Will blockchain survive the crackdown on mixers and anonymization?

[legiteum]

Technically PayPal is holding the money not by yourself so it's no different from the traditional banking system but it was the beginning of digital payment era when people found that it's easy to make payments with PayPal than going through the banks and their complicated processing for every transactions.

Here you use the blockchain which is not just limited to cryptos so better use the term crypto.

My point was that there was "digital cash" before Bitcoin, and millions of people happily used it. In that context, Bitcoin had to offer something PayPal did not have, which is the ability to thwart government subpoenas into transactions. If Bitcoin was just a slow, expensive, clunky and risky version of PayPal, then nobody would want it and Satoshi would certainly have known that.

The US at least, millions of Americans are paid every day for their work in untraceable physical cash, and there are no laws against it all of these years later.

Cash is traceable because the dollar notes have serial numbers on them. That's how they track down gun and drug sales for instance.

If you are talking about "most people" then you definitely aren't talking about rich people who have the money and the wherewithal to use offshore banks. Millions of Americans get paid physical cash every day for things like tips and service jobs. And the US government doesn't go after them because they don't have a specific reason (which they would need to take to court) and it's not worth their while to go to this trouble just to tax some hard worker person's... tips.

Government policy in this regard is very clear - anonymity and confidentiality will be eliminated

But this is very specific: they want anonymity and confidentiality from valid court-ordered government subpoenas. The US government is actually supporting privacy against criminals, marketers and fellow citizens through various privacy laws.

In current realities, privacy is primarily needed from government banditry (imagine blockchain in the hands of totalitarian governments).

I certainly agree that a system that allows people to evade the terrible effects of oppressive regimes is a very useful thing: but this is a very narrow audience of a few thousand people across the world, and not a problem most people have. Most people don't need to or want to go against their government--and most in the democratic world are happy its there to protect them from criminals.

As for the longer term, this brings up an important question: why use blockchain at all?

Blockchain is well suited in conditions where “transparency” of any activity between all market participants is valued and respected.

Maybe, but Venmo originally touted an option to share every transaction you made with your friends, and this feature was very unpopular.

And you can create transparency much easier/faster/cheaper/better without blockchain.

Are you suggesting we abandon this and take a step back? You can't put the jinnee back in the bottle.

Abandon? No. Did we "abandon" IBM mainframes designed in the 1980s? Not really: they are still in use today. But as a mainstream consumer phenomenon, I am predicting that the blockchain architecture will fade away.  People will still use digital currencies more and more, but they won't be based on blockchain.

[Sandra_hakeem]

If you narrow it down to Bitcoin which operates on a decentralized bloclchain, it will definitely survive the attack on pruvxcy through mixers and coinjoin services.

Mhan, what are you talking about? Bitcoin wasn't originally made with some sort of maneuvers like mixers and conjoin as you may have it, these services came in after several years of yearning/struggle for privacy.  Not until several other mixers were introduced with a different motive, this time, to collect dirty coins, swap, mix and release cleans ones.. It's somewhat impossible for the government to investigate where and how those coins were traded, since the mixers are anonymously rooted.

The whole thing will only move most of all services and businesses from restricted countries to crypto-friendly ones. Mixers will no longer be called mixers, they will have a new name, and their founders will do it much more carefully and with more anonymity.

They got butt-hurt for getting censored by the governments... Why didn't they decide to keep their services a secret?

[jrrsparkles]

Technically PayPal is holding the money not by yourself so it's no different from the traditional banking system but it was the beginning of digital payment era when people found that it's easy to make payments with PayPal than going through the banks and their complicated processing for every transactions.

Here you use the blockchain which is not just limited to cryptos so better use the term crypto.

My point was that there was "digital cash" before Bitcoin, and millions of people happily used it. In that context, Bitcoin had to offer something PayPal did not have, which is the ability to thwart government subpoenas into transactions. If Bitcoin was just a slow, expensive, clunky and risky version of PayPal, then nobody would want it and Satoshi would certainly have known that.

That is what I am trying to explain, digital cash is different from decentralized monetary system and that's what bitcoin is offering. And Paypal transactions are reversible while bitcoin transactions aren't, Paypal transactions are faster but the 180 days for chargeback is big red flag while bitcoin on an avg TX gets confirmed in 10 minutes and I feel it's worth the fee to pay what we get.

