The Paradox of Privacy and Decentralization: Banning Mixers on Bitcointalk.org

[so98nn]

I think Satoshi Nakomoto would just consider this as good approach. The mixers are getting banned because of valid reason. Forum does allow own hearts towards technology that is supportive and meant for Bitcoin escalation. However, peeps are not using it for the way it is meant. Most of the services came under the radar of regulatory bodies that found illegal activities underway. Now I think we don’t need to explain in detail what these are and for what they are being used but prime result was money laundering. I’m sure theymos has taken serious action against these services considering any of them could be involved with such activity. Now we do not want forum quality drop or get serious flags just because our forum is allowing them to advertise. That’s what Satoshi might have thought.

[1714228744]

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[1714228744]

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[stwenhao]

cough cough satoshi-dice cough cough

This is strange. You don't support Ordinals, but you support Satoshi Dice? Why? One kind of spam is acceptable, and another kind of spam is not? Because yes, if your model pushes more data on-chain, instead of pushing less, then it can be considered as a spam.

The real solution is to make transactions smaller, not bigger, and to make less of them, not more, while preserving coin flow. Which means, if you have Alice->Bob->Charlie, then making Alice->Charlie transaction is better, because then Bob can gain more privacy, if he needs that. However, expanding it into Alice->Dice->Bob->Dice->Charlie is not going to help anyone, it will just raise the fees for everyone (unless you introduce difficulty-like adjusted maximum block size, but then what would stop mining pools from abusing that, to store their Ordinals, or even to push altcoins on-chain, wrapped into bitcoin UTXOs?).

[coolcoinz]

Most of the services came under the radar of regulatory bodies that found illegal activities underway.

Here's a thing to consider. What if this or that nation delegalizes something? Does it make it wrong? Should an international forum try to appease every single jurisdiction around the world?
Where's the line that when crossed it becomes too much for the forum to handle?

We allow people to trade bitcoin here, because it's a bitcoin forum, so why not allow them to mix? If the only reason for that is that it's illegal in some countries, then how many countries have to consider it illegal for the forum to take action? I doubt that mixing is illegal in El Salvador.

[Bitstar_coin]

Other than a handful of members, I don't think the majority of this forum members patronize the different mixer platforms that are being promoted here daily. Hence banning them should not have any great impact on the community or the forum in general but refusing to comply with the government authorities' request will be the major problem.
I think the administration of this forum made the right call, this prevents unsolicited attention away from the forum by any means necessary. The authorities are ruthless when it comes to policy violations and have a way of punishing the offenders.

Satoshi is all about privacy which to some extent this forum is and decentralisation which this place is not but would he/them have welcomed the idea of mixers platform knowing what they are used for, i doubt it very much. Privacy and decentralisation are accompanied by transparency which can not be said with mixers. Thankfully there are privacy coins in the market for users who need the mixer service. This is not an issue imo.

[Cryptomultiplier]

The decision to ban mixrs is caused by the laundering activities that has been a way criminals and terrorists make untracked payments and sponsor terror as I learnt, hence the reason why the government is bent on putting a limit to the decentralized network by banning privacy tools that are undetectable.

Still, one clear fact they ignore is that the concept of money has evolved pass even the decentralized network, wherebeit transactions can also be completed by using precious metals and possessions of high value.

Apart from the fact too that forum members who campaign for this mixng platforms would be this left without a campaign or displace those low ranking members currently in different campaigns, the impact would create better opportunities to earn still from BTC and would strengthen its poise in the being decentralized, no matter how it's regulated by any SEC.

