KYC is dangerous and useless.. but Monero partially solves that.

[20kevin20]

Know-Your-Customer is now known by many of us as one very dangerous process we have to go through in order to be granted rights on a not-insignificant amount of cryptocurrency-related platforms. Although it has been proven over and over that its initial intention to fight illicit financial activity has smoothly turned for the most part into a much more malicious intent, a large part of cryptocurrency users seem to either ignore this fact or simply not care that, by completing KYC forms, their identity is now situated under a continuous threat of theft, black market sales and database hacks.

The internet does not forgive, nor does it forget. And if this does not sound scary enough, Bitcoin and about any other cryptocurrency with an immutable ledger that is historically preserved as long as the coin exists is more unforgivable and unforgettable than anything else we ever had since technology.

However, people still tend to use centralized platforms that require KYC completion due to a variety of reasons. Fees and rates are better on centralized exchanges than ATMs provide. The purchasing process is way simpler and more user friendly. The feeling of safety since for any click going wrong there is a Customer Service to call. Today we are going to analyze how Monero's private blockchain partially eliminates the dangers and risks posed by the Know-Your-Customer process.


BTC's privacy-enhancing tools are prone to user mistakes and, if ever broken/exploited, every single previous user will be affected. If there is a particular reason I am afraid to spend part of my money on services such as mixers and CoinJoins, it's the fact that I can either commit a mistake that eliminates the actual effect of those kind of services or, someday in the future, authorities or someone with enough IQ or luck could find a way to link CoinJoin inputs to outputs or mixed coins to your identity.

Even with CoinJoin's existence, very sophisticated algorithms could still analyze coins and make links a strong human brain can not. Once you mix or join coins, you will have to take care not to use non-privacy-enhanced coins together with privacy-enhanced ones. One very simple but costly mistake you can make is creating this link using change. Coin Control could solve that. But how many people know how to properly use Coin Control?

If Bitcoin still has some ways to enhance your privacy, all other coins pretty much don't. While you can mix your Bitcoins, you cannot mix your Ethereum, DOGE or Litecoin. Bitcoin is situated in between what pretty much any other coin and Monero offers from a privacy point of view.

With that being said, some Bitcoin services or software do still offer a potentially exploitable privacy alternative while the rest of cryptocurrencies are  prone to heuristical analysis that link coins to identities. Meanwhile, Monero comes with privacy as a default and main focus.

By using Monero, platforms you have verified your account on will now not know anything about your financial past besides how much you have deposited and how much you have withdrawn. This is something that has particularly frightened me before: through heuristical analysis, blockchain-analyzing tools could find out where your money came from and where it's going without even asking for your permission or statement. Since most cryptocurrencies are fully public and pseudonymous, it's almost like your banknotes leave a glittery trail behind whenever you go to a store, bank or anywhere else.

Banks know how much you deposit and withdraw. However, if you withdraw cash to your physical wallet, the chain of surveillance breaks down and whatever you do with your banknotes is none of their business anymore. Since Monero's ledger is private, it solves this issue by becoming the digital version of withdrawing cash: withdraw XMR to your private wallet and nobody knows what happens to it anymore.

Surveillance States are here - and Monero can fight that. In the past few years, cryptocurrency regulations brought upon a numerous amount of maliciously-intended laws. From Know-Your-Customer 'till this day, how did things change?

If anything, authorities are still supposedly strongly fighting an invisible, overly-exaggerated enemy: illicit financial activity. Under these three words, a large number of laws have been passed through which privacy becomes less and less meaningful. If before we had them regulate exchanges, today they are trying to regulate decentralization. By trying to limit unhosted wallets, FINCEN has proven my previous thoughts right: according to their mindset, privacy should be a crime.

However, Monero comes as a solution to this as well. Its wallet cannot truly be regulated since there is no public evidence for authorities to verify whether your declared addresses and values fit what the public ledger has stored or not.


Therefore, with Monero, KYC and other similar (and even worse) laws now pose a much smaller threat than they pose with public ledgers. Having said that, as time goes on and our governments plan how to better turn our countries into Surveillance States while still camouflaging it better than ever before in an only apparent freedom and democracy, we can fight this all and try gathering our privacy back.

Disclaimer: this is not supposed to be an argument against @1miau's thread but rather a solution to some of the risks and long-term effects of KYC and similar laws.

