[Question] If bitcoin becomes everyday money

[Alvin_talk]

I don't know if this has been discussed before, if so I'll just lock the thread.

The original purpose of bitcoin is to be able to transact peer to peer without intermediaries or centralised authorities. Lets imagine an ideal world where bitcoin is truly used in a decentralised manner (no regulated exchanges/merchants) and is accepted as everyday money. How will attackers be tracked, identified and penalised if they steal coins from others. Is there any possible way to track the attackers since KYC is not required to initiate a transaction?

I am asking because centralised exchanges were not part of the original plan. We are supposed practice self custody for the original purpose of bitcoin to be achieved. Run a full node and manage our bitcoin client (Bitcoin core and others) instead of relying on CEX. I am particularly concerned how identifying and penalising fraudsters will be possible in such an ideal world.

[Merit.s]

There are a lot of wallet compromised cases in the past that the attackers went away with it because they know how to cover their track especially, if they did not use an exchange to move the funds about.

Chain analysis can only track transactions that are traceable. This is why you must take the responsibility that is attached to self custody in order to secure your wallet properly. Only government and big firms can pay to track their lost bitcoin if possible, but a retailer like me and you cannot. If your wallet is compromised, your bitcoin is gone. Look at the recent Coldcard wallet compromised.

[Mrbluntzy]

How will attackers be tracked, identified and penalised if they steal coins from others. Is there any possible way to track the attackers since KYC is not required to initiate a transaction?

Yes, the address that the hacker sent the coins to will be blacklisted and published online so that Bitcoin users will be aware that any coins they receive from the address is coming from the stolen Bitcoin, that will help Bitcoin users keep a close eye on the address that sends them Bitcoin and if users are more concerned about it, they could at least get some information from anyone that wants to send Bitcoin to them, that might help.

If for example, someone wants to send Bitcoin to me based on any business or deals that we have had, they will have  to show me a that they are sending from a clean address and not the blacklisted address. This is just my thoughts.

[hmbdofficial]

How will attackers be tracked, identified and penalised if they steal coins from others. Is there any possible way to track the attackers since KYC is not required to initiate a transaction?

Since the bitcoin transaction are recorded publicly then it’s easier to identify the attacker and trace the address the stolen bitcoin were moved to. Just that the blockchain will not tell you who controls the address because address aren’t tied to any name identity but you can see the chain for transactions.

[BIT-BENDER]

I don't know if this has been discussed before, if so I'll just lock the thread.

The original purpose of bitcoin is to be able to transact peer to peer without intermediaries or centralised authorities. Lets imagine an ideal world where bitcoin is truly used in a decentralised manner (no regulated exchanges/merchants) and is accepted as everyday money. How will attackers be tracked, identified and penalised if they steal coins from others. Is there any possible way to track the attackers since KYC is not required to initiate a transaction?

I am asking because centralised exchanges were not part of the original plan. We are supposed practice self custody for the original purpose of bitcoin to be achieved. Run a full node and manage our bitcoin client (Bitcoin core and others) instead of relying on CEX. I am particularly concerned how identifying and penalising fraudsters will be possible in such an ideal world.

Many attackers aren't still using the centralized exchange and some of them are still being caught, yes KYC is a very fast route to tracking down a suspicious person but with constant pressure and monitoring an attacker can still be caught.
But still Bitcoin was meant to give you financial freedom and that freedom means you should protect your Bitcoin from attackers.

The North Korean case where the victims were waiting on the court to grant them permission to track the stolen funds down but did not come until a very serious percentage of the stolen funds became untraceable, this shows that stolen funds could be tracked even against the best attackers there is a possibility.

[Ambatman]

Bitcoin was never created to replace the Fiat system
It's an alternative for those that have seen the dark side of intermediaries.
With no Banks or Fiat and just Bitcoin the public ledger
There's no way to get the thief as long as they haven't shared somewhere that would link them to the address
Since Bitcoin is pseudonymous.