[franky1]

cough cough satoshi-dice cough cough

This is strange. You don't support Ordinals, but you support Satoshi Dice? Why? One kind of spam is acceptable, and another kind of spam is not? Because yes, if your model pushes more data on-chain, instead of pushing less, then it can be considered as a spam.

ordinals are large junk meme transactions
spam (including privacy spam) can be charged independently at a higher rate
for instance a fee formulae where utxo that moves with less then X confirms pays more

my tickly throat was not to say more spam is better. it was actually that services need to act smarter with what they advertise

The real solution is to make transactions smaller, not bigger, and to make less of them, not more, while preserving coin flow. Which means, if you have Alice->Bob->Charlie, then making Alice->Charlie transaction is better, because then Bob can gain more privacy, if he needs that. However, expanding it into Alice->Dice->Bob->Dice->Charlie is not going to help anyone, it will just raise the fees for everyone (unless you introduce difficulty-like adjusted maximum block size, but then what would stop mining pools from abusing that, to store their Ordinals, or even to push altcoins on-chain, wrapped into bitcoin UTXOs?).

also things are not alice->bob->charlie in real life
EG
alice buys something from bobs shop
bob pays his employee charlie..

in the real world its not upto alice to pay charlie. alice should not be organising how much charlie gets paid, or ensuring charlie gets paid when bob sells an item, nor completely avoiding bob and just handing funds to charlie

as for mixers
its not
alice->mixer->bob

its actually
alice->mixer reserveZ
dave->mixer reserveZ
fred->mixer reserveZ

mixer reserveG-> fred
mixer reserveS ->bob
mixer reserveK-> dave(or back to alice new unused address)

yes the mixer should pay higher fee and there should also be some other mixer->mixer in the middle incurring more fee's
but they should pay more fee by spamming every block with low confirm age, for the privilege of priority
where only those with low confirms re-spending so fast should pay more then base fee.. whereby others with confirm age over 1 day get to pay flat rate base fee

[hatshepsut93]

Community Response and Impact:
How has this decision been received by the broader cryptocurrency community? Does it affect the way we perceive and use Bitcoin and other cryptocurrencies?

Bitcointalk is not Bitcoin. It's not like the Bitcoin software banned mixers. It is a sign though that Bitcoin ecosystem is changing and becoming more in-line with government demands. But Bitcoin ecosystem will always have many faces, and mixers or darknet markets will always be a part of it. They can't be separated because no one can stop Bitcoin transactions from happening.

[stwenhao]

for instance a fee formulae where utxo that moves with less then X confirms pays more

You want to bring back something called "coinage"? This is a good idea. Some page about that: https://en.bitcoin.it/wiki/Miner_fees#Priority_transactions

Which means, instead of the current, flat "satoshi per byte" model, we could have "priority" instead, and allow cheaper transactions, if some coin was not moved for a long time.

my tickly throat was not to say more spam is better. it was actually that services need to act smarter with what they advertise

Yes, this is a good approach. For example, they could just implement something like CoinJoin. Because mixers are banned, but CoinJoin is allowed.

Because the main issue is not mixing per se. It is the way they are taken down. Which means, even if you have a mixer, you can still advertise it, if you for example don't control the coins, but you only provide a market for mixing (like JoinMarket or any other CoinJoin).

in the real world its not upto alice to pay charlie

I think indirectly, but it is. What about tipping the waiter?

alice should not be organising how much charlie gets paid, or ensuring charlie gets paid when bob sells an item, nor completely avoiding bob and just handing funds to charlie

Note that the code can do a lot of good things. Which means, it is possible to write some code, that will allow transaction joining, and sending it later in a batched version to the network. And note that even though this kind of service meets the definition of the mixer, it is still allowed by the rules, if you don't control the funds of your users, or if you can meet any other condition, listed by theymos. There are many ways to do that.

[franky1]

in the real world its not upto alice to pay charlie

I think indirectly, but it is. What about tipping the waiter?

alice should not be organising how much charlie gets paid, or ensuring charlie gets paid when bob sells an item, nor completely avoiding bob and just handing funds to charlie

yes we could change the economics of real world business transactions and interrogate all retailers spending to do payments for them
where instead of having price tags that are:
$300 [$285 + $15 (5%) sales tax] to become
$300 [$255 + $30 employee commission + $15 (5%) sales tax] where it cuts out the business from needing to later pay the employee

but the reality is when you buy a TV/PC from best-buy. you pay best-buy. .. the HR/accounting department of best-buy then pay an employee as a separate transaction at the end of the month

after all in most cases the customer does not know all of best-buys internal costs where best-buy pays out labour, bills, share dividends at the end of the month/year so its kinda impractical to interrogate the retailer about their future spending plans to reduce their transactions by you performing them for them

