I agree of course with you.  Bitcoin was the very first prototype.  It CANNOT be accepted as universal money, because it cannot handle it technically.

I think however, that bitcoin put in move a whole new concept, that is slowly trickling down society.  I think bitcoin is something like the invention of science in the 16-17th century.  Similar critique will apply.  In the end, though, science killed state religion, which was a pillar of power.  Financial monopoly is also a pillar of power.   But bitcoin showed that things can be different.  Of course, our generation will not wake up one day, and see that finally, state monopoly of money is gone, and we are all using bitcoin or a successor.   Galileo didn't live to see the separation of state and religion and the liberty of thinking and of expression wrt. religious/scientific matters.  It took centuries.  But the poison is out with bitcoin and its successors.  There will be ups and downs.  But the fundamental notion, that the state must be the steward of monetary things because it is impossible to do otherwise, is proven wrong.  This poison will slowly but steadily kill the financial hegemony, like science slowly but steadily killed the basis of the religion-based state power.
It will take generations.  I think that, just as with science (the first distributed system ever invented), first it will be ignored, then it will be ridiculed, then it will be fought, and then it will win.  But I think this can take centuries.  Crypto's fundamental contribution is not so much financial freedom, but the fact that it is DISTRIBUTED and immutable.   The ultimate excuse for state power always has been that in order to avoid people cheat on each other, there must be an arbiter.  If a distributed system can do so too, then this takes away the most pressing reason for state. 
But just as the concept of proposing hypotheses, doing observations, and confronting them as way to find the truth about this world (the invention of science) was a bold, ridiculous, and unseen proposition when for centuries, the truth about the world was centralized, came down from heaven, through the Pope, and the cardinals, down to the priest, and you were a BAD PERSON if ever you dared to think otherwise, the idea of not needing states, governments, and dictate of the law seems to be a ridiculous idea to people when you are a BAD PERSON if you go against the law.
But in the end, as science prevailed, I think that the distributivity of systems will in the end prevail over centralized privileges, in one way or another.
But just as science progresses one death after another, society progresses, one dead generation after the other.  It takes time.

One can think of many ways.  It depends on the threat model of course and it depends on the tyranny applied.  If "running free software on your computer" becomes outlawed, we're far gone, so I suppose that you can have nodes running P2P connections without having your house raided.  If that's not the case any more, then in the end, possessing a computer will be licensed like weapons, just like North Korea.  I will admit that anon crypto in North Korea is a difficult thing to do.

So under the assumption that people can run free software on their computers, and have free encrypted P2P links with other people running free software on their computers, which makes it impossible to outlaw monero as such, but only its USAGE in commercial transactions, there are enough means to transmit transactions over the network.  If you are in any case using your freedom to engage in forbidden transactions (because they are bluntly forbidden, or because you don't want to be fiscally stolen, or you don't want or are not allowed to get all the needed license privileges, or for whatever other reason your freedom to trade is taken away and you decide to keep that freedom), then the fact that you are going to engage in a forbidden transaction is not what is stopping you.

TOR was deanonymised with a big effort, because TOR is low-latency.  Transactions don't have to be low-latency.  They can be as slow as usenet used to be.  If you leave out the low-latency demand, then anonymous networking is much, much more robust.  If on top of that, you use obfuscation, then I think you're pretty well off.  Of course some users will be caught. No system is perfect. But you will not be able to bring down the whole network.

You can think for instance about transactions hidden in images, so that a whole set of images results in a zero-knowledge proof of transaction, without being able to know WHICH image actually contained the "real proof" (somewhat like obfuscated ring signatures).

Miners will look for these proofs in different places, and if they discover valid transactions, include them.  Of course, depending on the effort needed to recover the transaction, the fee has to be accordingly.

You could transmit transactions by snail mail.  One can be extremely creative.

All this depends on the effort the state wants to put into it, and the effort people want to put into keeping/obtaining their freedom.

