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Author Topic: Why Bitcoin is at least as anonymous as cash...  (Read 1302 times)
evoorhees
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July 15, 2011, 09:27:10 PM
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There has been skepticism over how anonymous Bitcoin really is, given that every transaction is tracked in the block chain. Well, I'll put forth a simple theory that Bitcoin's anonymity can be at least as strong as with cash.

Why? Because you can trade it exactly like cash. Bitbills are the easy example right now, but many more similar substitutes will develop in which people can trade the key pairs in the physical world, just as they trade cash in the physical world.

In this way, Bitcoins can indeed swap ownership WITHOUT being recorded on the block chain. I can give and receive Bitcoins without the block chain ever knowing. Poof! Cash-esque anonymity, if the user so desires.

This also has a compelling corollary: anyone analyzing the block chain in order to determine Bitcoin transfer records will have to assume those Bitcoins were not physically traded ever in the real world for such tracking to be reliable. Such assumptions become foolish very quickly. There is an unbridgeable gap in knowledge.

But I think it's best if the government believes Bitcoins are 100% traceable  Grin
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July 15, 2011, 09:36:05 PM
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Good point about BitBills enabling anonymity.

Also, if the block chain was datamined aggressively in the future I can see bitcoin mixers becoming common.   
Say you have a big pot where people throw in exactly 1 bitcoin amounts.
At the stroke of midnight every day, all the bitcoins thrown in that day get mixed up and sent back to the users.

All the bitcoins have effectively been shuffled like a deck of cards.

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July 15, 2011, 09:41:22 PM
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Why? Because you can trade it exactly like cash. Bitbills are the easy example right now, but many more similar substitutes will develop in which people can trade the key pairs in the physical world, just as they trade cash in the physical world.

But you would only buy a keypair if you completely trusted the creator not to have a copy, and also that the private key will in fact access the public address. That's not like cash at all, where the only concern might be that the cash is counterfeit and even then it would have to look pretty bad.
evoorhees
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July 15, 2011, 09:47:15 PM
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But you would only buy a keypair if you completely trusted the creator not to have a copy, and also that the private key will in fact access the public address. That's not like cash at all, where the only concern might be that the cash is counterfeit and even then it would have to look pretty bad.

BitBills has demonstrated proof of concept here... you do not need to trust the person handing you the BitBills. And BitBills is just the first iteration of this concept, it's not a stretch to say many similar/superior products will be created. And of course, just as with cash, there is always a risk you are receiving counterfeit money - the goal is to reduce that risk enough that it is no longer a big concern for most transactions.
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July 15, 2011, 09:55:31 PM
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But you would only buy a keypair if you completely trusted the creator not to have a copy, and also that the private key will in fact access the public address. That's not like cash at all, where the only concern might be that the cash is counterfeit and even then it would have to look pretty bad.

BitBills has demonstrated proof of concept here... you do not need to trust the person handing you the BitBills. And BitBills is just the first iteration of this concept, it's not a stretch to say many similar/superior products will be created. And of course, just as with cash, there is always a risk you are receiving counterfeit money - the goal is to reduce that risk enough that it is no longer a big concern for most transactions.
You do not need to trust the person handing you the bitbills, no, but you do need to trust the creator of the bitbills.
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July 15, 2011, 10:26:52 PM
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But you would only buy a keypair if you completely trusted the creator not to have a copy, and also that the private key will in fact access the public address. That's not like cash at all, where the only concern might be that the cash is counterfeit and even then it would have to look pretty bad.

BitBills has demonstrated proof of concept here... you do not need to trust the person handing you the BitBills. And BitBills is just the first iteration of this concept, it's not a stretch to say many similar/superior products will be created. And of course, just as with cash, there is always a risk you are receiving counterfeit money - the goal is to reduce that risk enough that it is no longer a big concern for most transactions.

I really don't even understand the purpose of bitbills, I'll never use them in a million billion years..

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July 15, 2011, 10:34:04 PM
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I really don't even understand the purpose of bitbills, I'll never use them in a million billion years..

You would never use physical cash?!?

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July 15, 2011, 10:56:23 PM
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I'd like to see a lot more in-person exchanges of Bitcoin and fiat currency.  If I meet someone anonymously, hand them cash and they send me the equivalent amount of Bitcoins to a brand-new wallet, how can those coins possibly be traced to me?
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July 15, 2011, 11:04:36 PM
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I really don't even understand the purpose of bitbills, I'll never use them in a million billion years..

You would never use physical cash?!?

Not when I can send them electronically. I'm all about the future, I avoid using things that will never exist in the future such as printers. I find them very wasteful.

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evoorhees
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July 16, 2011, 01:17:23 AM
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I really don't even understand the purpose of bitbills, I'll never use them in a million billion years..

They offer one style of transaction which some may find useful and others not so much. Their purpose is pretty easy to understand though- they are a physical codification of what is otherwise a purely digital commodity. We are physical beings and as such it's nice to have physical forms of the money.

And I bet you have some fiat cash lying around, don't you?
Leon
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July 16, 2011, 01:26:03 AM
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I really don't even understand the purpose of bitbills, I'll never use them in a million billion years..

They offer one style of transaction which some may find useful and others not so much. Their purpose is pretty easy to understand though- they are a physical codification of what is otherwise a purely digital commodity. We are physical beings and as such it's nice to have physical forms of the money.

And I bet you have some fiat cash lying around, don't you?

I believe I have a quarter or two somewhere in my house.

I only ever use cash if its given to me or I am forced to pay for something with it, otherwise I use my debit card.

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July 16, 2011, 02:13:51 AM
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I really don't even understand the purpose of bitbills, I'll never use them in a million billion years..

They offer one style of transaction which some may find useful and others not so much. Their purpose is pretty easy to understand though- they are a physical codification of what is otherwise a purely digital commodity. We are physical beings and as such it's nice to have physical forms of the money.

And I bet you have some fiat cash lying around, don't you?

I believe I have a quarter or two somewhere in my house.

I only ever use cash if its given to me or I am forced to pay for something with it, otherwise I use my debit card.

I used to do that, too...for about two decades (I always thought cash is old-fashioned and paying electronically is safer and better). After realizing how fiat money gets created I changed my mind, though. Effectively every electronic transaction (cash to electronic or e 2 e) supports the possibility of further creating money and thus inflating your home currency.
Especially in the eurozone where the reserve rate is only 2% this is extremely bad.

So now I try to do as much cash transactions as possible.

BTW the same is true if you bring cash to the bank, then somewhat later withdraw more than you actually need and then bring the remaining cash to the bank again (you helped creating much more money than "necessary").



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Alex Beckenham
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July 16, 2011, 02:55:23 AM
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I only ever use cash if its given to me or I am forced to pay for something with it, otherwise I use my debit card.

I'm pretty much the opposite (only use a card when cash isn't an option) as I prefer not to have my name recorded every time I buy a stick of gum.

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