Explaining the consequences of KYC

[samdan777712]

I feel like there is a lot of misunderstanding about what KYC is and why its good or bad, and why people seem to underestimate the danger of it.



KYC only makes sense for large entities and conventional finance and fiat, state actors, and proprietary blockchains. Bitcoin is inherently illegalism. If you ever studied Agorist theory or Anarchist theory, you would see that bitcoin is intentionally meant to be a outlaw tool. It's a opt out clause to oppressive governments. Repeatedly trying to sanitize it is a threat to it's entire purpose. "If you've done nothing wrong you have nothing to fear"



To take a step back and to understand what KYC is we need to understand what the NDAA clause in America is, what Counter Finance Terrorism and Anti Money Laundering laws and the Patriot act are, what FinCen is what FATF is and what American security and commodity laws are. To put it bluntly the US government want's a global panopticon. The NSA was proven to be guilty of breaking the constitution with unwarranted mass wire tapping.



Take another step back; Have you ever read the Terms of Service to all the crypto exchanges. I have, I have read every major exchange's ToS, including Bitmex. They all say roughly the same thing: "We have the right to suspend you, seize your money, and report you to respective authorities if we think you committed fraud, negligence, stolen funds, committed a crime, etc, etc"



On a surface level this all seems fine. On a surface level if we believe in the goodness of the government we would give it the benefit of the doubt because we wrongly trust democratic countries. That's your first mistake. You look at these laws through the framework of liberal democracies, and not the actual laws and behavior of the many repressive highly corrupt developing nations in the world, and the many atrocities and legal overreaches of European countries in the not far past. And that's not even considering the crimes that the United States has committed underneath the Patriot Act.

I personally feel that the Security and Commodities laws of the united states are unjust, banning retail from crypto and forex leverage trading is unjust, and against the spirit of bitcoin. The UK is outright banning it, again very unjust. Many states want to ban crypto trading all together, Iran is threatening it, again unjust. It's a game of incrementalism. How many times will you all defend a states decision to control your lives? How bad does it have to be? It will be much worse in non democratic countries, much more oppressive. I have no respect for such countries, and encourage people to give crypto technology to those people in those countries so they can rebel. It is the moral thing to do.

One of the biggest oversights of people who defend KYC, is the concept of incrementalism. If you pay attention to what China is doing with the social credit score, it is hyper totalitarian. That is the direction that the elite in China and America want to take the world, minority report style surveillance, using the blockchain as a weapon, being able to remotely unbank you, suspend your political, legal, and traveling rights, subject you, detain you, deny you medical care, and politically oppress you based on the data they collect about your finances. So to hell with law abiding tax paying Americans and Europeans. It's a first world privilege that you could lose rapidly. There can easily come a time where you need untracked unreported bitcoin to escape. But so many are eager to turn over the control to state backed actors like Brian Armstrong and Wallstreet backed crypto, to make this all entirely in their control, so they can continue to deny you services, to control, to unbank you. Which is largely the aim of Libra and Facebook. And guess what. Andreas Antonopoulos agrees with me.

It literally is Minority Report or 1984 in an unironic unhyperbolic sense. If you understand what a cashless society entails, what a repressive government is capable of, if you had a heavy academic background in history in political economy, if you understood what the rammifications of smart contract kyc based proprietary wallets like ciphertrace is promoting would be, if you understood what the NSA has done, with total global surveillance and wire tapping and meta data.



Could you imagine if Hitler had the meta data collection abilities of the NSA? He manually murdered people without the internet without the ability to track people with metadata, satellites, and phones, and immutable ledger based kyc. Do you understand how deadly a immutable irreftuable fraud proof KYC identity database is?



The greatest protection we have against tyrannical governments, is the concept of doubt, of anonymity, of asymmetrical lack of proof and hidden information from governments. When governments have omnipotent knowledge and surveillance of their subjects, they have omnipotent power. There exist such evil in the heart of men, there will always be a certain percentage of men who want to rule over others as absolute tyrants, and they always will if allowed, if given the tools.