Note that the code can do a lot of good things. Which means, it is possible to write some code, that will allow transaction joining, and sending it later in a batched version to the network. And note that even though this kind of service meets the definition of the mixer, it is still allowed by the rules, if you don't control the funds of your users, or if you can meet any other condition, listed by theymos. There are many ways to do that.

much like mixing is mentioned in regulations.. so is coinjoining, tumbling, AEC, obfuscation
https://www.fatf-gafi.org/content/dam/fatf-gafi/guidance/Second-12-Month-Review-Revised-FATF-Standards-Virtual-Assets-VASPS.pdf

The market for anonymity-enhancing tools and methods is in rapid flux. For
example, several mixer/tumbler services have been taken offline following
enforcement action for operating as unregistered VASPs. Some VASPs have also
delisted AECs due to their ML/TF risks, which has reduced access to AECs.
Nonetheless, some AECs have seen increased adoption by darknet markets and
ransomware actors, while bitcoin or fiat currencies still seems to be the major
settlement methods. For example, while cybercriminals often require payment in
bitcoin, some ransomware operators have offered discounted rates to victims who
pay in AECs, likely to reduce transparency of payments. In addition, the last year has
seen significant increase in the use of privacy wallet transfers where multiple
people’s transactions are combined into a single transfer, such as CoinJoin. Overall,
the use of anonymity enhancements remains a key area of ML/TF concern.

currently "coinjoin" is not specifically on a list of things VASPS need to actually monitor/do things about officially/specifically. and its just something regulators recently are starting to learn about/discuss/have concerns. but soon enough they will add it to official guidance to monitor coinjoin users

the smarter trick is to go deeper in thought.. like "buy/sell game credit" where deposited coin is not same taint as withdrawn. but the service is advertising as a legit service of retail gaming. instead of promoting itself as "privacy" "coin cleaning" "mixing"
smart people can work out how to use legit services to their "privacy" advantage without needing it advertised as "privacy enhancing"

heck there were even the olden days where you deposit fiat into btc-e create a 'MT-Gox code' and using bitinstant reserves then use the code on mtgox to then withdraw through mtgox.. and that was not considered 'laundering' but instead 'arbitrage'. it was not advertised as "privacy enhancing. though many smart people knew the benefits of using the codes to "arbitrage" their way to different coin holdings
(bitinstant did not get shut down or charged due to its mtgox-btc-e code reserves.. it got shut down because the compliance officer was doing private trades with a drug dealer he had full knowledge about)

EG set up TWO services
a. a legitimate service people can buy 'game credit codes' (offering no withdrawal)
b. a legitimate service people can sell 'game credit codes' (offering no deposits)

thus each business cannot be considered a money service business/exchange. because individually they are retailers

[Wind_FURY]

The problem I see with this is that it is just one more step in saying goodbye to privacy in Bitcoin. Mixers have been banned here because it won't be long before there will be regulations expressly prohibiting them. I said it some time ago: services that serve to obfuscate the origin of funds cannot have much future.

The casinos that have been so important in the history of Bitcoin and Bitcointalk will have to end up operating like fiat casinos, with everyone perfectly identified from the beginning among other things.

We are on a seemingly unstoppable path of loss of privacy in general, and Bitcoin is not going to be an exception.

It won't be that. I believe it will be wallet apps that will start having features that will "warn" users that they are about to receive a "tainted" input. As more users become "taint-aware", the moment they receive a "tainted" input, it's going to be a game of hot-potato.

- Users would sell those "tainted" coins as soon as possible, making the price of "tainted" Bitcoins lower than "clean" Bitcoins.

b. invent a new service that does not even mention privacy/cleaning, mixing.. and is more creative with how it takes in deposits and withdraws .. cough cough satoshi-dice cough cough

Isn't there an upgrade that would make transactions for opening Lightning channels indistinguishable from normal transactions?

you dont need a bitcoin upgrade. you just need to think smarter, lightning can do some changes and fix their flaws, even flaws in regard to how recognisable a channel lock format is

I believe it has something to do with Taproot. But I'm not sure if the making of opening and closures of Lightning channels indistinguishable from regular transactions have been implemented yet. But if it is, then I believe the Lightning Network could be used as more of an off-chain privacy layer rather than an off-chain network for fast and cheap transactions. Because I believe it won't be cheap forever once demand for Lightning goes up. Why? Because Bitcoin is a limited source of capital, then therefore Lightning channels will be limited.

