(1) people who send BTC in the "ring signature sidechain" (RSSC), taint their BTC who are not entering the RSSC. If their identity is matched with the same identity as who put BTC in the RSSC, this person can become "flagged".
No, it's possible to trustlessly
coinswap in and out of such a system, with no detectable connectivity. And there are many reasons to use such a sidechain, such as improved smart contracting. I consider improved fungiblity to be an essential basic feature.
Unfortunately, it's appears that it isn't possible to trustlessly swap in and out of monero because the developers of bytecoin didn't carry across smart contract functionality which they didn't understand. Perhaps the capability could be added later.
Ok, using coinswap is possible, but in that case, you are tainting your coins with coins from the other party. You don't know if the other party is a drug lord for example. Coinswapping coins will still be a risk.
and please adress (3) also:
(3) people who want to get their BTC out of the RSSC, immediately taint those BTC. It's even easier to taint these BTC than BTC put through a mixer or using coinjoin because you don't need to do extensive chainalysis. If/when regulation starts to come down on payment processors and/or miners (see
my reddit post about fungibility for more info on the risks of tainting your BTC), these BTC's will be hard to spend in the 'regular economy' or even transact with.
if your answer is again, coinswap. Fine. But why would someone voluntarily taint their coins with RSSC-mixed coins?
and also address why miners, who are generally only interested in the mining profit and not the politics, run an RSSC node?
Even if it doesn't take more resources to do it... if it ever becomes illegal to run a node that supports RSSC (money laundering law for example), I don't think many (big) miners/pools will take the risk.
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