We need a decentralized DNS, a decentralized internet, a decentralized internet dependent bitcoin blockchain on meshnets and satellites, decentralized order matching and trade settlement, distributed servers and internet infrastructure that does not go through state level internet grid that can handle the grid going down in war, etc our freedom depends upon it.

[ccryptopark]

I believe there is a positive side to having AML/KYC cyber security firms like say Ciphertrace involved in safer crytocurrency processes. Just this last quarter there was $1.2 billion in crypto theft, fraud and scams. How do you suggest we deal with this sort of number and instances that keep happening?

[minersday]

In my own point of view, I see nothing wrong with the use of kyc in the crypto universal. I believe is the key necessity needed in eliminating  criminal activities in the world and that of the crypto space. This will help in the tracking of funds stolen by hackers in any cyber attacks and hacks on any crypto exchange or platforms. But I think KYC needs a good re-brand to help people understand its true purpose and advantages..

[ityandsyn]

      We are always wanting how to prevent scamming and fraudulent activities , so I agree of KYC methods of improving our system , just like ICO which a full of scams and now introducing IEO to replace it with possible less scam .

[Kakmakr]

The Bitcoin scene is currently divided between to different types of people, namely :

Old school crowd : Those who believe in the actual technology and the financial freedom it offers people as a alternative payment option.

Speculators : Those people who entered the scene after 2017 and who could care less about the technology, but who are purely focused on profits.

So, the old school crowd wants pseud-anonymity and immutability and financial privacy and border-less transactions, where the speculators wants a legitimate trading platform that adhere to all the rules and regulations of their country, where they can invest and take profit and pay taxes and bend over to the government watchdogs. <Big Brother> 

[proTECH77]

Most of the projects that I had participated where demanding for KYC and I Shawn them down and move on and also some of my gambling platforms required some sort of KYC and I had to left my funds on their platform's and proceeds to my normal life instead of given them the needed KYC.
My privacy cannot be bought with million of dollars because its very important to me and my entire family, many have compromise their privacy and had heard them to jail. Am always be very careful to get into any KYCs because they if you give them your KYC then they will sell it to the government or to the common people for financial gains.

[bitbunnny]

It seems like there is some anti.KYC campaign going on. I can understand the concern about privacy and data protection because I also don't want to reveal my data without a reason. But we have to understand that KYC is not developed against users and your private data but for protection against fraud, data and identity minuse and other illegal activities.
And I always say how funny it is that people reveal so much of their data and privacy online on social media, forums and similar and that is available almost to everyone but when it comes to KYC suddenly they are very concerned about their data.

[jseverson]

Are there actually any people on here who defend KYC? For the most part, it's usually just people tolerating it because it's almost an inevitable price to pay for convenience. I don't think I've ever seen anyone who's not blatantly trolling say that KYC is good for the cryptospace lol.

But yeah, this is a good read for those people who don't mind because they feel like they have nothing to hide. If you're going to share your info, make sure you at least know the risks associated with it.

[joelsamuya]

Ideally speaking, there should really be no KYC especially with normal and small account holders. And when i said IDEALLY, I really meant ideally. Unfortunately, we are not living in an ideal world -- maybe not yet and just having cryptocurrency will not change this whole picture. We can not be living on an island especially not under the current globe-circling business environment we are in. The problem is that we are living in a world where the good and the bad co-exist and sometimes it is so hard to determine which is which and so the government and institutions are finding ways to contain the activities of the bad elements (though of course many believe that the government itself is also bad, unfortunately).

I fully understand the danger of freely sharing information on the internet as they can easily be exchanged, traded and abused. So what can be the best compromise on this matter then? I have been suggesting this: There should be a blockchain-integrated KYC platform that we will use once and for all have these companies and projects subscribed to them so we will not anymore be doing the same KYC again ang again and be exposed to so many information gatherers. Yes, actually, there are already projects or platforms offering the same service but not one of them made it to the mainstream -- we need one that is universally accepted and utilized.

