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Comment by mattmiller | Hacker News Reader

Do the Visas and Mastercards of Sweden still get their cut of every transaction? What a great way for these companies to solidify their corner of the market.

Here is what I want: a way to do electronic transactions anonymously and cheaper that the current options. How do you do this while combating fraud?

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Yes, Visa, MC and Amex take a cut. This infuriated shopowners to no end when they raised their tariffs, prompting a wave of "no charges under 50kr" or "3kr extra if you're paying with card (under x kr)"

No, the banks take a cut. The interchange fee that goes to the networks (VISA & MC) is very low (don't know the exact amount).

AMEX is another beast. AMEX is not sold through banks and AMEX can therefore set their own very high rates. This has caused many retailers to stop accepting AMEX altogether. IKEA being a good example of such a retailer.

The patent has come and gone on blinded signatures. Their fundamental drawback is that they don't work without the support of the banking industry, and why would the banking industry (a cartel) want to reduce their profits?

That's kind of the whole point of Bitcoin. Free to use, not tied to any government or organization, and it can be completely anonymous.

With that comes the downsides that you have to be technical and know what you're doing to use it, as does the person you're buying from, and bitcoins are basically as easy to steal as cash.

What is the 'anonymity' property of bitcoin I keep hearing about? Has there been a fundamental overhaul of the protocol since Satoshi's initial paper?

The parent means pseudonymous. Bitcoin is certainly not anonymous.

And with the transaction history included, and most transactions, by necessity, tell something about you (at least the merchant probably needs to know where to send your item or whatever) it seems to me that it would be utterly trivial to get a hold of the real identity of the vast majority of the users after even his/hers first transactions. And this is valuable information and it will, as today, be bought and sold freely - maintaining a database of who is who seems like childs play. Not only that, but also who bought what (or at least from who), making it the least anonymous way to make a purchase imaginable (almost as bad as saying what you bought on twitter).

For anyone hoping of using bitcoins for their everyday transactions, would that be any more anonymous than a credit card is today? Or even worse, it might give you the sense that you are anonymous when you are not.

You can generate a new address for every transaction and thus remain untrackable.

Isn't bitcoin transfer from old to new address trackable?

How are you going to fund each new address? You have to remember that money moves from A along a vertex to B. Its the vertexes that kill you...

How will you get money on your new address? Transfer them? No luck there... (Or have I missed something?) And even with a new address you will probably reveal yourself with most transactions anyway.

Sure you can probably find a way but it will be a hassle and probably quite a hassle if you don't want to trust anyone. Because of the transaction history the only real purpose I've seen with bitcoins is the fact that you could mine them quite successfully and thus get an anonymous income, and with those mined bitcoins you could buy something that isn't tied to you, such as a VPN. That was a quite cool scenario with bitcoins in my eyes.

Sure there are some VPNs that allow you to snail-mail money to them but that is quite a hassle. But aside from that you pretty much have to use your card, and by that you reveal your identity. And given that the VPN service isn't subject to the same laws as your ISP using one could actually be even less anonymous than not using one at all.

Anyway, due to the transaction history that is the only scenario I've found bitcoins beneficial (and the reason for why I haven't even bothered to read up more on bitcoin). Would love to be wrong though.

True, pseudonymous is the right word. You can start mining bitcoins without disclosing any personally identifiable information (if you obscure your IP address or connect from a public wifi network or something), you could buy bitcoins from someone on craigslist, pay in cash and have them sent to this account, etc. But the minute you make a transaction that links this account to you, all the activity on the account is linked to you. At least that's how I understand it, see [1]

[1] https://en.bitcoin.it/wiki/Anonymity#Staying_Anonymous

Actually it's much worse than this, because while your identifying information is most likely not interesting, aggregate network flows are. For example, when a node tends to aggregate transactions, we can infer that they are a 'merchant'. If their public key doesn't correspond to a known business, we can infer that they are engaged in unregulated commerce and investigate. Nevermind the very real possibility of having an out-exchange refuse a transaction because several transactions back, the value was stolen or otherwise involved in nefarious deals ("chargeback 2.0").

If a payment technology can't be used to incentivize TOR nodes, it is not anonymous. Throwing around the word 'anonymity' when one means 'psuedonymity' does a disservice to everyone interested in actual anonymous systems.

If a payment technology can't be used to incentivize TOR nodes, it is not anonymous.

You can incentivize me to run more nodes with AMEX, Visa, MC, Travelers Checks, cash, red lobster gift certifcates or gold dubloons. From your comment that I quoted below its obvious you care about this field but I'm not sure where you were going with the above statement?

Throwing around the word 'anonymity' when one means 'psuedonymity' does a disservice to everyone interested in actual anonymous systems.

I could not agree with you more. Picture a crowd leaping to their feet shouting bravo and huzzah!!!:)

I mean an addition to TOR where a user is explicitly paying each hop for transit. To do this (without buying nHops*nNyms count of unconnected red lobster gift cards), it must be possible to split a single source of value into two unassociable parts.

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