The idea that your transactions are mixed up and impossible to track doesn't matter so much if they just assume everybody who uses a mixer is a criminal.
You aren't tracking coins with the ledger, only totals. So address A can have 10 btc, tumbler adds 5 to A, then A transfers 5 to B, 5 to C. If C is an exchange, does it consider that A is still holding 5 tumbled coins? Or does it say B has the tumbled coins? Or does it reject A's offer of 5? Feel free to shift values such as A having 100 BTC, receiving 0.01 tumbled BTC, & wanting to send 1 BTC to exchange
Also hard to track something like A sending tumbled coins to B, which triggers the owner of B to have C send non tumbled coins to D. You can even have this service offered at an exchange rate, so D receives less than B did
A harder solution only allows them to withdraw up to the number of coins you can verify were not tumbled. So if some malicious tumbler deposits 0.000001 coin in your wallet you can convert all but 0.000001 of your wallet's value at an exchange.
Also, there are other ways of coorelating transactions such as tracking BTC -> XMR amounts and soon-thereafter XMR -> BTC amounts (minus fees)
Why use monero unless you wanted to hide your transactions? Hiding your transactions is literally illegal in the USA (its called money laundering).
Presumably, the FBI will be able to automatically determine if your BTC came from a Monero exchange.
As for the fbi consdering monero a "money laundering scheme" in the future. They can outlaw it, I guess, but it's like trying to outlaw video and music piracy, it's hard to do in practice.
How does "bisq" provide anonymity to its users? If you're trading BTC, your wallets are still being connected to each other and provably written into the blockchain for all of eternity. Same with Ethereum and other "mainstream" cryptocoins.
If the FBI only cares about "anonymous" coins, like Monero, and ONLY targets those, then all payment processors would "taint" Monero wallets (or any BTC coins which ever touched a Monero-related wallet), and refuse to process them.
Its really not that hard for Monero (or any other minority-coin) to be shut out of the payment processor market and relegated to black-market goods.
What is the purpose of mixing the coins? You only help criminals. Gray-market goods (ex: legal pornography) are already solved by the traditional BTC network without anonymity.
Between KYC (Know your Customer) and other such laws in the USA, it is clear to me that anonymizing your transactions is very much frowned upon by the powers that be. If anything, fully transparent and trackable BTC "in the open" has numerous advantages with regards to being a "good citizen".
And there are legitimate reasons to use monero and bitcoin. Sending money to family in countries such as china, iran, and venezuela is one. Another use is legitimiate "adult entertainment" sites where people don't want their sexual fetishes appearing on a credit card or ending up on a blockchain somewhere where the public can see.
Have you ever actually purchased adult entertainment on a credit card? They are inconspicuous companies that don't exactly flag what fetish you're into. At worst, you get a cover-company that doesn't actually match up to the website name. I dare say that this is a solved problem in the credit-card world.
Worst case scenario: buy Visa / AmEX gift-cards with cash and use that to fund your porn-stash. If you really have someone watching over your credit-card statements that you're worried about. There are very simple means of avoiding the problem in the traditional credit-card world. If credit-cards are available, then no form of cryptocoin is necessary for any kind of anonymity or protection.
> And there are legitimate reasons to use monero and bitcoin. Sending money to family in countries such as china, iran, and venezuela is one.
No, at best, that's a reason to use BTC. No reason to use Monero yet. And furthermore, using BTC to avoid local currency laws is going to probably put you up to scrutiny by the local authorities.
I don't think the US cares about sending money abroad... but China probably cares if you're avoiding their Yuan -> USD restrictions or creating a secondary market to trade Yuan / USD.
When I read stories about "people getting caught using bitcoin", I am baffled as to why they don't do this.
I never trusted the mixers personally. But it was a hot debate item a few years back whether or not law enforcement could track transactions through a mixer.
Its always been my firm belief that a mixer was just automated money laundering and probably puts you up for legal scrutiny as well. But we'll see how the FBI decides to handle those...