[Upgrade00]

How do you suggest we deal with this sort of number and instances that keep happening?

One way would be not to use centralized exchanges or websites that requires you to submit identification documents, but as an active trader, one has to visit this exchanges often. And investors as well need them to convert fiat yo cryptocurrency.
One thing is do not rely on such exchanges, do not use them as a store of value. You funds can only be seized or hacked/stolen if it's on the exchange.

[samdan777712]

The Bitcoin scene is currently divided between to different types of people, namely :

Old school crowd : Those who believe in the actual technology and the financial freedom it offers people as a alternative payment option.

Speculators : Those people who entered the scene after 2017 and who could care less about the technology, but who are purely focused on profits.

So, the old school crowd wants pseud-anonymity and immutability and financial privacy and border-less transactions, where the speculators wants a legitimate trading platform that adhere to all the rules and regulations of their country, where they can invest and take profit and pay taxes and bend over to the government watchdogs. <Big Brother> 

And I am both, I am a trader. I want a decentralized exchange that uses RenVm and Stack net and Blocknet and AtomicDEX api to build a leverage margin decentralized exchange with good liquidity, I know the technology exist to build it, I know it can and must be built.

[Argoo]

It seems like there is some anti.KYC campaign going on. I can understand the concern about privacy and data protection because I also don't want to reveal my data without a reason. But we have to understand that KYC is not developed against users and your private data but for protection against fraud, data and identity minuse and other illegal activities.
And I always say how funny it is that people reveal so much of their data and privacy online on social media, forums and similar and that is available almost to everyone but when it comes to KYC suddenly they are very concerned about their data.

In the field of KYC application, reasonable government regulation is needed. First of all, it is necessary to clearly define and restrict the subjects who are entitled to demand to undergo such testing from other persons. Now anyone who has decided to create his token can collect our confidential information from investors and participants of the ICO bounty campaigns. And they themselves do not know how and how long to store it and where to use it. This is extremely dangerous.
You also need to set the minimum transaction size, below which no KYC check should be conducted. The FATF recommendations for setting $ 1,000 as such a minimum amount are acceptable.

[Ozero]

So I agree with you. The KYC check must be made if the transactions in the cryptocurrency exceed a certain minimum amount. Recently, the FATF determined that such a minimum amount is one thousand dollars. Therefore, if as a result of participation in ICO bounty companies, bounty hunters receive tokens worth less than a thousand dollars, they should not pass any KYC checks.
At the same time, I disagree with the fact that we need everything decentralized when working with cryptocurrency. We need decentralized exchanges, but a significant part of them must obey the general rules of states. Otherwise, the states may unite and completely ban the decentralized cryptocurrency.

[Rockie1234]

So I agree with you. The KYC check must be made if the transactions in the cryptocurrency exceed a certain minimum amount. Recently, the FATF determined that such a minimum amount is one thousand dollars. Therefore, if as a result of participation in ICO bounty companies, bounty hunters receive tokens worth less than a thousand dollars, they should not pass any KYC checks.
At the same time, I disagree with the fact that we need everything decentralized when working with cryptocurrency. We need decentralized exchanges, but a significant part of them must obey the general rules of states. Otherwise, the states may unite and completely ban the decentralized cryptocurrency.

You are missing the OP's point that small, incremental changes are being made to current technologies that will only cause problems further down. I agree with this, we need to protect our privacy, and one of the ways to do so is through decentralised platforms which cannot be taken down/subpoenaed etc which give the individual liberty to buy cryptocurrency anonymously or without KYC.  You say otherwise states will ban the currency, but how can that be done? With decentralised platforms all someone needs is a wallet, which can easily be found anywhere. He is saying Bitcoin and others are a protection against ridiculously powerful surveillance states, something much bigger than whether regulation is needed on exchanges or not.