Yes, the address that the hacker sent the coins to will be blacklisted and published online so that Bitcoin users will be aware that any coins they receive from the address is coming from the stolen Bitcoin

And how would the communication get to everyone.
Bitcoin doesn't know if an address is clean or blacklisted
As long as its a valid address then it can receive Bitcoin
No intermediary can stop it
That's why it's called Bitcoin.

[Zoomic]

Op, if you've forgotten, Bitcoin is not completely anonymous but pseudonymous. The blockchain was designed to keep permanent record of every damn transaction so it's not even possible for an attacker to erase their trail.

In a case of theft of coins the main problem is identifying the person behind the address where the stolen funds are transferred to. So in essence, KYC is not what makes tracking possible rather it helps to easily reveal the real identity of the person behind an address that receive a stolen funds.

[CucakRowo]

Bitcoin was never designed to be theft recoverable. Fundamental ambition of Irreversible final settlement is, once your keys are gone, your coins are gone. No chargeback, no bank freeze and no opportunity to communicate and request please reverse this. This is the intended security standard in a virgin p2p world, not a flaw.

[Franklyn-wood]

How will attackers be tracked, identified and penalised if they steal coins from others. Is there any possible way to track the attackers since KYC is not required to initiate a transaction?

Since the bitcoin transaction are recorded publicly then it’s easier to identify the attacker and trace the address the stolen bitcoin were moved to. Just that the blockchain will not tell you who controls the address because address aren’t tied to any name identity but you can see the chain for transactions.

Yes since there is no KYC information attached to it, even if the block chain manage to reveal the address it won't show the name of the account or person that made the transaction.
The process are a bit difficult to achieve because first of all the victim of the affect stolen coin would need to report to security operatives that can handle the matter EFCC, FBI's and others depending on the country you are.
Proper record keeping is very important should Incase if those information are required for more investigation.

[Alvin_talk]

This is why you must take the responsibility that is attached to self custody in order to secure your wallet properly.

In such an ideal world, taking responsibility of self custody is not enough. Apart from privacy breaches, Imagine if you fall for a clone scams, the fraudster clones an e-commerce site and attach his personal bitcoin address to it and you buy a product from the cloned site, your coins are gone. How do you track and identify such scammer?

Yes, the address that the hacker sent the coins to will be blacklisted and published online so that Bitcoin users will be aware that any coins they receive from the address is coming from the stolen Bitcoin

Flaging the address of the scammer doesn't reveal the identity of the scammer. Does it?

Since the bitcoin transaction are recorded publicly then it’s easier to identify the attacker and trace the address the stolen bitcoin were moved to. Just that the blockchain will not tell you who controls the address because address aren’t tied to any name identity but you can see the chain for transactions.

Maybe you don't fully understand the question. My major concern is how the attacker can be identified not his address.

Bitcoin was never designed to be theft recoverable. Fundamental ambition of Irreversible final settlement is, once your keys are gone, your coins are gone. No chargeback, no bank freeze and no opportunity to communicate and request please reverse this. This is the intended security standard in a virgin p2p world, not a flaw.

This simply means it is not possible to adopt bitcoin as everyday money. Because chances are people always get scammed one way or the other. Since it is impossible to tackle the issue of scam identity, it will only be an alternative to fiat system for those who value privacy.

[Royal Cap]

The original purpose of bitcoin is to be able to transact peer to peer without intermediaries or centralised authorities.

Bitcoin's decentralisation is mainly to verify whether transactions are valid, and to prevent double spending not to verify the identity of each person with a central authority.  And we all know that the transaction history is publicly available on the blockchain, so even without KYC, it is often possible to see where stolen coins are going. But it is not always possible to directly trace a real world person from an address.

I am particularly concerned about how identifying and penalising fraudsters will be possible in such an ideal world.

