Will blockchain survive the crackdown on mixers and anonymization?

[Abiky]

Privacy and anonymity weren't the "first thing Bitcoin was originally designed to accomplish". Bitcoin was supposed to be peer-to-peer electronic cash, which can be used without the need of banks and third parties. Just read the whitepaper again. Does it mention anything about privacy and anonymity?
The BTC blockchain was never designed to be anonymous and private. Actually, the BTC blockchain is pretty transparent and transparency is a good thing, because it creates trust.
BTC mixers weren't a thing when the BTC blockchain was created. Why would the BTC blockchain be dependent on the existence of centralized third party services like BTC mixers?

Mixers aren't mentioned in the whitepaper. But the fact that Bitcoin was created by a cypherpunk with libertarian ideals, says it all. In the early days, many believed BTC to be truly-anonymous. It's just that the rise of centralized exchanges and surveillance/analytics tools defeated Bitcoin's original purpose. Mixers were created as a solution to this problem. But they're still far from perfect. Centralized mixers may've been taken down by mainstream governments, but that won't stop developers from making non-custodial (decentralized) ones.

The failures of mixers won't affect the core Bitcoin blockchain because they aren't directly part of the network. Just like L2 scaling solutions (eg: Lightning Network). Rest assured that Bitcoin will continue to carry on as usual because of the way it was designed (decentralized and censorship-resistant). As long as it stays that way, we should have nothing to worry about.

[legiteum]

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

It's stupid because it wouldn't do anything except make the system slow, expensive, and error prone because it would be brand new untested systems.

Like lots of blockchain "projects" that had happened a few years ago, people blindly put the words, "blockchain" on anything because the price of Bitcoin went to a half trillion dollars and that convinced them at anything made with "this blockchain thingy" must be awesome. But blockchain doesn't solve any problems that voting systems actually have since it makes the system inherently less secure, slower, and more expensive to create (can you imagine every vote taking 15 minutes to cast?).

And voting is quite necessarily not anonymous, which is the very opposite of what a blockchain system does. If all votes were anonymous and not connected to an actual person but rather just a private key, then tampering and vote rigging would actually be easier than ever before.

[CODE200]

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

You just exposed yourself as a person that doesn't know anything about blockchain. Dude, blockchain is perfect for creating a voting system that's tamper proof. If you don't know, blockchain works in a way where once you put in the data on the block and it's confirmed, there's no going back on that, it would only be stupid in a government setting when they don't do any kind of blockchain technology on what they claim to be a blockchain voting system and the fact that this system will never pass in Congress because they know how powerful that system would be once it's implemented but other than that, it's the best way to prevent fraud.

[legiteum]

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

You just exposed yourself as a person that doesn't know anything about blockchain. Dude, blockchain is perfect for creating a voting system that's tamper proof. If you don't know, blockchain works in a way where once you put in the data on the block and it's confirmed, there's no going back on that, it would only be stupid in a government setting when they don't do any kind of blockchain technology on what they claim to be a blockchain voting system and the fact that this system will never pass in Congress because they know how powerful that system would be once it's implemented but other than that, it's the best way to prevent fraud.

LOL, "tamper proof". Tell that to the thousands of people who have lost billions of dollars on blockchain projects. The data structure of the blockchain is only as secure as the system holding it.

Believe it or not, understanding computer systems is a little harder than reading the financial papers telling you to buy more Bitcoin.

[batang_bitcoin]

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.

You're defining failed projects compared to the working projects. Talking in general about the function of blockchain, the integrity is there. Of course, you'd look at the failure of blockchain when you're defining the specific projects that have failed. Blockchain isn't just all about crypto nowadays, there's the actual use case in different fields aside from crypto.

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

It's just one of the many use cases there but I've found this for that specific and many others did actually used it.

It might surprise you to know that the US has already used a blockchain electronic voting system to vote in the 2018 midterm election (West Virginia) and the 2020 Presidential election (Utah County).