[Synchronice]

First of all, blockchain has nothing to do with mixing and anonymization. A blockchain is a distributed ledger with growing lists of records (blocks) that are securely linked together via cryptographic hashes. [Source ¹]. Blockchain technology alone (also) is very interesting and beneficial for everyone, for governments too. Some governments and companies invest into development of blockchain technologies in their countries, in different niche.

And yes, even without privacy, Bitcoin and blockchains would still be useful, just as these are still very useful today despite privacy being very minimal.

If privacy was important for people, Monero would be number 1 cryptocurrency on coinmarketcap instead of being placed at 47th place right now (with 24h volume - 136th.

[yazher]

With just a few updates and modernizations countering every plot of the government wanting to have full control of it, I'm sure it's just a matter of time before they scratch their head again. I don't think those people who are behind this great financial revolution will only sit and watch what the SEC is going to do to close the gap between anonymity and transparency in the crypto industry, I'm sure they are also cooking something in order to counter whatever the government plan on taking out anonymization from us. That's why Satoshi didn't show himself because he knows something like this might happen in the future and if he is alive and his team, I'm sure they are making some plan to close any possibility of taking out everything that leads to hide our identity when holding crypto.

[legiteum]

That is what I am trying to explain, digital cash is different from decentralized monetary system and that's what bitcoin is offering. And Paypal transactions are reversible while bitcoin transactions aren't, Paypal transactions are faster but the 180 days for chargeback is big red flag while bitcoin on an avg TX gets confirmed in 10 minutes and I feel it's worth the fee to pay what we get.

Huh? Bitcoin transactions are reversible in the same way PayPal transactions are, or any other transaction system: you create a new transaction to counteract the value of the one you want to reverse. As for charge-backs, refunds, etc., the technical mechanism of the value transfer is an implementation detail. All of those things happen on top of whatever transfer mechanism you are using.

(And ten minutes for a transaction is an absolutely unthinkable amount of time for 99.99% of the world's transactions on any given day. Bitcoin transactions are only viable for extremely specialized purposes e.g. large-scale transfers. This is why it will never be "digital cash" as so many here keep saying Bitcoin was originally designed to be).

As for calling Bitcoin a "monetary system", well, I would... need you to define exactly what you mean by that before commenting on it .

First of all, blockchain has nothing to do with mixing and anonymization. A blockchain is a distributed ledger with growing lists of records (blocks) that are securely linked together via cryptographic hashes. [Source ¹]. Blockchain technology alone (also) is very interesting and beneficial for everyone, for governments too. Some governments and companies invest into development of blockchain technologies in their countries, in different niche.

Yes, but that's like saying a car has nothing to do with transportation. Clearly blockchain was meant to provide a means of transactions for entities who could not use the means they had at the time.

And I have asked here and elsewhere, in numerous times (with dedicated threads) for certified non-cryptocurrency non-NFT design wins for the blockchain architecture and thus far the answer has been zero. There's lots of hype around the technology, but nobody has actually delivered a clear customer benefit with the architecture outside of the realm of public crypto. (And why is that? Because blockchain's only unique benefit is that it thwarts government subpoenas into transactions, and that is by definition a problem that known entities cannot possibly have since they are... known). Hiding something from yourself is a pointless waste of time, which is why nobody uses blockchain inside of companies or governments.

And yes, even without privacy, Bitcoin and blockchains would still be useful, just as these are still very useful today despite privacy being very minimal.

If privacy was important for people, Monero would be number 1 cryptocurrency on coinmarketcap instead of being placed at 47th place right now (with 24h volume - 136th.

I've been saying this as well. And given that most people own hold Bitcoin and other cryptos through a broker or an app, almost nobody actually cares about decentralization either.

Bitcoin is, in actual reality today, a meme investment instrument. There's nothing wrong with that, though.

I'm sure they are making some plan to close any possibility of taking out everything that leads to hide our identity when holding crypto.

The US dealt with this problem in the early 1970s with physical cash, and their solution was to put a dollar limit on transactions of $10,000. Anything under 10k cash and basically the government doesn't care about it. This handles most people's needs for cash, and aligns with the principles of the Anon Paradox, which states the most people want anonymity for "small" money and known identity for "big" money.

[Medusah]

If you didn't care about the government, then why not just use a plain old bank?

It depends on the amount.  When transferring a thousand dollars, using Bitcoin is less expensive compared to traditional bank-to-bank transactions.  If the banks involved are in different countries, the process becomes even pricier and takes longer for the transaction to be confirmed. 

