Gold collapsing. Bitcoin UP.

[rocks]

The only reason you would ever be worried about receiving "bad" coins would be because of some legal framework that makes such coins possibility "bad". The exact same legal framework could make 100% of Monero's coins "bad". And you're back to square one.  

Having to spend contraband coins in a public blockchain would feel awkward, a private chain suits the use case much better.

Bitcoin plus this (or any number of other extensions)

https://github.com/justusranvier/rfc/blob/payment_code/bips/bip-pc01.mediawiki

enables Bitcoin to be used in a completely private manner. I don't see any difference between Bitcoin with these easy extensions in how it is used, and Monero.

That and there is no difference in the level of "contrabandness" between contraband coins in a public blockchain and a private chain that is declared to be entirely contraband.

[smooth]

Am debating what are the innate properties that constitute money. For the reasons stated in prior posts I do not consider privacy to be applicable to what makes good or bad money and do not see that as a factor towards driving adoption.

Privacy is not necessarily a property of money. Fungibility is a property of money though, and without strong legal guarantees of fungibility, it likely does require privacy because if you can trace "bad" or "good" coins then fungibility isn't there. Bitcoin currently doesn't have whitelisting/blacklisting, etc. (for the most part; there do seem to be some exceptions involving Coinbase, etc.) but as long as that concept is in play fungibility is a question.

Fully agree. But as HeliKopterBen and dEBRUYNE pointed out a few posts ago, a fully private currency such as Monero could just as easily be outlawed in it's entirety. Which puts Monero in the same position as a Bitcoin where blacklist coins are outlawed.

Legally yes, but in terms of fungibility no. If I'm a fully compliant Bitcoin user I may -- purely as a practical matter -- have to check on coins I'm receiving to see if they are "bad", and because coins may be added to a blacklist (or removed from a whitelist) after I receive them, it means I'm left with performing my own KYC to convince myself that the counterparty is unlikely to be passing off "bad" coins.

I'm not doing this because the law requires it but because I'm worried about being left holding the bag with "bad" coins, even if the transaction itself is entirely legal. This is fundamentally incompatible with the concept of fungibility (again, which is distinct from legality).

The risk of this is fungibility concerns is far less to nonexistent with a private coin, where tagging coins as "good" or "bad" is technologically less feasible or impossible (Monero is not as private as say zerocash, so some issues remain there, but far less so than Bitcoin).

The only reason you would ever be worried about receiving "bad" coins would be because of some legal framework that makes such coins possibility "bad". The exact same legal framework could make 100% of Monero's coins "bad". And you're back to square one.

No you're not because if all coins are bad then all coins have the same value. You can't overpay and be left holding the bag.

That is the definition of fungibility. Again, you are confusing privacy with fungibility. Without regard for the merits of either/both.

[rpietila]

The only reason you would ever be worried about receiving "bad" coins would be because of some legal framework that makes such coins possibility "bad". The exact same legal framework could make 100% of Monero's coins "bad". And you're back to square one.  

Having to spend contraband coins in a public blockchain would feel awkward, a private chain suits the use case much better.

Bitcoin plus this (or any number of other extensions)

https://github.com/justusranvier/rfc/blob/payment_code/bips/bip-pc01.mediawiki

enables Bitcoin to be used in a completely private manner. I don't see any difference between Bitcoin with these easy extensions in how it is used, and Monero.

Far be it from me that I were against Bitcoin! I am one of the few people who even owns a Bitcoin castle!  

But using monero is just soo easy that even if BTC fungibility is fixed and markets would force me to return to it, I would miss the ease of life when it was possible just to click "send" and not care...  

[smooth]

The only reason you would ever be worried about receiving "bad" coins would be because of some legal framework that makes such coins possibility "bad". The exact same legal framework could make 100% of Monero's coins "bad". And you're back to square one.  

Having to spend contraband coins in a public blockchain would feel awkward, a private chain suits the use case much better.

Bitcoin plus this (or any number of other extensions)

https://github.com/justusranvier/rfc/blob/payment_code/bips/bip-pc01.mediawiki

enables Bitcoin to be used in a completely private manner. I don't see any difference between Bitcoin with these easy extensions in how it is used, and Monero.

The difference is mixing. Bitcoin doesn't have mixing without using some sort of third party mixing process, and that payment code proposal doesn't provide one either. The coins remain traceable on the blockchain.

[justusranvier]

We don't know that Coinbase limits their tracking of "bad" activity to "one hop." In fact I'm pretty sure at least one of the reported cases was more than one hop.

Part of the consideration that went into the payment code proposal was finding a way to make analysis of transactions impossible beyond one hop.

Even if they want to do multi-hop analysis, it's possible to make that unfeasible.

[justusranvier]

The coins remain traceable on the blockchain.

The coins are traceable, but the link between the coins and to whom they belong is less so.