I think the real challenge will not be identity, but attribution. Bitcoin is intentionally pseudonymous, not anonymous.  Using the same address repeatedly can make it much easier to link transaction history, while good privacy practices can make it harder. So even if Bitcoin can run without CEX, it's not true that fraud investigation will disappear completely, it's just that the method of investigation will be very different from the traditional banking system.

[JiiBs]

I am asking because centralised exchanges were not part of the original plan. We are supposed practice self custody for the original purpose of bitcoin to be achieved. Run a full node and manage our bitcoin client (Bitcoin core and others) instead of relying on CEX. I am particularly concerned how identifying and penalising fraudsters will be possible in such an ideal world.

This would continue to remain as some of the downside to a fully Bitcoin functioning society.

If you do watch discovery channels and security documentaries on how certain crimes are being established and traced, perhaps you might note that there are several pathways to establishing and tracing a crime.

Bitcoin wasn’t meant to identify who owns what address and the coins it contains but, a situation where certain addresses can be flagged, perhaps on some media can establish a pathway to tracking. I don’t think it can be easy but,

Let’s say in a scenario where addresses are flagged and certain merchants do receive payments from these addresses, the time stamp and a CCTV footage can identify the individual that did certain transaction. It would be a system that depends solely on the merchant though. It’s not a fully conceived thought to me and I don’t think it’s one that can be easy but, it can form a pathway hypothetically.

[Mrbluntzy]

Yes, the address that the hacker sent the coins to will be blacklisted and published online so that Bitcoin users will be aware that any coins they receive from the address is coming from the stolen Bitcoin

And how would the communication get to everyone.
Bitcoin doesn't know if an address is clean or blacklisted
As long as its a valid address then it can receive Bitcoin
No intermediary can stop it
That's why it's called Bitcoin.

Your interpretation about my idea is a bit off,  I didn't say or mean that when a Bitcoin address is blacklisted it can not send or receive Bitcoin, what am just implying here is that if such kind of theft happens and the information should be spread on the internet alongside the address that received the stolen Bitcoin should be published, any probably anyone that gets the information will be careful when receiving Bitcoin from any random transaction.

This is just an idea, it might not work effectively because not everyone will be able to get the information and some persons can still receive the Bitcoin without even knowing, perhap even with the Fiat money, it's not all stolen money that gets recovered. So, if Bitcoin become every day money and the kind of thing happened, it's not all the time that the hackers can be identified.

Yes, the address that the hacker sent the coins to will be blacklisted and published online so that Bitcoin users will be aware that any coins they receive from the address is coming from the stolen Bitcoin

Flaging the address of the scammer doesn't reveal the identity of the scammer. Does it?

No, it doesn't, the address is pseudonymous, but flagging it might just help in the investigation process which might or might not lead to Identifying the hacker.

[Stalker22]

This simply means it is not possible to adopt bitcoin as everyday money. Because chances are people always get scammed one way or the other. Since it is impossible to tackle the issue of scam identity, it will only be an alternative to fiat system for those who value privacy.

This simply means that Bitcoin was never intended to be a complete replacement for the fiat system.  That is not its primary purpose.  Think about how you transact with cash in the real world.  Cash is not easy to track either, is it?  So when you give cash to someone who turns out to be a fraud, you dont blame physical paper bills, and you certainly dont expect a bank to undo the transaction.  You accept that peer-to-peer settlement comes with personal responsibility.

Bitcoin is digital cash.  It trades the safety nets and chargebacks of centralized banks for censorship resistance, absolute self-custody, and complete control over your own money.

[CucakRowo]

This simply means it is not possible to adopt bitcoin as everyday money. Because chances are people always get scammed one way or the other. Since it is impossible to tackle the issue of scam identity, it will only be an alternative to fiat system for those who value privacy.

You can, you just have to change your payment model.
The reason you keep getting scammed is that you follow pay first, dispute later model.

When using Bitcoin, leave no room to get scammed. verify first, then pay.

And if someone doesn't develop the knowledge to avoid being scammed, they can use escrow.