[1714906851]

1714906851

[Charles-Tim]

I will still prefer Bitcoin, many people do not even care about privacy, all they want is to make use of cryptocurrencies, be that as it may, privacy is very important and necessary. Truly, there are anonymous coins like monero, dash and zcash that have anonymous ledger, but I will still prefer Bitcoin with transparent ledger.



Bitcoin ledger is transparent to the public, but not connected to individuals, that is why people says Bitcoin is psuedonymous, except in some cases of mistake like the ledger data leak which was the mistake of ledger company, not how bitcoin was designed.

You can still increase your privacy while using bitcoin, use of CoinJoin, mixers and coin control in few cases and many other ways we can possibly think of to maximize our privacy. You can even send bitcoin to anonymous coin like monero and send it back to Bitcoin, this will not be always but at times for maintaining privacy.

Monero and others like it can bring about anonymity but Bitcoin makes it better as it is flexible enough to maintain privacy in an advance fashion. What is mostly needed is not anonymity as it can bring about money laundering and terrorsm financing, which can be reduced while dealing with bitcoin, we have seen many cases of such when illicit Bitcoin is hijacked by the government, but yet, Bitcoin brings about privacy if we'll handled.

And as for kyc, it is extremely dangerous because it will bridge people's identities to their transactions. That is why people discouraged buying Bitcoin with verified (kyc) accounts.

[KingsGambet19]

I think we can get along with the trend in doing KYC as it seems everywhere in our sorroundings there are always identity exposure.

Actually some people does not care with their identity exposure as long as they can do what they want. Yes, they know the bad side of KYC but this doea not affect them. In cryptocurrency the ideal which Satosi Nakamoto wanted was to keep in decentralized and being anonynous. This is why until now he did not show up and just like a bubble he just pop out and no where to be found.

Whether we like it or not, KYC is already inculcated in everys system and we will not hope that out of thousands or millions of peope doing KYC we will not be the unfortunate one to become the subject for abuses.

Still, my advise is to keep away doing KYC as much as possible and only do it if you think that you do not have any other options left.

[Porfirii]

In cryptocurrency the ideal which Satosi Nakamoto wanted was to keep in decentralized and being anonynous.

I don't think the ideal of Satoshi was to keep it necessarily anonymous (prove me wrong if I am not well informed, please), otherwise he would not have created Bitcoin in its pseudonymous form.

While KYC is being abused and it supposes many potential threats for the individual, there are a few services where it seems legit to fulfil it, IMO. In Laws, there are some documents which are "nominative", and it is reasonable that these require KYC in crypto too, until a better ID technology is developed (AFAIK there are some crypto projects out there already working on it, thus, providing prove about your identity without disclosing it).

Yes, of course, KYC everywhere is unjustifiable and dangerous, but I'm not so sure as the OP about its uselessness in each and every case.

[lovesmayfamilis]

Several months ago I read an interview with Ricardo Spagni in which he was asked questions. And one of the questions was: what are the biggest discussed myths about Monero?
The biggest myth is that Monero's transactions are not traceable, according to Spagni. He admits that there is no truly private cryptocurrency or transaction that cannot be made public.
Privacy is becoming a more and more difficult task for ordinary users every year. States are beginning to regulate cryptocurrencies, and some exchanges are forced to divide up anonymous coins. Therefore, hoping for such cryptocurrencies is also not entirely reasonable. Bitcoin is gaining widespread acceptance every year, and in my opinion, it is the only one you can trust. But the passage of KYC, is still not a recommended action, although for whom anonymity is not important, this should not be a problem.

[20kevin20]

What is mostly needed is not anonymity as it can bring about money laundering and terrorsm financing, which can be reduced while dealing with bitcoin, we have seen many cases of such when illicit Bitcoin is hijacked by the government, but yet, Bitcoin brings about privacy if we'll handled.

I'm interested to know, why exactly do you believe that anonymity is automatically linked to money laundering and terrorism financing? Take cash as an example: would it be fair to you if your government suddenly bans cash due to illicit activity, or would you worry?

While KYC is being abused and it supposes many potential threats for the individual, there are a few services where it seems legit to fulfil it, IMO.

Depends on which side you're sitting on. The Cypherpunks and raw, OG Bitcoin users are probably going to deny your point since Bitcoin is here to eliminate the need of third parties. I do get your point: you need to show yiur ID when exchanging fiat to fiat, right?

But the difference is that, unlike Bitcoin, Monero's traceability is as close to the traceability of cash as possible. When you enter the exchange, nobody knows how much you have in your wallet and where that comes from. When you leave it, nobody knows where your money is about to go. Bitcoin's public ledger allows that information to be analyzed.