[smooth]

The coins remain traceable on the blockchain.

The coins are traceable, but the link between the coins and to whom they belong is less so.

That's irrelevant to the extent that blacklisting or whitelisting (or the prospect of such) impair the value of those coins.

[rocks]

Am debating what are the innate properties that constitute money. For the reasons stated in prior posts I do not consider privacy to be applicable to what makes good or bad money and do not see that as a factor towards driving adoption.

Privacy is not necessarily a property of money. Fungibility is a property of money though, and without strong legal guarantees of fungibility, it likely does require privacy because if you can trace "bad" or "good" coins then fungibility isn't there. Bitcoin currently doesn't have whitelisting/blacklisting, etc. (for the most part; there do seem to be some exceptions involving Coinbase, etc.) but as long as that concept is in play fungibility is a question.

Fully agree. But as HeliKopterBen and dEBRUYNE pointed out a few posts ago, a fully private currency such as Monero could just as easily be outlawed in it's entirety. Which puts Monero in the same position as a Bitcoin where blacklist coins are outlawed.

Legally yes, but in terms of fungibility no. If I'm a fully compliant Bitcoin user I may -- purely as a practical matter -- have to check on coins I'm receiving to see if they are "bad", and because coins may be added to a blacklist (or removed from a whitelist) after I receive them, it means I'm left with performing my own KYC to convince myself that the counterparty is unlikely to be passing off "bad" coins.

I'm not doing this because the law requires it but because I'm worried about being left holding the bag with "bad" coins, even if the transaction itself is entirely legal. This is fundamentally incompatible with the concept of fungibility (again, which is distinct from legality).

The risk of this is fungibility concerns is far less to nonexistent with a private coin, where tagging coins as "good" or "bad" is technologically less feasible or impossible (Monero is not as private as say zerocash, so some issues remain there, but far less so than Bitcoin).

The only reason you would ever be worried about receiving "bad" coins would be because of some legal framework that makes such coins possibility "bad". The exact same legal framework could make 100% of Monero's coins "bad". And you're back to square one.

No you're not because if all coins are bad then all coins have the same value. You can't overpay and be left holding the bag.

That is the definition of fungibility. Again, you are confusing privacy with fungibility. Without regard for the merits of either/both.

I don't think so, it seems to be that you've confused them. I think my prior posts (that weren't quoted) explained why. Fungibility is an innate property, privacy is a question of usage. You're free to disagree but I'll still think that these arguments that a coin needs privacy to be built in or off the mark.

Fungibility also doesn't mean how I think you are using it. Even in your black/white coin scenario, Bitcoin coins are still 100% fungible, the bitcoin network will treat 1 BTC as 1 unit and 0.5 BTC as half a unit in all cases (i.e. to the network 1 BTC blacklist = 1 BTC whitelist), that is perfect fungibility.

Things such as dimonds are not fungible, different people will value 2 different one caret diamonds differently. That is an example of something not fungible. Not black/white market coins where a government might try to force different values for them, but the network would treat them identically.

[smooth]

We don't know that Coinbase limits their tracking of "bad" activity to "one hop." In fact I'm pretty sure at least one of the reported cases was more than one hop.

Part of the consideration that went into the payment code proposal was finding a way to make analysis of transactions impossible beyond one hop.

Even if they want to do multi-hop analysis, it's possible to make that unfeasible.

I don't think you understand what Coinbase is doing. For example, even with non-reused addresses, compliant participants may report their addresses to a risk-scoring service. If you go outside that "system", boom your coins risk score goes way up.

As long as these things remain associated with the coins themselves, fungibility is impaired.

[rocks]

We don't know that Coinbase limits their tracking of "bad" activity to "one hop." In fact I'm pretty sure at least one of the reported cases was more than one hop.

Part of the consideration that went into the payment code proposal was finding a way to make analysis of transactions impossible beyond one hop.

Even if they want to do multi-hop analysis, it's possible to make that unfeasible.

I don't think you understand what Coinbase is doing. For example, even with non-reused addresses, compliant participants may report their addresses to a risk-scoring service. If you go outside that "system", boom your coins risk score goes way up.

As long as these things remain associated with the coins themselves, fungibility is impaired.

This is where we are disagreeing then.

To the bitcoin network 1 BTC blacklist or low score coin = 1 BTC whitelist coin. They are perfectly the same to the network itself, that is fungibility. This is very different from the diamond example a post up.

You can argue that for gold you could melt it down and recast in new coins to recover all privacy, but I'd argue that advanced mixing could do the same in time.

[smooth]

Am debating what are the innate properties that constitute money. For the reasons stated in prior posts I do not consider privacy to be applicable to what makes good or bad money and do not see that as a factor towards driving adoption.

