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Comment by lawn | Hacker News Reader

This is why Bitcoin's traceability is a problem for it's money status. If people are actively pursuing the stolen bitcoins, regardless of who's currently holding them, then Bitcoin's fungibility will break as some coins will be worth more than others.

The only cryptocurrency that comes close to solving this is Monero, which isn't traceable.

If the attackers were smart, this is what they would've done: Send them to Bitfinex, which is an unregulated and shady exchange, sell them for Monero and withdraw them immediately. Congratulations, now you have a bunch of untraceable cryptocurrency.

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I would assume that Monero isn't being used because Bitcoin tainting hasn't become a significant issue and Monero doesn't provide sufficient liquidity to allow extorting at scale.

bitcoin related privacy features are getting much better [1] as are ethereums [2]

[1]https://news.bitcoin.com/how-to-obscure-bitcoin-cash-transac... [2]https://medium.com/@tornado.cash/introducing-private-transac...

[1] is about Bitcoin Cash, not Bitcoin. [2] is basically a Tumbler/Mixer based on a smart contract which there are plenty of available (at least non-smart contract ones)

anything useful on bitcoin cash is easily ported to bitcoin, vice versa.

with cashfusion not even the server owners know which transactions belong to who, which isnt the case with normal mixers[1].

[1]https://medium.com/@james.waugh28/is-cashfusion-really-anony...

No, it's not "just copy it" because Bitcoin Cash has some OP codes that Bitcoin doesn't have. See OP_CHECKDATASIG for example.

if OP_CHECKDATASIG is beneficial btc can implement it

With Bitcoin's history of extreme hardfork aversion, it's not that simple. In theory you're right, but in practice it's much harder.

You should be able to add an optional functionality w/o a hardfork yes?

You can technically introduce anything as a softfork yes. The only difference is how difficult it is to implement, which I think would go beyond "just copy it".

How are CashFusion or tornado.cash different from other mixers?

I believe in the case of a mixer, you need a trusted third party to be the mixer.

You can write down the serial numbers of paper money you hold, but that's not going to help you recover the money if someone steals the money and spends it at a shop.

Traceability doesn't need to be a problem.

Steal a banknote, nobody's going to find it.

Steal enough banknotes and the bank will go to great lengths to find you. The Northern Bank robbery stole a significant fraction of all NB notes in circulation, so the bank re-issued them, relying on the impossibility of the criminals laundering them before the swap deadline.

https://www.belfasttelegraph.co.uk/news/northern-ireland/the...

Governments are unlikely to give cryptocurrencies the same legal privileges as the currencies they issue.

As such, traceability will remain a risk for anyone receiving cryptocurrency payments. If a chain analysis reveals an illegal transaction as a precursor, it's going to be considered stolen goods, not money, as the article states.

> Governments are unlikely to give cryptocurrencies the same legal privileges as the currencies they issue.

That's fine, but if the governments don't take action it'll be up for the courts to decide that.

>it's going to be considered stolen goods, not money, as the article states.

This is not at all obvious. It's not even clear that the nemo dat rule would apply to any kind of ransom payment.

Untraceability sidesteps getting courts or lawmakers to give you legal status as money. I don't see why governments have any motivation to extend this protection to cryptocurrencies as it would seem to mainly facilitate crime without providing any benefit in terms of encouraging adoption of government controlled currency.

>I don't see why governments have any motivation to extend this protection to cryptocurrencies

The governments don't need to do this, the courts do. There's an existing principle they could very cleanly apply here.

Why not z-cash?

Because, like with mixing services, ZCash shielded transactions are opt-in and can easily be detected. So exchanges could decide to ban coins with mixing in their history or require extensive KYC information.

Yes it's a little different from the problem described in the post, but it's another facet of the fungibility issue.

> So exchanges could decide to ban coins with mixing in their history or require extensive KYC information.

The same way they could decide to ban Monero... seems like what you describe with z-cash is more complex to support in an exchange than simply removing a whole cryptocurrency, thus is less likely to happen.

Sure, but that's a different issue than fungibility.

Fundamentally not trustable.

Greenbacks seem to do fine despite the existence of marked bills.

Money laundering is a thing for this reason.

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