OP, I agree with a lot of things you said and have voiced similar concerns; if I had the resources/knew how, I would be making a decentralised exchange now, but they need to be easy to use. One thing I wanted to ask you is why you think Bitcoin is an illegalist idea. After all, many of the early founders were  libertarians or at least strong supporters of capitalism and the use of Bitcoin as a way to increase liberty ("cypherpunk movement" etc). And Satoshi did not seem to have anarchist leanings.

Cryptocurrency will be whatever its users do and want with it. And sadly a lot of public opinion needs to change before the value of the ideals you have espoused are truly appreciated. For now, people will still think KYC on centralised, power-hungry exchanges is good for them without realising the real consequences.

Would love to talk to you on these topics further, and merited the post, I think there needs to be more discussion/reflection in the community that is not about how to make more money.

[BitcoinPanther]

For me, I really don't see anything wrong with KYC if we wanted clean transactions and campaign. This will keep the scammers and criminals away. This will also can convince the government that we are not doing anything wrong but a legit means of acquiring profit or income. It can also help them to track anything (if needed) legally that can help us to prepare for regulation. They can also give us protection if someone will steal our identity when the regulation was implemented. If we are not hiding something, then we should not have any problem with KYC.

[Rockie1234]

For me, I really don't see anything wrong with KYC if we wanted clean transactions and campaign. This will keep the scammers and criminals away. This will also can convince the government that we are not doing anything wrong but a legit means of acquiring profit or income. It can also help them to track anything (if needed) legally that can help us to prepare for regulation. They can also give us protection if someone will steal our identity when the regulation was implemented. If we are not hiding something, then we should not have any problem with KYC.

The "nothing to hide" argument is quite an old one, but I don't buy it. Important figures such as Snowden have already talked in depth on the subject, but think of online privacy as the ability to own yourself and your data. No one is saying the government shouldn't investigate these types of crimes, but willingly giving them power over our data only leads to disasters like the Patriot Act. Even on this forum you will see people selling KYC documents of strangers, often obtained illegally, which shows how unsafe our data is at the moment. It would be naive to think that the government just wants to make sure you're not committing a crime, it is about control over civilians. Would recommend a reading of the early ideas on which Bitcoin was founded.

[krb91]

KYC should be discouraged within the blockchain space. It saddens me that more exchanges and platforms keep requesting it. User privacy and anonymity is something we shouldn't have to bargain for. With increasing data breaches, the security of personal information is something that is often taken for granted; that an exchange was hacked and no funds were stolen doesn't mean nothing was stolen, user data could have easily been stolen.

[mamesso]

Your identity is at stake and at risk of misuse of data on the internet. Some cases occur and it is proven that personal data can be misused by someone to carry out illegal transactions.
Do not give your data if there is no guarantee of security.

[finaleshot2016]

KYC should be discouraged within the blockchain space. It saddens me that more exchanges and platforms keep requesting it. User privacy and anonymity is something we shouldn't have to bargain for. With increasing data breaches, the security of personal information is something that is often taken for granted; that an exchange was hacked and no funds were stolen doesn't mean nothing was stolen, user data could have easily been stolen.

Agree, those platforms are very greedy that they all wanted to conquer a lot of personal information. If that is the case, find something that doesn't require KYC so you can freely trade your currencies. Obviously, personal information can be used in fraud and the worst case is to be stolen by some anonymous hackers. You aren't sure about the platform itself if they have really maximum security, your life is at stake too.

[bitsurfer2014]

All of this are valid points but the problem is that most people who wants an entry point to cryptocurrencies often needs to pass a KYC procedure on their local exchanges to cash in and cash out so that they can buy and trade crypto and consequently take profits from it so in effect, they have no choice but to abide with it even if they are somewhat hesitant to do it.