[PX-Z]

It's stupid because it wouldn't do anything except make the system slow, expensive, and error prone because it would be brand new untested systems.

Existing voting systems are more expensive, slow and can be cheated. Untested is outdated term check the article i provided on ehat countries and city uses this kind of voting. It's true that it still in fancy stage yet it is still developing.

Like lots of blockchain "projects" that had happened a few years ago, people blindly put the words, "blockchain" on anything because the price of Bitcoin went to a half trillion dollars and that convinced them at anything made with "this blockchain thingy" must be awesome.

Those are not connected and does not make any sense to a voting system, investments on blockchain projects are different to a blockchain system only for a single usecase - cast a vote.

But blockchain doesn't solve any problems that voting systems actually have since it makes the system inherently less secure, slower, and more expensive to create (can you imagine every vote taking 15 minutes to cast?)

I assume that this 15 mins you're talking is the confirmation time to verify a transaction. That problems can be easily solved by changing the confirmation time in the code, is it not? Change it to at least 1 minute, no need to follow what bitcoin blockchain did and having a mutiple nodes will secure it's network. I don't think it's expensive to do such thing, elections cost whereas countries have millions of $ budget in every elections that happens once in 3-6 years.

And voting is quite necessarily not anonymous, which is the very opposite of what a blockchain system does. If all votes were anonymous and not connected to an actual person but rather just a private key, then tampering and vote rigging would actually be easier than ever before.

Obviously, you don't need to be anonymous in blockchain voting system no explaination needed.

[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.

You're defining failed projects compared to the working projects. Talking in general about the function of blockchain, the integrity is there. Of course, you'd look at the failure of blockchain when you're defining the specific projects that have failed. Blockchain isn't just all about crypto nowadays, there's the actual use case in different fields aside from crypto.

But wait, if the project includes blockchain, how can it possibly fail, since, as you said above, it automatically make a system secure, right? As opposed to other technologies that have been around for decades (say what your bank account is stored in) that are somehow "insecure"?

True: in the proper context (e.g. with thousands of servers like Bitcoin has), and with good governance, a blockchain architecture can be made to be secure.

Also true: you can make any software system secure with good governance and careful testing.

The only difference is that using the blockchain architecture adds unnecessary layers of software that make the system more complicated (which makes it inherently less secure), and adds unnecessary costs (thousands of servers), and still involves a risk of a network overthrow, which could even happen to Bitcoin from a nation-state like China.

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

It's just one of the many use cases there but I've found this for that specific and many others did actually used it.

It might surprise you to know that the US has already used a blockchain electronic voting system to vote in the 2018 midterm election (West Virginia) and the 2020 Presidential election (Utah County).

[/quote]

Maybe actually read the content of the link before you cite it? Here you go:

"Voatz recently has come under fire for their application security. A team of MIT researchers published a paper that outlined numerous issues, specifically highlighting their vulnerability to third party attacks. The paper specifically advised the Department of Homeland Security to abandon the use of the app in high-stakes elections. Since then, West Virginia has paused use of the app while Utah county will continue to do so because of its popularity"

This is exactly my problem with people who think just saying the word, "blockchain" will magically make a system more secure. While it's technically possible to make a secure blockchain system, it is harder to make it secure with blockchain than without it.

And using a decentralized architecture for a centralized problem like voting (viz. votes must necessarily be connected to a real human identity not an anonymous public key), is really (sorry), pretty dumb .


Every new technology architecture that comes along in the IT world always has "case studies" that document increased customer value, reduced costs, and other benefits. Tools sellers like Microsoft and Amazon love these things, and you will see all of the technology architectures have these studies to show proven customer benefit from the architecture.

They don't have anything like that for blockchain. Nobody does. That's because IT projects are all done by known entities who are by definition centralized in their governance, so using an architecture that makes the system slower, more expensive and more complicated makes no sense.

Blockchain's only unique benefit is that it thwarts government subpoenas into transactions. That's it. That's all it does that other architectures don't do. And to solve that specific problem a very complicated and expensive and less secure architecture was invented to solve the problem.