If I were Di Lorio, I would withdraw from the Apple Store all together.  Smaller market share (27%) of mobile, and probably even much smaller crypto users share.  If you want crypto, don't buy Apple, should be the message.

This is what freedom is about, no ?

Feynman said once: if it can happen, it will happen.  Chainanalysis is just the normal implementation of the transparency of the bitcoin block chain.  If you implement transparency, then it is somehow normal that people start looking at it.

I consider the block chain transparency as the biggest problem with bitcoin.  It is understandable, because it was the first crypto.  Satoshi got an amazing lot of stuff right for a first go.  But this is one of the points where he got it wrong, thinking that the pseudonymity would have been sufficient, and forgetting that the joins of several inputs in a transaction, and several outputs of a transaction, make a network that can propagate partial knowledge of identities.

Because they are the monopolists of violence that exist to extort people from their production of course.
Replace your question by "why should states be the only ones making laws and sending people to prison ?".

Then you also have the answer to the future legality of "that I can transfer value to the other side of the globe for a relatively low fee".  That fee, plus the taxes, plus the seigniorage, is what states live off.  You will not be allowed to like the idea that you can do without giving up sufficiently of your value to them for every breath you take.

You concentrate on the fee demanded by VISA, but that is peanuts compared to the VAT and the income tax that you are supposed to give to the states whenever "you transfer some value to just anybody anywhere".

This is why, if you do so, you will need anonymity.

That's normal, isn't it ?  Otherwise, immutability is gone, and if you can pull it off against a gouvernment, you can pull it off against just anybody. 

That's the nice thing about monero: its fungibility. 

This is the eternal confusion.  You can say that about cash too: the only way to get cash from a bank account is to withdraw it from a known account with known identities.   This has nothing to do with the anonymity of cash, but rather with the non-anonymity of bank accounts.  It is not because the OTHER ITEM against which you trade with an anonymous coin is giving away your identity, that the coin itself is the culprit.  If you want to exchange against fiat bank account money, then the anonymity is lost because of the fiat bank account, not because of monero or another crypto.

As long as you stay within the crypto world, distributed exchanges are/will be possible. 

But the real use of anonymous crypto is of course when it closes the economic circle.  For instance, suppose that I sell illegal weapons for monero, and I want to buy drugs with monero.  I never leave the chain.  THEN this anonymity works.  I exchange weapons for drugs, and I use monero as an intermediate store of value.  And here, this anonymity is of value, because if some participants get caught, chain analysis will not allow to complete the missing knowledge.

Since the age of empires (the classical period), the monetary items to be used in commerce have always been under state control, because who controls the "blood of the economy" controls essentially everything: you make the riches and the poor, you pay armies and traitors and it happens essentially in an invisible way.  Even gold and silver was a kind of "fiat" during the Roman times, because their conquests served essentially to take slaves, and to open silver mines that financed the state and its wars.... to conquer more territory, to obtain more slaves and silver mines. 
The European nations did about the same at the end of the middle ages in America with the gold mines over there.  So even gold and silver have been "fiat" money, in the sense that they served as seigniorage financing of the state.  Next came of course diluting the precious metals in state coins.  The Romans did it already.  Fiat money is simply "infinitely diluted gold and/or silver".  The dilution reached infinity in 1972.

States will never allow a monetary asset that they can't control as the main blood of the economy.  So forget the idea that you will LEGALLY have bitcoin as a general currency - unless - and that is my hope - that it sneaks in and takes states by surprise, weakening them, and in the end, make them collapse.   States can't live without pumping money.  They are the parasites that need to drink the economy's blood to survive.  They will not allow foreign blood to flow in the majority of economy if they cannot make it, control it, and take it away at their whims, unless they have been weakened enough that they lose their power.

Bitcoin is a totally different beast than any other state money, whether it be gold or paper fiat, in the sense that bitcoin cannot be state controlled - unless China seizes all the mining, and bitcoin becomes Chinese money.  It will never be accepted by states as a currency. 