[PrivacyG]

This simply means it is not possible to adopt bitcoin as everyday money. Because chances are people always get scammed one way or the other. Since it is impossible to tackle the issue of scam identity, it will only be an alternative to fiat system for those who value privacy.

And there is no problem with Bitcoin not becoming 'every day money'.  Bitcoin was meant to be a serious alternative to Fiat, not a replacement of it.  There are a lot more problems around it than just 'not being able to track scammers and attackers'.  I am pretty sure no government around the World right now could move from Fiat to Bitcoin considering how much they rely on a money printer or on the money printer of another country.  They can not inflate or deflate to their liking.  They can not seize.  They would lose control and this is their nightmare.

If you purchased Bitcoin thinking it is going to replace your local Fiat, you had a very unrealistic expectation.  Bitcoin will probably replace Cash once Cash becomes digitalized.  As soon as we will have no Privacy even with Bank notes, you may see Bitcoin replacing the old idea of having 'Cash' on you.  Other than that, I doubt it will do much.

[Alphakilo]

. I am particularly concerned how identifying and penalising fraudsters will be possible in such an ideal world.

it is not impossible even though it might prove to be somewhat difficult based on the region and their technology at hand, because for one, Bitcoin is not anonymous; every transactions is open on the ledger for all to see and forensic investigators can track an address using sophisticated means even if it takes more time, hence why CEX exist to make identification easy.
Funny also is the fact that fraudsters must at some point spend the funds they stole no matter how long it takes and that's a point were they get caught, so this stresses on the point I was trying to make earlier by saying Bitcoin isn't anonymous but the base layer is pseudonymous by design.

[Agbamoni]

The original purpose of bitcoin is to be able to transact peer to peer without intermediaries or centralised authorities.

Maybe we misunderstood the intention of Satoshi, or perhaps the users of Bitcoin decided to create their own usage instead of limiting it to what Satoshi wanted. Peer to peer transaction is indirectly done when we use Bitcoin to purchase goods and services online. It must not be done physically. Is it that we want Bitcoin to replace FIAT? I don't think that will ever happen. Bitcoin won't replace fiat. Rather, it will complement the FIAT system and has made an asset that is worth holding for the long term.

[CryptopreneurBrainboss]

I am asking because centralised exchanges were not part of the original plan. We are supposed practice self custody for the original purpose of bitcoin to be achieved. Run a full node and manage our bitcoin client (Bitcoin core and others) instead of relying on CEX. I am particularly concerned how identifying and penalising fraudsters will be possible in such an ideal world

The moment we begin to accept cryptocurrency for our everyday money,  then we have to begin facing the reality that every now and then   scammers will be getting away with their scams as is one of those things that decentralization can't defeat  but to combat this then we have to be cautious of ourselves and become security conscious of our own funds and make sure this scammers don't get away with the scams that they're doing. Doing this is the only way we can operate cryptocurrency as money for our everyday usage and also have a fair success rate as without this I can't see any way we can successfully make use of crypto as a means of exchange. For Bitcoin to function as money it has a lot of shoes to be filled and this might not be easy for Bitcoin to fully achieve this function.

[AmoreJaz]

The original purpose of bitcoin is to be able to transact peer to peer without intermediaries or centralised authorities.

Maybe we misunderstood the intention of Satoshi, or perhaps the users of Bitcoin decided to create their own usage instead of limiting it to what Satoshi wanted. Peer to peer transaction is indirectly done when we use Bitcoin to purchase goods and services online. It must not be done physically. Is it that we want Bitcoin to replace FIAT? I don't think that will ever happen. Bitcoin won't replace fiat. Rather, it will complement the FIAT system and has made an asset that is worth holding for the long term.

When this digital currency was created, I don't think the main goal was to replace our fiat. I believe it is more on the alternative method that a person can use for other financial transactions. But look at how far this has become, even the price has increased drastically thru the years.

The volatility factor is still the main reason why many people are trying to get a hold of this coin. The notion that they will get good profit once they sold it after quite some time remains the main attraction in this market.