But if you don't have that problem, then you are just wasting your time using the architecture and probably making your project less secure.

Thousands of "manager types" have probably instructed their engineers to "create xyz using blockchain" because it was the hottest buzzword for a while. This was driven mostly by the market cap of BTC and nothing else.

But when engineers go to actually implement a blockchain system, they learn the actual reality here, which is that buzzwords don't solve problems (but they sure can create a whole bunch you otherwise never would have had).

It's stupid because it wouldn't do anything except make the system slow, expensive, and error prone because it would be brand new untested systems.

Existing voting systems are more expensive, slow and can be cheated. Untested is outdated term check the article i provided on ehat countries and city uses this kind of voting. It's true that it still in fancy stage yet it is still developing.

Yep, I did. See the above comment about that experiment. Hint: it was a failed one.

I assume that this 15 mins you're talking is the confirmation time to verify a transaction. That problems can be easily solved by changing the confirmation time in the code, is it not?

You should really understand the technology you are talking about before commenting on it . The time it takes to verify a Bitcoin transaction is not some variable in the program that determines how long they want to make a user wait. That time is spent doing calculations that are slow on purpose based on the architecture.

And voting is quite necessarily not anonymous, which is the very opposite of what a blockchain system does. If all votes were anonymous and not connected to an actual person but rather just a private key, then tampering and vote rigging would actually be easier than ever before.

Obviously, you don't need to be anonymous in blockchain voting system no explaination needed.

If you aren't anonymous, then why use is blockchain? If you just want to keep a database of every known person's vote, why not... just keep a database of every known person's vote? This can be done very securely and has been done like this for billions and billions of votes worldwide.

[Medusah]

This is not functionally different than PayPal, a credit card, or anything else.

It is different, because the cost of mediation increases the transaction cost, unlike Bitcoin where there is no mediation.  Are you aware of the chargeback fees imposed by Paypal?  

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.

It's not necessarily foolish, but the majority of people wouldn't place their trust in it, which seems quite reasonable.  I am not sure if I would prefer it over the traditional voting system.  

[bluebit25]

Looking at the problem, they only talk about negative issues that appear through crypto, while other positive aspects that do exist are not mentioned or ignored. That is always the way of operation of those who want to manipulate and show influence to make certain areas easy to control.

I see positive/negative aspects of cryptocurrencies or some services that do not share data, and before blocking something, please raise the awareness of each user to guide them to fair use.

Anyway, the debate on this issue will always last along the journey of existence and development of blockchain. It cannot inherently be governed in a centralized manner, but will also go through a period where we find a way to to accept it.

[legiteum]

This is not functionally different than PayPal, a credit card, or anything else.

It is different, because the cost of mediation increases the transaction cost, unlike Bitcoin where there is no mediation.  Are you aware of the chargeback fees imposed by Paypal?  

Bitcoin transactions can cost 30 US dollars. PayPal charges a buck or two for small transactions. What are you talking about?

Are you seriously trying to say that Bitcoin is superior to every other from of value transfer because... it's cheaper?

[Medusah]

Bitcoin transactions can cost 30 US dollars.

Alright, firstly, that only occurs during serious network congestion, which is rare phenomenon.  Secondly, as a vendor, you're not obligated to exclusively accept Bitcoin.  I don't use Bitcoin for low-value transactions.  Monero, for instance, is significantly more cost-effective. 

Currently, Paypal imposes a $20 chargeback fee in the majority of countries, excluding the extra cost that's included if the situation escalates into a dispute. 

[legiteum]

Bitcoin transactions can cost 30 US dollars.

Alright, firstly, that only occurs during serious network congestion, which is rare phenomenon.  Secondly, as a vendor, you're not obligated to exclusively accept Bitcoin.  I don't use Bitcoin for low-value transactions.  Monero, for instance, is significantly more cost-effective. 

Currently, Paypal imposes a $20 chargeback fee in the majority of countries, excluding the extra cost that's included if the situation escalates into a dispute. 