At best, states themselves will invent some kind of state crypto, of which they get the seigniorage, they get to decide upon the forking, and they have the exclusivity to mine/mint/print it.  At which point it is not a free crypto any more.  Bitcoin could be state-forked into such a thing.  But it won't be bitcoin any more. 

It would be a freedom nightmare: a compulsory blockchainish state currency, somewhat monero like, but with a state golden viewkey, so that they, and only they, can see every transaction.

If you want to call that "crypto", be my guest. 

Then what are you doing in crypto in general ?  Or are you just interested in gambling on tokens with other gamblers ?

Again, if you are to be law abiding, then crypto is of no use.

Now how's that ?  Monero never "developed confidential transactions".  It was in there from the start.  How could they have asked Apple to allow them to do so before they existed ?  

Honestly, I wouldn't care.  Apple is not a big enough player to impose its whims on crypto, and I would even say, probably most Apple customers are not interested in crypto.  So not having the very few potential crypto interested people of Apple doesn't matter.

This may be a sad truth.  On the other hand, in as much as that is the case, it will only affect those that are in any case people that don't need crypto, and are law abiding. 

I'm simply waiting for the next big exploit on an ethereum contract.
Then we will know if ETH is definitely a fork coin, or also a criminal coin.

Problem is, the waiting can be long, because there's not much "life" in the contract world on ethereum.
Where are the contracts with tens of millions invested again, like the DAO ?

Indeed.  Bitcoin has changed.  It went corporate.  
It is the Apple of open source now

It will be a long road from burning of Giordano Bruno to the chopping off the head of Louis XVI.  It might take centuries.  
It will not be bitcoin, and probably not monero.  These are just steps.  But clearly, monero is a further step than bitcoin.
There will be contra-reforms, there will be harsh measures against crypto.  But in the end, freedom will prevail.  Like always.

That must have been the same reaction a normal person must have had in the middle ages when he asked "what is all that philosophy and science for ?" and someone answered "to bring down state religion and kings and freedom of inquiry to people".

If that is the kind of argument (argumentum ad hominem) that you think is convincing, then we're not on the same planet.

What was bitcoin invented for ?  I would think, to let people FREELY trade with a FREE currency.  Now, as long as we have states that don't want you to freely trade, and declare war on every form of free trade (because they simply forbid it, or they want to steal part of it through taxes, or they want to follow it to verify permits and other forms of compliance), and don't want you to have a free currency they do not control, the only way to do so, is by doing so anonymously.  Doing free and hence illegal trading on a public transparent means of payment, graved in stone, is suicide.

As such, bitcoin was a good idea, but was lacking an essential element: privacy/anonymity.  The pseudonymity was thought to be good enough, but it has been shown several times that this is NOT good enough because of chain analysis.  It worked enough when it was still under the radar.  Now, it isn't good enough any more.  It is way too transparent.

So, to the question: what other crypto is going to challenge bitcoin in its original purpose of bringing free (and hence illegal) trade currency back to people ?  I think that the answer "Monero" is not a bad answer.  It could even already have challenged bitcoin successfully, because my idea is that MOST of bitcoin's activity and market cap is actually legal, and hence OUT OF THE AIM of bitcoin.

If crypto isn't illegal, then it is not serving any purpose.  So, how much of the usage of bitcoin is really illegal, and how much of the usage of monero is illegal ?  And isn't monero challenging bitcoin then ?

Whether the crypto of the future on which the commercial world will run will use "block chain technology" or other cryptographic techniques that have not yet been invented, I don't know.  But I surely would hope that we reach a day when distributed, grass-roots founded, non-state-or-corporate-monopoly digital assets ARE the currency on which the commercial world will run, or this whole crypto circus has no meaning at all.