[stwenhao]

I believe it has something to do with Taproot.

Why do you think so? Lightning could work even on P2PK, if there would be no routing. Note that if you multiply a public key by a private key, then you can reach 2-of-2 multisig on a P2PK. Here is how: https://duo.com/labs/tech-notes/2p-ecdsa-explained

Also, there was a thing called "payment channels", that existed long before Lightning Network was even invented. See this page: https://en.bitcoin.it/wiki/Payment_channels

Note that if you have a payment channel, you don't have to add routing to the whole picture. Segwit was needed only because of routing, if you remove routing from LN, you can implement it on any address type you want, even P2PK.

[Frankolala]

Banning mixer on bitcointalk us nothing to me because the forum has been existing before the nicers company came in for ads by forum members. And if mixers services campaign no longer exist in the forum, the gorum will be doing fine and normal activities will still be going on.

Anything that will bring raising of eye browns to this forum ny government should be disallowed to keep the forum clean and save from the government, because the government has the power to shut down any company that they want to. It is sad to see that mixers wants to bring a bad name to bitcoin because of bad actors. This forum was built for sharing ideas on bitcoin and every angle of it, so whatever will jeopardize such mission shouldn't be encouraged.

[LeGaulois]

also dont forget these two details

1. many bitcoiners lobbied to get governments to recognise bitcoin as a currency.. opening the door to currency regulations
   (2009-2013 bitcoin was defined as private property. 2014-now its currency)

True, they were telling us during years how "wonderful" it could be.

But it's worse than that in reality
Did you ever think on who's funding Blockstream or Digital Currency Group for example? And how it's funny if you think about it
Axa, Mastercard, and so on. Come on, what good could have come from letting them in?

If you listen to the WEF about the cryptocurrency industry, nothing is smelling good for us in their speech

[DaveF]

also dont forget these two details

1. many bitcoiners lobbied to get governments to recognise bitcoin as a currency.. opening the door to currency regulations
   (2009-2013 bitcoin was defined as private property. 2014-now its currency)

2. regulations actually require businesses to watch/monitor mixer users that deposit with them, more so than other random people transacting on the blockchain. so using a mixer doesnt offer better privacy, it puts you on a watchlist due to using a mixer.

the solution, if regulators require businesses to monitor mixer users..
a. stop using mixers
b. invent a new service that does not even mention privacy/cleaning, mixing.. and is more creative with how it takes in deposits and withdraws .. cough cough satoshi-dice cough cough

1) Still depends on where you are in the world. A blanket 2014 date is not accurate, even now there are still places that see BTC as property.
2) A lot of places still don't really care about mixers, they just monitor sanctioned addresses, no sanction no problem. The question is how far back do they look.
2a) Yes.
2b) Don't think that matters if once again people / services pay attention to sanction lists.

-Dave

[franky1]

Did you ever think on who's funding Blockstream or Digital Currency Group for example? And how it's funny if you think about it
Axa, Mastercard, and so on. Come on, what good could have come from letting them in?

If you listen to the WEF about the cryptocurrency industry, nothing is smelling good for us in their speech

you like to follow the money..
lets take you backwards..
WEF   world economic forum
   -BIS  bank of international settlements
      -CBDC: M-bridge the BIS project that will manage all reserve swaps of CBDC
           -CBDC the key-pair secured ID of multisig payments between customer<->bank, and bank<->bank to compete/replace visa/mastercard
               -hyperledger the group that helped design many CBDC and the M-bridge
                    -blockstream were part of hyperledger

many of the stuff blockstream done to bitcoin were actually sandbox tests for patented designs they passed onto hyperledger, and vice versa

https://www.ccn.com/hyperledger-blockchain-new-members-blockstream/

[LeGaulois]

@franky1
It's pretty much summed up.