The biggest myth is that Monero's transactions are not traceable, according to Spagni. He admits that there is no truly private cryptocurrency or transaction that cannot be made public.

Well, the US gov is looking for someone to trace txs and the closest they can really get is approximating in %. Obviously, Monero isn't perfect just the same way Bitcoin isn't. However, they're working on it and it's the best privacy you can really get by default.

You can still trace very small and quite insignificant details about Monero transactions or be a malicious node/miner, although these issues can be easily fixed by running your own full node and jumping from address to address.

[GreekCoiner]

I think that KYC can be dangerous only when they can't safely store and protect users private data. But you can't call it as useless since it is important to avoid fraud, multiple accounts creation spam, scams, hacks etc.

For example, in Bitmex at the past when the market was moving the servers were overloading and people couldnt place orders. That was happening not only because of the high volatility but also because some people were using many accounts to spam low size orders and cause overload to the server resulting in huge wicks and massive liquidations. Once bitmex implemented KYC, these overload issues vanished.

[hatshepsut93]

By using Monero, platforms you have verified your account on will now not know anything about your financial past besides how much you have deposited and how much you have withdrawn.[/b] This is something that has particularly frightened me before: through heuristical analysis, blockchain-analyzing tools could find out where your money came from and where it's going without even asking for your permission or statement. Since most cryptocurrencies are fully public and pseudonymous, it's almost like your banknotes leave a glittery trail behind whenever you go to a store, bank or anywhere else.

Except all the regulated platforms have stopped using Monero or will stop in the near future. Monero is a solution to privacy but not to KYC. The real solution to KYC is to not use KYC services. KYC services will do everything they can to ensure that they comply with regulations, they will just close your account if you will try to find a loophole, unless the service itself wants to allow such loopholes to exist.

[sgenuine]

Everyone dreams that they will soon create an ideal project without flaws, completely anonymous and decentralized. But so far there are no such projects. Monero is the best option. Of course, there are some questions and even problems and doubts with the partial confidentiality of the coin, but I do not see other options.

[Chlotide]

Not sure what you guys are talking about. Privacy is not hiding your identity, it's choosing who you want/need to show it to.
Tbh OP I didn't really look at things from that perspective, but you have a point.
We would need some conjoined atomic swaps so no one can even corelate 2 tx (btc - xmr) with the same fiat value moments between. But things like this are ugly. There is no frontend, no UI/UX factor and can get be very hard to do for the majority. The UI/UX devs want to be paid. Mostly coding devs are doing 99% of the open source stuff and the finished product is mostly not that user friendly.
There is a prototype of a working atomic swap zcash - btc using HTLC, but it is done in terminal and you would need to run a ZEC full node and a BTC full node. Pretty much over the capability of most people I guess.
https://youtu.be/nPvfn138PRg
If you really want privacy you can get pretty far but since it is hard and requires skills and knowledge in several fields it seems a bit out of reech.

Another issue is privacy coin adoption. Maybe Elon will help a bit if he would accept XMR as payment method for buying a Tesla but the general legislative opinion is not that good. Not that many businesses accept XMR & Co.
Let's just hope it's the same thing as with cars, but faster: the electric motor was invented before the combustion one. It wasn't used at the time because fuel was a bigger market. Decades later we realize it does more harm than good and slowly migrate to electric. I see privacy as having a similar course.

[RussianEnglishTranslation]

Know-Your-Customer is now known by many of us as one very dangerous process we have to go through in order to be granted rights on a not-insignificant amount of cryptocurrency-related platforms. Although it has been proven over and over that its initial intention to fight illicit financial activity has smoothly turned for the most part into a much more malicious intent, a large part of cryptocurrency users seem to either ignore this fact or simply not care that, by completing KYC forms, their identity is now situated under a continuous threat of theft, black market sales and database hacks.

The internet does not forgive, nor does it forget. And if this does not sound scary enough, Bitcoin and about any other cryptocurrency with an immutable ledger that is historically preserved as long as the coin exists is more unforgivable and unforgettable than anything else we ever had since technology.

However, people still tend to use centralized platforms that require KYC completion due to a variety of reasons. Fees and rates are better on centralized exchanges than ATMs provide. The purchasing process is way simpler and more user friendly. The feeling of safety since for any click going wrong there is a Customer Service to call. Today we are going to analyze how Monero's private blockchain partially eliminates the dangers and risks posed by the Know-Your-Customer process.


