I think you’re deliberately ignoring the entire point that the article is making. The fact is that tainted transactions are becoming a thing as exchanges realize that they need to do something about addressing theft and fraud.
It’s not even about your own transaction history. Assets acquired illegally, including Bitcoin, and and will be seized even after they change hands several times.
Unless you mined the Bitcoin yourself (not through a pool, literally generates the block yourself) then it has a history attached that involves other people.
well if we're going this abstract then everything everywhere involves "other people".
Pragmatically mining, even through a pool does not show who you are or who you are associated with as no one can associate you with anyone if they can't associate your coins with you.
This idea that exchanges will stop handling coins from flagged addresses is nonsense - DEXes already solve that problem anyways, so an exchange will be willingly giving up business for legit customers who may have happened upon a coin with a less-than-legit history and they'll do nothing to prevent money with illicit history from making its way onto their platform.
Those who enforce money laundering laws don't mess around: If your money is clean, you're just shooting yourself in the foot by erasing the record of how you got it.
Guilty until proven innocent is an untenable practice if you want to run a profitable business. The market will sort out any ridiculous practices that makes you prove you haven't laundered in order to participate in a market and as I've said, the alternatives already exist.
edit: as for DEXes that's my whole point, you trade a crypto with "bad history" for a crypto without bad history and just like that even the strictest exchanges will happily give you an off ramp into fiat
Even in your jurisdiction, you may soon have to. From the linked article, you can infer that you got lucky - your attempt to cash out might have been stopped by an exchange, if you did it a little later or with a little dirtier coins.
> and if I had really wanted to I could have traded into fiat via direct trades using sites like localbitcoin.com or similar
Good luck meeting random strangers and trading BTC for cash with them safely AND anonymously. You're lucky if you get even one of those two.
> Guilty until proven innocent is an untenable practice
Tell that to financial crimes investigators, whatever they're called where you live. As I said, they don't mess around. They're not reasonable. The price for operating in the legal economy is that you have to be able to account for your assets. The exchanges don't do this because they want to, but because they have money laundering cops breathing down their necks - and you will too, if you're silly enough to try to cash out significant amounts through localbitcoin or similar.
and as I've stated, using a DEX to trade from dirty coins into clean coins is cheap and simple. I think this whole thing is just paranoia, but in the event it actually does become an issue for law abiding citizens (such as myself) the market has already accounted for the nonsense and given me an avenue to continue to operate effectively and legally.
> Good luck meeting random strangers and trading BTC for cash with them safely AND anonymously. You're lucky if you get even one of those two.
I've done both frequently and with nothing but success - I'm wondering if you've had experiences otherwise as I know plenty of people who use that site and have had nothing but success.
> if you're silly enough to try to cash out significant amounts through localbitcoin or similar
I'm sorry, what are you talking about? Legitimate services with legitimate clean money is not silly.
Cheap, but not free. You're paying a premium. Which illustrates the article's point.
As exchanges are reined in, and off-the-record bitcoin for cash trades are cracked down on (google "localbitcoin arrests" to get an idea - that should also answer your two other lines), this premium will grow, and it may well grow enough to make the whole thing impractical.
Who is on the other side of that trade? If it's an identifiable DEX then doesn't that only work until cryptocurrencies from that DEX are defined as "bad"?
Gold has a real world trace that can be found out by simply asking intermediaries and numerous other means, Bitcoin has a digital trace, it's not that different.
It's very difficult to make sure that the history of where that gold you got came from and to whom you sold it to is 100% erased.
Gold is literally untraceable. Nobody can stop you from smelting and selling it as you like.
Gold is very traceable, because it leaves a trail of people behind. It's very heard to disconnect your identity from your gold sale, because you have to make that sale in person, so there are always witnesses, cameras, paper trails.
If you want to put in a middle man, you also need to know him to trust him not to run away with the gold and he becomes a liability, because he knows your identity.
That's why this is the maximum fungability you get, be it with bitcoin or gold, none of the two have the upper hand here.
And no, I don’t see how you can compare gold being “traceable” through detective work, to a ledger that literally stores every transaction in history, publicly.
Once a person trades coins at that exchange (perhaps even into a different cryptocurrency for additional obfuscation), then in the eyes of the other exchanges those coins will become disconnected from the activity they are trying to hide.
Once that happens, why would exchange X take your BTC, or any other people exchange other crypto for BTC there, if they can’t circulate it?
No they don’t. Nobody records the serial numbers of each bill they receive and pass and who they got it from and gave it to, in a publicly accessible ledger.
Please don't lump in Monero with Zcash and Dash.
I chose to buy some Monero because they didn't backpeddle like Dash by claiming they're not more private than Bitcoin and CoinJoin when the coin was removed from an exchange, or have a developer that tweeted that Zcash can be made traceable.
https://old.reddit.com/r/Monero/comments/kp8jws/after_years_...
Need to read more about that. Thanks!
Nope. It's impossible to cash out a tainted bitcoin since it cannot be deposited at exchanges. Its value is essentially zero.
> How's 1 BTC is not fungible [to another BTC] unless you're wanna hide your bitcoin transaction history?
Every bitcoin can be distinguished by its transaction history. If you try to use a mixing service, that fact will be known and the resulting bitcoins will be tainted. Exchanges will assume they are laundered funds.
No it's not. It's worth a bit less than face value, but you can cash it out by swapping to other cryptos.
To you, you might be trying to break your link with a Bitcoin mixer by wrapping those bitcoins and uniswapping them for a different asset on Ethereum.
To me, I simply went to Uniswap and bought some wrapped bitcoins, then deposited them on a traditional exchange.
Given the limitless number of cryptocurrencies coupled with the limitless number of exchanges, there will always be some series of hops that someone can make between cryptos such that by the end, there is no amount of algorithmic analysis your exchange can perform that will automatically connect the coins and block them. Manual intervention would be required, by a privileged law enforcement expert who is personally tracking that value across novel and disparate networks using domain-specific knowledge.
By hyperhopper, for one: https://news.ycombinator.com/item?id=30156253
I think it's a pretty widespread belief amongst people who haven't yet learned about tainting (as i myself only did a few weeks ago).
By whom? There's nothing like that here https://github.com/bitcoin/bitcoin https://bitcoin.org/bitcoin.pdf
> and digital cash alternative
That was the case from the beginning but it hasn't worked out.
> Each bitcoin in circulation has a distinct history attached to it ensuring that 1BTC != 1BTC.
What? The value is the same. Paper bills also have a distinct history.
> While coin histories can be somewhat ofuscated with tools like CoinJoin, the fungibility of Bitcoin remains distinctly lacking.
What? How's 1 BTC is not fungible [to another BTC] unless you're wanna hide your bitcoin transaction history? Is this what it's all about? Sorry to break it to the author but he seems to imply that Bitcoin is a privacy oriented electronic currency. It has never been "private". The whole ledger is public. If you don't like it, don't use it. You have Monero, Dash and Zcash and Bitcoin mixers if you wanna deal with ecurrencies without anyone being able to trace you.