That $20 chargeback fee is still cheaper than what you'd pay for the necessary Bitcoin transaction to send the money back in that situation. And of course for that $20 you are mostly paying for administrative time, which would be the same amount of work regardless of the technical means of the transaction. That means that in a Bitcoin scenario, you'd probably pay the $30 for the Bitcoin transaction and pay some company another $15 to mess around with the legal/contractual situation around the chargeback.

And through all of this, we've been talking about the old, slow, outdated system known as "PayPal'. The future is pure digital currencies that are not based on blockchain. My company's transaction fee is baked into the name of the company: one haypenny, or $0.005, or one half of a cent. That's the price of all transactions, no matter how big or small, and transactions are completed in under 10 milliseconds, and credibly scaling to handle every daily transaction the occurs by the human race on a daily basis.

Blockchain-based currencies are simply non-viable for mainstream transactions. That's why nobody has made this happen, despite billions and billions of dollars in hype that has been lavished on the idea. Blockchain will stay around forever as a means of providing investment instruments, but consumer transactions are quite another story.

[Medusah]

That $20 chargeback fee is still cheaper than what you'd pay for the necessary Bitcoin transaction to send the money back in that situation.

In Paypal, you're paying for administrative time and the legal situation around the chargeback.  In Bitcoin, you're paying for the legal situation only, if there is any.  If a chargeback for a low-value item is requested, the merchant is encouraged to accept it. 

And through all of this, we've been talking about the old, slow, outdated system known as "PayPal'. The future is pure digital currencies that are not based on blockchain.

Could you clarify the distinction between a centralized digital currency and Paypal?  From what I understand, they appear to be essentially identical, just labeled differently.

Blockchain-based currencies are simply non-viable for mainstream transactions.

I agree.  They are predominantly useful for situations requiring privacy or when transferring funds internationally. 

[legiteum]

In Paypal, you're paying for administrative time and the legal situation around the chargeback.  In Bitcoin, you're paying for the legal situation only, if there is any.  If a chargeback for a low-value item is requested, the merchant is encouraged to accept it.  

Again, the situation is exactly the same whether the means of transaction was PayPal, Bitcoin, a credit card, or an envelope with some paper bills. Some actual humans need to be involved in a merchandise return situation, which costs a business money to deal with.

There are probably other services that deal with this cheaper, but in any case you are not paying for the price of PayPal's servers to move a few rows in their database around, you are paying for human beings to deal with a customer service problem.

And through all of this, we've been talking about the old, slow, outdated system known as "PayPal'. The future is pure digital currencies that are not based on blockchain.

Could you clarify the distinction between a centralized digital currency and Paypal?  From what I understand, they appear to be essentially identical, just labeled differently.

A digital currency is a... digital currency, e.g. like Bitcoin, or Ether, or Haypenny. Digital currencies are digital tokens that maintain their value by virtue of one's possession of it, as opposed to one's identity like as in a bank or credit card or PayPal etc. Digital currencies allow value transfer without an exchange of personal information. For instance, here is 1M USDE (non-negotiable) in DollHairs: gmBe00H5TVgD1XiA6tOEPR. Put that into your Haypenny wallet (which requires no identity), and you have the Doll Hairs (see how fun this is? ).

It's worth noting that lots of blockchain-based digital currencies (aka cryptocurrencies) are defacto centralized since they don't have a broad dispersal of servers, or don't have very many servers. Indeed, probably most cryptos could be taken over fairly easily by a central entity, which makes them only "temporarily" decentralized. And there's lots of debate over whether Ether and others are "really" decentralized since there is so much control over these systems by a single company.

(And I'll be wondering how long before somebody claims those Doll Hairs ).

[Medusah]

Again, the situation is exactly the same whether the means of transaction was PayPal, Bitcoin, a credit card, or an envelope with some paper bills. Some actual humans need to be involved in a merchandise return situation, which costs a business money to deal with.