It could deserve a dedicated topic because it's an interesting area of discussion. I made the link with the WEF and other because yes, I do like to follow the money. It answers to a lot of questions

I don't know why people haven't been interested in all this for years they're in the crypto industry.

Especially as the WEF's speech is quite meaningful, to the point where I wondered if the WEF wasn't behind the creation of Bitcoin lol. OK, maybe it's a bit paranoid and could be considered a conspiracy theory, but everything they're doing on crypto is enough to make you wonder. It's not just saying here and there that it should be regulated. It's about the technology, the development of the ecosystem, and even recently they've been talking about interconnecting all the crypto blockchains together.

They're at least trying to drive the bitcoin industry and influence it

Add to that the CBDC, blockchain for Carbon dioxide, Digital iD in EU,

[Lucius]

To me, it is a much bigger paradox that the OP opens a topic like this in BD when we already have a corresponding topic in Meta, and besides, the entire post was created with the help of AI.

https://sapling.ai/ai-content-detector/136d8c995e916e719e38232a9e599997
Also, the GPTZero detector gives a result of 93% generated with the help of AI -> https://gptzero.me/

[Hamza2424]

Mixers are not the only privacy solutions, but yes it was one of the easy ones and user-friendly, we still have, coin-join, pay-join, and even HD wallets, I would like to mention that I have not experienced any of these but I've got some information about these solutions as well.

Mixers Ban on the forum is really a serious concern for the forum, as we dont want to see, opening our eyes in the morning and logging back to the forum, and there you go the Bitcointalk is no more, I think whatever thermos did is really for the sake of the forum. Let's wait for more solutions. In the end satoshi he dared to introduce Bitcoin mixers are not even a deal for him.

[BenCodie]

There is a solution to this paradox. I went into detail with it in a public letter to theymos which asks for a medium, a discussion board for Cybersecurity and Privacy. Something members have expressed that they want in a consensus manner for the last 12 months.

The topics in the thread could have been better. This isn't an attack on decebtralization as another member said, as mixers are centralized. It is an attack on privacy to an extent, in the sense that a service industry which charged fees to mix Bitcoins have now had a major advertising source (and community regulator) removed.

A medium however, is needed. We need to be able to discuss how to be private and secure in the bitcoin ecosystem, and on the net. It's a vital part of keeping the community safe from all kinds of threats in the future, and to innovate on the concept of mixers in a decentralized way.

I'm hoping theymos sees all of the discussions, votes and the letter, and makes a decision on the board before the mixer deadline.

[DooMAD]

for instance a fee formulae where utxo that moves with less then X confirms pays more

You want to bring back something called "coinage"? This is a good idea. Some page about that: https://en.bitcoin.it/wiki/Miner_fees#Priority_transactions

Which means, instead of the current, flat "satoshi per byte" model, we could have "priority" instead, and allow cheaper transactions, if some coin was not moved for a long time.

my tickly throat was not to say more spam is better. it was actually that services need to act smarter with what they advertise

Yes, this is a good approach. For example, they could just implement something like CoinJoin. Because mixers are banned, but CoinJoin is allowed.

Because the main issue is not mixing per se. It is the way they are taken down. Which means, even if you have a mixer, you can still advertise it, if you for example don't control the coins, but you only provide a market for mixing (like JoinMarket or any other CoinJoin).

Fee priority is something that used to be implemented, but was changed for good reasons.  It's worth pointing out that the user suggesting this holds a long term vendetta against developers.  They advocate undoing just about every change made to Bitcoin over the course of the last 7 years.  

I've actually added them to my ignore list because I perceive them to be one of the forums' most prolific disinformation agents.  It's not worth reading their delusions about how this supposedly ought to work.  Particularly when they've been repeating the same drivel for years, hoping to gain a fresh audience.

And in previous topics, their proposed alternative to mixing sounded worryingly akin to setting up what law enforcement agencies would call a 'Front'.  I cannot stress strongly enough how bad this "advice" is.  It is not recommended to found a business with the intent of laundering money.  I'm sure that goes without saying, but just in case anyone did think for a second that it somehow sounded like a sane course of action, it really isn't.

Most of their ideas are equally dangerous and stupid.