BTC's privacy-enhancing tools are prone to user mistakes and, if ever broken/exploited, every single previous user will be affected. If there is a particular reason I am afraid to spend part of my money on services such as mixers and CoinJoins, it's the fact that I can either commit a mistake that eliminates the actual effect of those kind of services or, someday in the future, authorities or someone with enough IQ or luck could find a way to link CoinJoin inputs to outputs or mixed coins to your identity.

Even with CoinJoin's existence, very sophisticated algorithms could still analyze coins and make links a strong human brain can not. Once you mix or join coins, you will have to take care not to use non-privacy-enhanced coins together with privacy-enhanced ones. One very simple but costly mistake you can make is creating this link using change. Coin Control could solve that. But how many people know how to properly use Coin Control?

If Bitcoin still has some ways to enhance your privacy, all other coins pretty much don't. While you can mix your Bitcoins, you cannot mix your Ethereum, DOGE or Litecoin. Bitcoin is situated in between what pretty much any other coin and Monero offers from a privacy point of view.

With that being said, some Bitcoin services or software do still offer a potentially exploitable privacy alternative while the rest of cryptocurrencies are  prone to heuristical analysis that link coins to identities. Meanwhile, Monero comes with privacy as a default and main focus.

By using Monero, platforms you have verified your account on will now not know anything about your financial past besides how much you have deposited and how much you have withdrawn. This is something that has particularly frightened me before: through heuristical analysis, blockchain-analyzing tools could find out where your money came from and where it's going without even asking for your permission or statement. Since most cryptocurrencies are fully public and pseudonymous, it's almost like your banknotes leave a glittery trail behind whenever you go to a store, bank or anywhere else.

Banks know how much you deposit and withdraw. However, if you withdraw cash to your physical wallet, the chain of surveillance breaks down and whatever you do with your banknotes is none of their business anymore. Since Monero's ledger is private, it solves this issue by becoming the digital version of withdrawing cash: withdraw XMR to your private wallet and nobody knows what happens to it anymore.

Surveillance States are here - and Monero can fight that. In the past few years, cryptocurrency regulations brought upon a numerous amount of maliciously-intended laws. From Know-Your-Customer 'till this day, how did things change?

If anything, authorities are still supposedly strongly fighting an invisible, overly-exaggerated enemy: illicit financial activity. Under these three words, a large number of laws have been passed through which privacy becomes less and less meaningful. If before we had them regulate exchanges, today they are trying to regulate decentralization. By trying to limit unhosted wallets, FINCEN has proven my previous thoughts right: according to their mindset, privacy should be a crime.

However, Monero comes as a solution to this as well. Its wallet cannot truly be regulated since there is no public evidence for authorities to verify whether your declared addresses and values fit what the public ledger has stored or not.


Therefore, with Monero, KYC and other similar (and even worse) laws now pose a much smaller threat than they pose with public ledgers. Having said that, as time goes on and our governments plan how to better turn our countries into Surveillance States while still camouflaging it better than ever before in an only apparent freedom and democracy, we can fight this all and try gathering our privacy back.

Disclaimer: this is not supposed to be an argument against @1miau's thread but rather a solution to some of the risks and long-term effects of KYC and similar laws.

This look like you copied it from a website somewhere. Monero can be tracked and Ciphertrace has a contract with DHS and two patents to do so. The majority of nodes are currently malicious. If you read the 0xMonero whitepaper it explains all of the problems with Monero and why you should upgrade to 0xMonero. Frankly, the issue with all UTXO based cryptos is that every single coin mined carries a history of where it has been forever. Even if the blockchain is claimed to be private now, when that privacy is broken, all transactions will be seen due to the nature of UTXO. Account based cryptos like 0xMR don't have that problem, plus they cannot be blacklisted.

[20kevin20]

Except all the regulated platforms have stopped using Monero or will stop in the near future. Monero is a solution to privacy but not to KYC. The real solution to KYC is to not use KYC services. KYC services will do everything they can to ensure that they comply with regulations, they will just close your account if you will try to find a loophole, unless the service itself wants to allow such loopholes to exist.

Well, here's the thing: if a large platform decides to delist XMR, they're literally fighting privacy and imo should be abandoned by as many of its customers as possible. If we don't fight back but comply instead, we will never get privacy back again. Silence is a very strong answer. The world is losing the definition of privacy and we are doing nothing about it!