All you try to portray bitcoin as is your interpretation, if you knew how bitcoin was designed and for what we wouldn't have had satoshi we would have gad legitum as the inventor.
Satoshi mentioned the government only once, and you're not going to like it:

"The developers expect that this will result in a stable-with-respect-to-energy currency outside the reach of any government." -- I am definitely not making an such taunt or assertion.

Satoshi mentioned the government quite a lot of times.  "Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own".  The genesis block message.  I believe he also discussed government in the introduction post on the p2pfoundation forum.

The original intent, as Satoshi suggested, for Bitcoin was to function as peer-to-peer cash, but it is rarely used like this nowadays.  No significant concern there. 

[coolcoinz]

No cryptocurrency will ever come even close to scaling to the billions of transactions each day by people worldwide.

That's a bold statement. You can't possibly know that. We're not talking about the next 10 years, but ever. How do you know what people will use for currency in 2050, or 2150?
IMO it's not going to be fiat currency and if not that then what? Maybe we'll be mostly extinct and back to trading seashells and amber, but if not we'll not use currency printed by FED. There will not be any FED, I'm pretty sure of that.

I don't think that there's any danger to bitcoin. The only danger is that there will be no anonymity, but for that to happen they'll first need to ban cash.

[The Cryptovator]

When crypto was born, there weren't any kind of mixers or privacy tools. But crypto hasn't only survived; it has also gained mass popularity. Crypto wasn't created for privacy reasons when all the data is public on the blockchain. Crypto was created to make borderless decentralised money transfers, which have been going on. No government can prevent us from using blockchain that is available publicly. So mixers or privacy tools don't have any relation to the blockchain. Privacy tools can just mix or break transactions; they can't change or modify blockchain data. So I don't see any reason why blockchain should be affected when mixers and privacy tools break down. 

[legiteum]

No cryptocurrency will ever come even close to scaling to the billions of transactions each day by people worldwide.

That's a bold statement. You can't possibly know that. We're not talking about the next 10 years, but ever.

The laws haven't changed in the last 14 years and they aren't going to change in the next 140 . Bitcoin was designed intentionally to be slow and expensive e.g. PoW. If it was easy/fast/cheap to create a node and certify transactions, the paradigm would fail.

How do you know what people will use for currency in 2050, or 2150?

IMO it's not going to be fiat currency and if not that then what? Maybe we'll be mostly extinct and back to trading seashells and amber, but if not we'll not use currency printed by FED.

I think the world will almost entirely stop using physical paper and metal currencies in the next 20 years. I think they be replaced by digital currencies. I think those currencies will not be powered by a blockchain-based architecture.

 There will not be any FED, I'm pretty sure of that.

The FED will be just fine. They don't care how the money is transmitted, they just trade in value. Maybe you are thinking about the US Mint and the Bureau of Engraving? Those departments probably will shrink to almost nothing.

And as we discussed in another thread, I think the USD will stay around forever in the same way that the English language and the Metric System will stay around forever, e.g. as a measurement mechanism for value. People will stop holding physical paper and metal coins, and people will not store their savings in actual USD as much, and people will use various digital currencies to trade, but the USD as a concept will stay around forever, more or less. Even if we're trading seashells and amber, the value of those things will be translated to USD so people know how much value it is.

Quite the contrary, my 100 year prediction is that all other sovereign currencies fall by the wayside and only USD stays around, and only then as a measurement device so you'd pay for everything the world denominated in USD, and all digital currencies will have a USD exchange rate which most people won't even see because it's hidden from them by the software.

I don't think that there's any danger to bitcoin. The only danger is that there will be no anonymity, but for that to happen they'll first need to ban cash.

I don't think so either, and I've needed to qualify my original OP to say that by "survive" I mean "still be the biggest thing in digital currency". I think it will "survive" in the same way IBM mainframes have "survived". There's no reason people won't be trading Bitcoin forever. It's just that the ubiquitous means of digital transfer e.g. a digital currency that everybody uses on a daily basis will be some other non-blockchain-based thing.

[serjent05]

That is what I am trying to explain, digital cash is different from decentralized monetary system and that's what bitcoin is offering. And Paypal transactions are reversible while bitcoin transactions aren't, Paypal transactions are faster but the 180 days for chargeback is big red flag while bitcoin on an avg TX gets confirmed in 10 minutes and I feel it's worth the fee to pay what we get.