Privacy is not necessarily a property of money. Fungibility is a property of money though, and without strong legal guarantees of fungibility, it likely does require privacy because if you can trace "bad" or "good" coins then fungibility isn't there. Bitcoin currently doesn't have whitelisting/blacklisting, etc. (for the most part; there do seem to be some exceptions involving Coinbase, etc.) but as long as that concept is in play fungibility is a question.

Fully agree. But as HeliKopterBen and dEBRUYNE pointed out a few posts ago, a fully private currency such as Monero could just as easily be outlawed in it's entirety. Which puts Monero in the same position as a Bitcoin where blacklist coins are outlawed.

Legally yes, but in terms of fungibility no. If I'm a fully compliant Bitcoin user I may -- purely as a practical matter -- have to check on coins I'm receiving to see if they are "bad", and because coins may be added to a blacklist (or removed from a whitelist) after I receive them, it means I'm left with performing my own KYC to convince myself that the counterparty is unlikely to be passing off "bad" coins.

I'm not doing this because the law requires it but because I'm worried about being left holding the bag with "bad" coins, even if the transaction itself is entirely legal. This is fundamentally incompatible with the concept of fungibility (again, which is distinct from legality).

The risk of this is fungibility concerns is far less to nonexistent with a private coin, where tagging coins as "good" or "bad" is technologically less feasible or impossible (Monero is not as private as say zerocash, so some issues remain there, but far less so than Bitcoin).

The only reason you would ever be worried about receiving "bad" coins would be because of some legal framework that makes such coins possibility "bad". The exact same legal framework could make 100% of Monero's coins "bad". And you're back to square one.

No you're not because if all coins are bad then all coins have the same value. You can't overpay and be left holding the bag.

That is the definition of fungibility. Again, you are confusing privacy with fungibility. Without regard for the merits of either/both.

I don't think so, it seems to be that you've confused them. I think my prior posts (that weren't quoted) explained why. Fungibility is an innate property, privacy is a question of usage. You're free to disagree but I'll still think that these arguments that a coin needs privacy to be built in or off the mark.

Fungibility also doesn't mean how I think you are using it. Even in your black/white coin scenario, Bitcoin coins are still 100% fungible, the bitcoin network will treat 1 BTC as 1 unit and 0.5 BTC as half a unit in all cases, that is perfect fungibility.

Things such as dimonds are not fungible, different people will value 2 different one caret diamonds differently. That is an example of something not fungible. Not black/white market coins where a government might try to force different values for them, but the network would treat them identically.

Correct about diamonds. Incorrect about cryptocurrncies. Fungibility means that units are interchangeable. Bitcoins are not interchangeable as long as they have an identifiable history. And in practice participants such as Coinbase are taking that history into account in evaluating coins and users.

Take a look at that post from a long time ago about "Bitcoin Island". If Bitcoins (really satoshis) are plots of land, which is in many ways a reasonable analogy, then they are not interchangeable. They become interchangeable with a pervasive mixing process, but at present in Bitcoin that doesn't exist, and may or may not ever exist (the greater the role of participants who are invested in AML/KYC processes, the less likely it is that will ever exist).

Fungibility isn't totally an inherent property either, there is a social context. Paper currency has serial numbers so in a technical sense it isn't totally fungible. However, the extent to which people pay attention to those serial numbers is every limited. If the social context changed so serial number scanners became widely used, paper currency would not be fungible by its nature.

[Carlton Banks]

The 6-7 properties of money were written thousands of years ago, people. Technology, including "anti-money" technology, has come on a little since then. Privacy is a property of money since at least some point in the 20th century.

Furthermore, cryptocurrency brings a whole new set of (so far) necessary properties. There's no need to compartmentalise "classical money" properties from those which have been added during it's subsequent evolution.

[Carlton Banks]

Paper currency has serial numbers so in a techical sense it isn't totally fungible. However, the extent to which people pay attention to those serial numbers is every limited. If the social context changed so serial number scanners became widely used, paper currency would not be fungible by its nature.

Apparently, the serial numbers on Euro notes dispensed in a given official Euro country can be used to identify which country they were produced for (although they're intended to be equally accepted). Irrational as it may be, some people will ostensibly reject notes thought to come from the PIIGS countries.

[rocks]

The 6-7 properties of money were written thousands of years ago, people. Technology, including "anti-money" technology, has come on a little since then. Privacy is a property of money since at least some point in the 20th century.

Furthermore, cryptocurrency brings a whole new set of (so far) necessary properties. There's no need to compartmentalise "classical money" properties from those which have been added during it's subsequent evolution.

I think it is important to determine what you "have" to have in a money instrument vs. what is "nice" to have vs. what "derives" from other properties. When arguments on which altcoin might be better start, the differences in opinion seem to often come down to this. I don't think the properties of ideal money have changed just because we are using a digital medium now. I also think with the right "have to have" properties, that you can layer on top of that the "nice to have" aspects. Anyway the market will decide.