We would need some conjoined atomic swaps so no one can even corelate 2 tx (btc - xmr) with the same fiat value moments between. But things like this are ugly. There is no frontend, no UI/UX factor and can get be very hard to do for the majority. The UI/UX devs want to be paid. Mostly coding devs are doing 99% of the open source stuff and the finished product is mostly not that user friendly.

Well, how could an atomic swap between XMR and BTC have the fiat values correlated when you don't even see on the blockchain how much XMR was spent? I have never studied how atomic swaps look on blockchains, but I do suppose that the devs currently working on a XMR <-> BTC swap function are planning to make it discrete.

I know, UI will likely be an issue even for the function Monero devs are currently working on. But I have seen a lot of fundings for different things in the XMR community - I think it's hard to believe that a request of X$ for UI/UX would not be fulfilled.

There is a prototype of a working atomic swap zcash - btc using HTLC, but it is done in terminal and you would need to run a ZEC full node and a BTC full node. Pretty much over the capability of most people I guess.
https://youtu.be/nPvfn138PRg
If you really want privacy you can get pretty far but since it is hard and requires skills and knowledge in several fields it seems a bit out of reech.

True, can't deny that.

Another issue is privacy coin adoption. Maybe Elon will help a bit if he would accept XMR as payment method for buying a Tesla but the general legislative opinion is not that good. Not that many businesses accept XMR & Co.
Let's just hope it's the same thing as with cars, but faster: the electric motor was invented before the combustion one. It wasn't used at the time because fuel was a bigger market. Decades later we realize it does more harm than good and slowly migrate to electric. I see privacy as having a similar course.

Also true, but I really have hopes for privacy coins. Mostly long term hopes, since people today do not care. They will, one day..

[hatshepsut93]

Well, here's the thing: if a large platform decides to delist XMR, they're literally fighting privacy and imo should be abandoned by as many of its customers as possible. If we don't fight back but comply instead, we will never get privacy back again. Silence is a very strong answer. The world is losing the definition of privacy and we are doing nothing about it!

And where would the users go if all the major platforms will do so and the smaller platforms, including decentralized exchanges, don't offer the same user experience and the big exchanges?

The only way to truly fight back is to go 100% on crypto, but practice shows that even true Bitcoin fans are not ready for that. The attempt to create a Bitcoin version of Ebay, OpenBazaar has failed due to lack of interest.

[20kevin20]

And where would the users go if all the major platforms will do so and the smaller platforms, including decentralized exchanges, don't offer the same user experience and the big exchanges?

The only way to truly fight back is to go 100% on crypto, but practice shows that even true Bitcoin fans are not ready for that. The attempt to create a Bitcoin version of Ebay, OpenBazaar has failed due to lack of interest.

There will always be an alternative to major platforms, although they do have their own flaws. If Signal was able to get a new user count record as people come over from WhatsApp, then Facebook can be abandoned so can large exchanges.

For example, Binance is right now an option. KYC is optional and Monero still exists, probably due to the country their headquarters are currently located in. The crypto community is large enough to fight back and create their own platform to use if and when the platforms they use ever decide to categorize privacy coins under suspicious financial activity.

Remember that the more platforms decide to ban XMR, the more Bisq's XMR volume grows and the more alternative options become available since people will want to have the right to digital intimacy. And the more we decide to move away from censored exchanges that try to take away our right to privacy, the more smaller exchanges are going to cash in for their user experience to keep only getting better.

Imagine Bitcoin suddenly became illegal in the US and most Bitcoin users moved out of the USA. It'd hurt them and they may start reconsidering the ban, wouldn't they?

There are alternatives. We just have to stop sustaining those who want to take our rights away.

[hatshepsut93]

For example, Binance is right now an option. KYC is optional and Monero still exists, probably due to the country their headquarters are currently located in. The crypto community is large enough to fight back and create their own platform to use if and when the platforms they use ever decide to categorize privacy coins under suspicious financial activity.

Remember that the more platforms decide to ban XMR, the more Bisq's XMR volume grows and the more alternative options become available since people will want to have the right to digital intimacy. And the more we decide to move away from censored exchanges that try to take away our right to privacy, the more smaller exchanges are going to cash in for their user experience to keep only getting better.

Binance is still listing XMR only because regulators didn't bother to go after them so far. It's just a matter of time before they do. The point I am making, large platforms will never accept XMR because of regulations, so you won't be able to pay with it in Walmart or on Ebay. And since majority of the population is choosing the big names over small and local alternatives, widespread Monero adoption is not possible.