Huh? Bitcoin transactions are reversible in the same way PayPal transactions are, or any other transaction system: you create a new transaction to counteract the value of the one you want to reverse. As for charge-backs, refunds, etc., the technical mechanism of the value transfer is an implementation detail. All of those things happen on top of whatever transfer mechanism you are using.

I beg to disagree that Bitcoin works the same as Paypal transaction. Once confirmed on the network Bitcoin transaction is irreversible, for Bitcoin transaction to be reversed, it needs to be double spend before the network confirms it.  So it does not work like the Paypal way of reversing transactions.  I wonder why you think that Bitcoin and PayPal can be reverse in the same way.

(And ten minutes for a transaction is an absolutely unthinkable amount of time for 99.99% of the world's transactions on any given day. Bitcoin transactions are only viable for extremely specialized purposes e.g. large-scale transfers. This is why it will never be "digital cash" as so many here keep saying Bitcoin was originally designed to be).

But there are people who are able to transfer funds on a small scale, and it is not only specialized for a large-scale transfer else if it is then there will be a very high lower amount limit for Bitcoin transactions and we can even transfer as small as 1 satoshi, can't we?

[Woodie]

This explains why that Trump crypto support video clip is making headlines on the internet!

You know what,from one angle I believe the US government has the best interest of its people and are trying to protect them but on the other hand we all know that these regulations will leave a mark on crypto and this ripple effect will be felt by everyone no doubt about that as markets will be negatively affected.. probably already happening .


Btw, I think there is a typo in title which probably was to read>>> Will blockchain "Bitcoin" survive...

[legiteum]

I beg to disagree that Bitcoin works the same as Paypal transaction. Once confirmed on the network Bitcoin transaction is irreversible, for Bitcoin transaction to be reversed, it needs to be double spend before the network confirms it.  So it does not work like the Paypal way of reversing transactions.  I wonder why you think that Bitcoin and PayPal can be reverse in the same way.

Because you can't reverse a PayPal transaction, either. The transaction is always there in their database no matter what. From anybody using either means of transacting, the usage is exactly the same. You can get into which database is "safer" but you'd get into a very long conversation about information security, and you'd need to know a lot about how PayPal manages its infrastructure, etc.

My company's transactions are written to distributed WORM drives that cannot be erased, so every transaction stays around forever. I don't know if PayPal does, but it might be similar.

But there are people who are able to transfer funds on a small scale, and it is not only specialized for a large-scale transfer else if it is then there will be a very high lower amount limit for Bitcoin transactions and we can even transfer as small as 1 satoshi, can't we?

You can, in the same way you can take an airline flight from JFK to LGA (10.4 miles), but... why would you? That would obviously be a massive waste of resources and you can get there a lot easier in other ways. In the case of Bitcoin, transactions can cost up to 30 US dollars, so unless you are moving at least hundreds of dollars around, the transfer cost as a percentage will be prohibitively expensive.

This explains why that Trump crypto support video clip is making headlines on the internet!

Anything he lies about on any given day makes headlines--he's the candidate for president this year.

Btw, I think there is a typo in title which probably was to read>>> Will blockchain "Bitcoin" survive...

No, I very specifically meant blockchain as an architecture to support a digital currency. I think future popular digital currencies will not be based on blockchain.

[Antotena]

When did Proof Of Work is the only one consensus in blockchain?

If you are been asked the most successful consensus blockchain today, I bet you will first mention Bitcoin and would probably not mention any other blockchain because Bitcoin remain the best and others are insignificant, people don't mix with other coins like Bitcoin, Ethereum was closer but now take down and it's not even proof of work anymore.

POW and decentralization is the reason why Bitcoin transactions are slow and expensive compared to other coins, but it's not make the whole blockchain is slow and expensive! check Stellar and Nano.

Blockchain is just a ledger that contains data, a public blockchain is actually make anyone can trace it. If US crackdown on privacy, only private blockchain are in danger.

I'm not sure if decentralization was the reason why Bitcoin transaction was slow, Ethereum chain is not as decentralized as it was during the days of proof of work but does that increases the speed now in proof of stake, no. Block space doesn't have deep relationship with decentralization but on the protocol level. If it was about fully decentralization, the developers wouldn't have discarded block increased proposal all this while.