We already know that bitcoin can't be that currency, at least not on-chain, and that even adaptive chains like monero will face practical problems of chain growth with current technology.  Maybe there will be smarter ways of doing this.   But the idea is, I would hope, to get liberated from state fiat money one day, and be free in the choice of the currency used in the economy.    In fact, the best would be that there are myriads of currencies from which to chose, in permanent competition and in permanent creation.

In ALL OF THESE CASES, it is to be hoped that there is no traceability of the succession of transactions, but at most "proof of right to spend".  All the other information is in any case 1) leaking private information and 2) harming the fungibility of the asset under scrutinity.

So *in any case* there is no need for a "transparent block chain" but only for a "proof of right to spend".  Whether that proof of right to spend is derived directly from things on the block chain, or from structures on top of that which are even not public, doesn't matter.

In fact you are heavily contradicting yourself here in several ways.  

1) In as much as, according to you, crypto currencies will remain a very minor toy in the hands of a few geeks considering that stuff having value, you are probably right that between getting your money off an exchange in fiat, turning it into cash, and using that cash whenever you want privacy, and only return onto an exchange to "play trader" and not to pay for any real world goods, you are prefectly right that a transparent block chain is not harming privacy much.
But hey, you don't even need a block chain in that case.  You can just trade the tokens on the web site of your exchange.  So the "transparent nature" of the block chain is not a problem, but also not necessary.  If crypto is not used as a currency, there's no problem, but also no need to have a transparent block chain (or no block chain at all).

2) In as much as crypto currencies ARE used as a "backbone" to OTHER ASSETS, but are widely used, then the transparency of the underlying block chain is just as broken because you cannot follow the off-chain transactions.  The off-chain assets will in any case just be cryptographic proofs to spend of the corresponding on-chain assets.  We're just as "opaque" as with a non-transparent block chain.  Yes, you can explicitly see the few transactions which are the final results of very long off-chain transaction histories, but as you don't have those, these settlements only indicate you that, whatever happened off-line was correct, without knowing WHAT happened off-line - exactly like a cryptographic proof of right to spend gives you.  You are right that the on-chain verification is explicit, but that on-chain happening is only a very minor fraction of what happens off-line.  So your "proofs of right to spend" are just as indirect (but nevertheless just as valid) as on a chain like monero.

3) The denomination of goods in a currency depends on the usage of that currency as currency.  If it is used a lot as currency, the "stickyness of prices" will stabilize the currency value and hence allow for denominating the stuff in the currency at hand.  In fact, when a large part is denominating its trades in a currency, the volatility risk of that currency diminishes strongly.

If I have a store, and I sell and I can buy in currency X, actually the "value" of X doesn't matter much, because what matters to me is the ratio of my selling price in X, and my buying price in X, to have a margin.  If, however, I sell in X, but I have to buy in Y, then the ratio of X to Y is very important to me.  I will tend to denominate my stuff in Y too, to avoid the risk of X to Y.


On the contrary.  If most of the economic cycle has its products denominated in, say, monero, then by the stickyness of prices, monero will stabilize, and will induce others to denominate their stuff also in monero.  Simply because that eliminates a risk for them.  This is why essentially, we look at stuff in $ or Euro, even if we pretend to look at it in bitcoin.  Because right now, most stuff is denominated in $ or Euro.  Bitcoin has almost no economic integration as a currency, and the few companies that do, denominate actual prices in their main provider's currency, and CONVERT to bitcoin.  They have to, because otherwise the risk is too big.
If crypto is to succeed, this has to change.  If not, crypto is a geek's toy, and nothing more.   This can easily take a century.



I really, really don't see what is the "strength" of a transparent block chain.  What you are essentially saying is that "we should keep a transparent block chain, because it doesn't matter; we don't use it as a currency".  You are perfectly right that a TRANSPARENT AND UNUSED BLOCK CHAIN preserves privacy and can remain transparent  If you don't use bitcoin, it won't leak your financial information, so much is true.