Regardless, transaction costs increase due to mediation.  Paypal is compelled by regulations to verify the parties involved when facilitating a transaction; this increases the cost.  People need to work so that your transaction finalizes.  How is this "exactly the same"? 

Digital currencies are digital tokens that maintain their value by virtue of one's possession of it, as opposed to one's identity like as in a bank or credit card or PayPal etc.

So, your digital currency operates similarly to PayPal but without the need for identification, correct?  What happens when authorities demand client identification from you?  Sooner or later, you may be classified as a money transmitting business. 

[legiteum]

Digital currencies are digital tokens that maintain their value by virtue of one's possession of it, as opposed to one's identity like as in a bank or credit card or PayPal etc.

So, your digital currency operates similarly to PayPal but without the need for identification, correct?  What happens when authorities demand client identification from you?  Sooner or later, you may be classified as a money transmitting business. 

Haypenny is a digital currency, just like Bitcoin is. You could also say, "Bitcoin operates similarly to PayPal but without the need for identification". I guess that's one way to look at it...

Anyhow, Haypenny is just the transaction mechanism. Like with Bitcoin, the businesses who are compelled to deal KYC and so forth are the ones who take in and send out sovereign currencies e.g. US dollars and so forth. The Haypenny platform itself doesn't do that. We rely on brokers just like blockchain-based digital currencies do.

Of course, authorities can "demand" all they want--the platform simply doesn't have any identity inside of it. The only personal information we collect is an email address, and that's only for those wanted to create their own currency. You can have a client-side wallet with no identity at all if you want.

[Medusah]

Haypenny is a digital currency, just like Bitcoin is. You could also say, "Bitcoin operates similarly to PayPal but without the need for identification". I guess that's one way to look at it...

Except for one major distinction: in Haypenny, a state-level entity could potentially dismantle the system by targeting you, the central figure of Haypenny.  In Bitcoin, there is no individual or collective entity that, if attacked, could result in the shutdown of the entire system. 

Like with Bitcoin, the businesses who are compelled to deal KYC and so forth are the ones who take in and send out sovereign currencies e.g. US dollars and so forth.

...because there isn't a central authority that controls Bitcoin?  If such an entity existed, it's likely governments would enforce Know Your Customer policies on it or even threaten it if it resisted compliance. 

Of course, authorities can "demand" all they want--the platform simply doesn't have any identity inside of it. The only personal information we collect is an email address, and that's only for those wanted to create their own currency. You can have a client-side wallet with no identity at all if you want.

No disrespect, but were you just born yesterday?  Your company operates under the jurisdiction of a country's laws.  If those laws mandate the collection of personal information, you have to comply, or else you're breaking the law.  And just so you know, this puts your users' funds at risk because you're a single point of failure, in case you haven't realized it yet. 

[legiteum]

Haypenny is a digital currency, just like Bitcoin is. You could also say, "Bitcoin operates similarly to PayPal but without the need for identification". I guess that's one way to look at it...

Except for one major distinction: in Haypenny, a state-level entity could potentially dismantle the system by targeting you, the central figure of Haypenny.  In Bitcoin, there is no individual or collective entity that, if attacked, could result in the shutdown of the entire system.  

As we've discussed in another thread this week, a major nation-state like China could easily take over Bitcoin if it wanted to by controlling 51% of the hashrate. In our discussions most agreed that it was completely possible, although people questioned why they (or any other big country) would want to do that, which I agree with.

And by the same token, I don't know why some state-level actor would want to attack Haypenny either. Or PayPal, or Visa, or Citibank, or a corner grocery store?

I agree Haypenny can be attacked, but so could anything.

Like with Bitcoin, the businesses who are compelled to deal KYC and so forth are the ones who take in and send out sovereign currencies e.g. US dollars and so forth.

...because there isn't a central authority that controls Bitcoin?  If such an entity existed, it's likely governments would enforce Know Your Customer policies on it or even threaten it if it resisted compliance.  

Have governments gone after the many blockchain-based currencies that are defacto centralized (e.g. Ether)? I don't see why they would since these entities have public ledgers like Bitcoin does, and as such they can be tracked by anybody, including criminals, marketers, and... governments.

