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Author Topic: Privacy, KYC UTXOs and non-KYC UTXOs  (Read 60 times)
remifa287 (OP)
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April 24, 2024, 01:36:37 AM
 #1

Hello, I'm learning. Be nice.
I just moved this question here...

In the privacy realm…
It is said that KYC UTXOs and non-KYC UTXOs should not be consolidated. What does that mean? Does it mean that the two UTXOs should not be combined? Or does it mean we should not save it in the same hardware wallet?
I'm still trying to sort this all out. I have Ledger and Sparrow. I'm catching on.

If anyone cares to respond?

Thanks.
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mocacinno
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April 24, 2024, 07:39:29 AM
 #2

STINKYBEE is correct (eventough he removed his answer).

There is no KYC or non-KYC 'tag' in the bitcoin protocol. KYC UTXO's look exactly the same as non-KYC UTXO's on a technical level. The only difference is that with a KYC UTXO, somebody somewhere can link this unspent output to your real (psuedo)identity, so you tag such a utxo as a kyc utxo for your own administration.

Technically, there is no difference between unspent outputs that can be linked to your identity (KYC UTXO's) and unspent outputs that can't be linked to your identity (non-KYC UTXO's). They are equally valid, and on a technical level you can create a transaction using a mix of both as inputs. However, you have to realise that as soon as you use even one KYC UTXO, every input and output of the transaction will potentially be linkable to your identity.

Personally, i just use different wallets... One wallet which i use for stuff that can be tied to my identity: buying/selling BTC, buying physical items,... And a completely different wallet that's only funded with unspent outputs that went trough some form of *anonimisation*... Nowadays, however, anonimisation is seen as a bad thing by many KYC services, so be carefull when anonimising unspent outputs.

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remifa287 (OP)
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April 25, 2024, 12:40:29 AM
 #3

To mocacinno:
Yes, you understand what I am asking. The double wallet idea sounds very good to me to preserve privacy. And I'm guessing that 'anonimization' is the same as 'whirlpooling?' I'm also thinking that Monero would come in handy when accepting donations too. Opinions? Thanks for your explanation, mocacinno.
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April 25, 2024, 05:45:31 AM
 #4

To mocacinno:
Yes, you understand what I am asking. The double wallet idea sounds very good to me to preserve privacy. And I'm guessing that 'anonimization' is the same as 'whirlpooling?' I'm also thinking that Monero would come in handy when accepting donations too. Opinions? Thanks for your explanation, mocacinno.

Well, the technique you mentioned is one of the ways to anonimise your funds... There are many others like it, but bitcointalk might not be the right place to go into that topic, since one of the most popular forms of anonimisation was banned from bitcointalk quite recently.
Personally, when it comes to donations, i like to give people options, and monero is defenately a good option when it comes to privacy. But i also think that if you limit your donations to monero, you'll probably miss out (since not all people will hold monero, and most people won't exchange BTC for XMR just to donate).

PS, you probably get way less opinions on this thread because it has been made in off-topic, whilst it had an equally good place in the "Bitcoin Discussion" subforum. You could ask a moderator if he can move your topic if you want other people's opinions aswell.

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