[cypherdoc]

The coins remain traceable on the blockchain.

The coins are traceable, but the link between the coins and to whom they belong is less so.

That's irrelevant to the extent that blacklisting or whitelisting (or the prospect of such) impair the value of those coins.

Not true. There have been numerous attempts to blacklist and track coins from every failed exchange in Bitcoin's history all the way back to MyBitcoin. Yet we all probably have those coins in our wallets to various degrees.

[Carlton Banks]

The 6-7 properties of money were written thousands of years ago, people. Technology, including "anti-money" technology, has come on a little since then. Privacy is a property of money since at least some point in the 20th century.

Furthermore, cryptocurrency brings a whole new set of (so far) necessary properties. There's no need to compartmentalise "classical money" properties from those which have been added during it's subsequent evolution.

I think it is important to determine what you "have" to have in a money instrument vs. what is "nice" to have vs. what "derives" from other properties. When arguments on which altcoin might be better start, the differences in opinion seem to often come down to this. I don't think the properties of ideal money have changed just because we are using a digital medium now. I also think with the right "have to have" properties, that you can layer on top of that the "nice to have" aspects. Anyway the market will decide.

So, new innovations in anti-money tools don't change the fundamental characteristics of money itself?

[kazuki49]

The coins remain traceable on the blockchain.

The coins are traceable, but the link between the coins and to whom they belong is less so.

That's irrelevant to the extent that blacklisting or whitelisting (or the prospect of such) impair the value of those coins.

Not true. There have been numerous attempts to blacklist and track coins from every failed exchange in Bitcoin's history all the way back to MyBitcoin. Yet we all probably have those coins in our wallets to various degrees.

Do you live under a rock? BTC-e already showed Bitcoin has no fungibility and coins can be blacklisted.

[justusranvier]

For example, even with non-reused addresses, compliant participants may report their addresses to a risk-scoring service. If you go outside that "system", boom your coins risk score goes way up.

This is not sustainable in the long term.

All that's required is that users put one non-reporting entity between every transaction between reporting entities. A non-reporting entity could be anyone or any business.

Coinbase et al. may attempt to keep their users inside a walled garden that is only allowed to transact with other people in the same walled garden, but they won't get away with it in the long term.

[rocks]

The 6-7 properties of money were written thousands of years ago, people. Technology, including "anti-money" technology, has come on a little since then. Privacy is a property of money since at least some point in the 20th century.

Furthermore, cryptocurrency brings a whole new set of (so far) necessary properties. There's no need to compartmentalise "classical money" properties from those which have been added during it's subsequent evolution.

I think it is important to determine what you "have" to have in a money instrument vs. what is "nice" to have vs. what "derives" from other properties. When arguments on which altcoin might be better start, the differences in opinion seem to often come down to this. I don't think the properties of ideal money have changed just because we are using a digital medium now. I also think with the right "have to have" properties, that you can layer on top of that the "nice to have" aspects. Anyway the market will decide.

So, new innovations in anti-money tools don't change the fundamental characteristics of money itself?

My personal view is I do not believe so.

The reason is I have not seen any anti-money tools that are not defeated by the six main properties working together.

Gold was attacked by anti-money tools (bank notes) because it was not very portable, and as a result people stopped using it directly and governments were able to circumvent gold over time. Bitcoin is very portable and perfectly fungible, this makes anti-money tools harder to deploy. For anything I can imagine they will throw at Bitcoin, it seems trivial to layer additional usage mechanisms on top of the protocol as needed. If bitcoin wasn't portable, fungible, divisible, etc this wouldn't be the case.

[rocks]

Correct about diamonds. Incorrect about cryptocurrncies. Fungibility means that units are interchangeable. Bitcoins are not interchangeable as long as they have an identifiable history. And in practice participants such as Coinbase are taking that history into account in evaluating coins and users.

If Coinbase was the processor of BTC, then I would agree with you. But Coinbase is not.

The P2P and mining network is the processor of BTC. The P2P and mining network will always consider BTC to be perfectly interchangeable, 1 BTC is always equal to 1 BTC regardless of history, law or anything else. The P2P and mining network will always consider 1 whitelist BTC to be of equal value to 1 blacklist BTC, and process transactions accordingly. This maintains perfect fungibility.

If you argument is that entities (goverments) will try to make individuals value certain coins (whitelist) more over other coins (blacklist). However if they can dictate usage of bitcoin, they can dictate usage of anything, including Monero. Either way it does not matter though, to the P2P network BTC are all still identical, this is fungibility.

If Bitcoin was not perfectly fungible, then you'd have a situation were the P2P network and the blockchain processes 1 blacklist BTC as somehow equaling less than 1 whitelist BTC. That is impossible with the current network and would require a hard fork.