Haypenny, like any company, will respond to valid government subpoenas, and we make that very clear to our customers. But unlike cryptocurrencies with public ledgers, your transactions aren't out in the public for all to see. This makes Haypenny far more private that most blockchain-based currencies.

And this brings us right back to the beginning of this thread: blockchain's sole advantage is resisting government subpoenas into transaction activity. Then they figured out that Bitcoin couldn't really do that because of chain analysis, so mixers were invented. Now governments are cracking down on mixers. If they are successful, one wonders what utility Bitcoin has at all, since net-net it's less private than non-blockchain-based currencies like Haypenny.

Of course, authorities can "demand" all they want--the platform simply doesn't have any identity inside of it. The only personal information we collect is an email address, and that's only for those wanted to create their own currency. You can have a client-side wallet with no identity at all if you want.

No disrespect, but were you just born yesterday?  Your company operates under the jurisdiction of a country's laws.  If those laws mandate the collection of personal information, you have to comply, or else you're breaking the law.  And just so you know, this puts your users' funds at risk because you're a single point of failure, in case you haven't realized it yet.  

Of course we follow the law. There's no demand for an entity to do KYC who does not take in or give out tradable money. We are regulated exactly as any cryptocurrency is regulated.

As for our transaction integrity, every Haypenny transaction is written to three geographically separate locations before the transaction is marked as completed. And then, within about 10 seconds, transactions are written to military/financial-compliant distributed WORM system, meaning transactions cannot be erased no matter what, forever. This treatment of data is similar, or generally exceeds that of any major financial institution like a bank or a broker. (And as such, 95% of Bitcoin investors probably do not have this level of transaction integrity since their broker of choice is probably not this diligent with their transactions, and they may not even be with their own direct Bitcoin transactions).

[Casdinyard]

Yeah, at the end of the day bitcoin is money first and anonymous payment method secondly.

Nowadays most investors see the anonymization aspect of bitcoin as an afterthought anyway, with most of them really in it for the technology, the decentralization, or of course, the profits. Add to this the fact that we're getting Centralized Cryptocurrencies nowadays, and influencers/celebrities outing themselves as avid crypto investors and enthusiasts which are clear cut evidence that people are becoming more interested about bitcoin's other aspects and not because it makes you private and anonymous.

In the near future I envision even more people joining bitcoin for such reasons, and mixers becoming an even more obscure and "niche" necessity to many people. I don't see it dying off, as well as anonymization for that matter, no aspect of the crypto industry dies after all, but its following will definitely shrink towards the remaining day 1s and avid fans which is healthy if I do say so myself. It also makes it easier for retrieval of lost and stolen cryptocurrencies altogether, so in my book, it's a win-win.

[Medusah]

And by the same token, I don't know why some state-level actor would want to attack Haypenny either. Or PayPal, or Visa, or Citibank, or a corner grocery store?

Perhaps it's because they find it easier to shut down companies?  Lol.  Are you seriously asking why they'd target a company instead of Bitcoin, which is like a billion times more challenging to shut down?

I agree Haypenny can be attacked, but so could anything.

Why should I use bricks to build my house instead of just wood?  After all, you can break both.  

Have governments gone after the many blockchain-based currencies that are defacto centralized (e.g. Ether)? I don't see why they would since these entities have public ledgers like Bitcoin does, and as such they can be tracked by anybody, including criminals, marketers, and... governments.

That's why they are cracking down mixers and other privacy services: they are central points that can be shutdown easily.  What actions have governments taken against Monero?  Despite being infinitely superior to any mixer, it continues to operate smoothly.  Here's a hint: Monero operates in a decentralized manner.  

Of course we follow the law. There's no demand for an entity to do KYC who does not take in or give out tradable money. We are regulated exactly as any cryptocurrency is regulated.

Therefore, Haypenny functions as long as it complies with the laws of its country.  The difference with cryptocurrencies is that they operate independently of any country's laws.