactly that).

If the KYC procedure is something like the one created by Sum&Sub (https://sumsub.com/how-to-pass-verification/) and sold to third parties, then all that's needed is assurances that the third party is securely (and ephermally) storing the documents.

Of course, I do not trust when some unknown company is providing their own KYC verification service because there's no knowing how safely they store the information (and whether they ever delete it).

I also do not like the Coinbase kind of verification where they alert the authorities if the verification fails (and you have >$2000) because it can cause many false positives.

Well, we all have the choices to make i guess and in the end, one is not force to comply with KYC if he thinks that is unethical. But honestly, time will come that all exchanges will be requiring KYC and by that time, we have no other choices to make if we insist on buying crypto from an exchange. Although its really beyond our privacy but to think that it's only for security reasons on our part, and safety on the exchanges part, i think its not really a bad idea i guess. We just have to be more cautious with that, and make sure that we are not giving our personal identities to those not reputable exchanges.

I don't disagree with that at all. If a private company wants to set ridiculously invasive rules and requirements, they are absolutely free to do so. And if an individual user wants to compromise all their privacy and security by complying with those ridiculous rules, then again they are absolutely free to do so. That doesn't mean it is a good idea, however, and it doesn't stop KYC from being antithetical to the whole point of bitcoin.

This is similar to using a third party payment processor to process your transactions or using a third party web wallet or exchange to hold your coins for you, as both are antithetical to bitcoin and defeat the entire point of not having intermediary third parties. Doesn't mean people won't do it, though.