[Medusah]

The laws haven't changed in the last 14 years and they aren't going to change in the next 140 . Bitcoin was designed intentionally to be slow and expensive e.g. PoW. If it was easy/fast/cheap to create a node and certify transactions, the paradigm would fail.

At this point, it seems like you're simply trolling.  The fact that laws haven't changed over the past decade doesn't mean they won't change in the next decade, or even in the next century... By the way, Proof-of-Work does not relate to the network's speed. 

Because you can't reverse a PayPal transaction, either.

Absolutely not true.  Paypal transactions are reversible:  https://www.paypal.com/us/brc/article/bank-reversals-guide.

[philipma1957]

In the first place — why would 'blockchain' not survive? Blockchains will work totally fine without mixers and coinjoins and stuff. I'm all for privacy, but everyone simply isn't interested in it whether we like it or not. Only a minority cares about self-custody and being self-sovereign; a lot of people just want to use it just as an investment/hedge.

And yes, even without privacy, Bitcoin and blockchains would still be useful, just as these are still very useful today despite privacy being very minimal.

they lose a lot of value if your tx can be blocked and frozen.

I am in country x it is invaded by country y I flee  go to country e.

the winning invading country (y) asks for the tx to move my coins be frozen.

my only crime was living in a losing country (x)

[legiteum]

The laws haven't changed in the last 14 years and they aren't going to change in the next 140 . Bitcoin was designed intentionally to be slow and expensive e.g. PoW. If it was easy/fast/cheap to create a node and certify transactions, the paradigm would fail.

At this point, it seems like you're simply trolling.  The fact that laws haven't changed over the past decade doesn't mean they won't change in the next decade, or even in the next century... By the way, Proof-of-Work does not relate to the network's speed.  

I don't know about "trolling", but do you think the speed of light will change in the future? I'm personally banking on that staying the same for as long I am alive, at least .

And by "network" here I mean the infrastructure supporting Bitcoin, not the interconnect specifically.

Because you can't reverse a PayPal transaction, either.

Absolutely not true.  Paypal transactions are reversible:  https://www.paypal.com/us/brc/article/bank-reversals-guide.

Yes, but it's not reversible within their infrastructure. Another payment service using blockchain would have the same exact thing. In other words, if you paid in Bitcoin for something you bought from an online retailer and they were unable to deliver it, they would have a procedure for "reversing the transaction" which would entail another Bitcoin transaction. This is not functionally different than PayPal, a credit card, or anything else.

And again, if you want to switch the topic to the internal infrastructure, PayPal is absolutely not "erasing the transaction from existence" when they refund a transaction, the data is absolutely there, stored approximately forever, just like a block in the Bitcoin blockchain is. There are many other ways to securely ensure the permanence of data besides the way Bitcoin does it, or with a blockchain architecture. Indeed, a centralized blockchain or one with relatively few nodes would be far more dangerous than any typical regulated US financial institution.

And of course Bitcoin itself could potentially (however unlikely) be taken over by China so I would surmise that Bitcoin is significantly less safe than say PayPal as well (although for my own purposes I would easily trust them both).

[batang_bitcoin]

As for the longer term, this brings up an important question: why use blockchain at all?

Blockchain is slow and expensive to transact in on purpose because of proof-of-work and decentralization.

It's because it is transparent and can't be altered. That's the reason why blockchain has a better integrity if you're for that and projects that are into it aren't just for crypto but also for main use cases like voting.

No cryptocurrency will ever come even close to scaling to the billions of transactions each day by people worldwide.

You bet? many of those billion of transactions aren't that much I guess so if it's about quantity over quality, you have the point in there.

[legiteum]

It's because it is transparent and can't be altered. That's the reason why blockchain has a better integrity if you're for that and projects that are into it aren't just for crypto but also for main use cases like voting.

A blockchain-based architecture does not have "better integrity" than other approaches per se--just ask one of the thousands of people who have lost billions of dollars on failed blockchain projects. Blockchain can fail just like any other computer system can fail.

And no country is actually using blockchain for voting, which would be extremely stupid if they even tried it.

[PX-Z]

And no country is actually using blockchain for voting, which would be extremely stupid if they even tried it.

Why its stupid? It addreses vote tampering which is known in any election (fraud/cheating) although there's no country uses it for national election yet. But there already some "stupid" of them uses already in small scale voting for pivot testing^[1] in city, organization, etc. in different countries already.


[1] https://hackernoon.com/which-countries-are-casting-voting-using-blockchain-s33j34ab