alex-ru
Well-known member
Sometimes it is important to preserve not only one's personal anonymity, but the anonymity of one's finances as well. And, when your money require anonymity, errors are inadmissible!
THE NEED
The governments of many countries are productively working on establishing complete monitoring and control over the movement of funds both, of their citizens and the citizens of other countries. A stereotype is being imposed on the public opinion: "If someone hides something, that most likely means that this person a criminal evades paying of taxes, sponsors terrorism or is involved in other sins." In some countries the use of cash, precious metals, cryptocurrencies, offshores, and other tools making financial monitoring more difficult automatically makes you suspicious.
But the common sense tells the people that the expression "Money loves silence" is not related to a crime, but is grounded in elementary everyday carefulness. Nobody being in sound mind shouts about how much money they have in the pocket, does not write everywhere about their income amount nor flaunts everyone a bank statement with a list of card transactions.
The organizations also seek to cover the detail of their financing activity; they do not publish lists of customers with their order details because it will at a minimum upset customers and attract ill-wishers (including competitors).
And, if the citizens of developed countries can at least hope that spying at their finances is driven by some national interests, in the countries with the high level of corruption people justifiably fear that their private information will most likely get to people with hostile intentions.
Okay, I will not immerse in philosophy and simply state the fact that the majority of people and businesses have the desire (and often the need) to preserve anonymity of their finances. And they are driven not by some bad intentions but by the desire to protect themselves from falling become victims of others' malicious or criminal plans.
BITCOIN
Unfortunately the set of legal tools for preservation of financial anonymity is rather limited and inconvenient in use. The appearance of the first cryptocurrency (Bitcoin) in 2009 brought people a hope that they will after all receive anonymous money in a fast, convenient, and uncontrolled by anyone way. In fact, some promising and the revolutionary ideas and technical decisions were incorporated into the Bitcoin concept.
Years went by... Today, in 2015, Bitcoin has become the most known and popular cryptocurrency, leading by the number and the volume of financial transactions conducted with it. Unfortunately, these are among the few criteria by which Bitcoin managed to hold its leadership in the world of cryptocurrencies.
The reason being that since its start-up, the Bitcoin network underwent no important changes and now remains close to its initial technological level (if one does not account for some front-end improvements which do not affect the network operation principles). For example, over the last years, nothing has been done towards implementation of anonymity mechanisms, which is in conflict with users' expectations, but is being lobbied by the current Bitcoin developers (unfortunately, the unknown creator of Bitcoin removed himself from its further development).
In my opinion, the cause «of a stagnation» lies in the blocking of technological development of the Project because of the lack of motivation, management, and funding. It is not a secret that miners and large investors are the primary beneficiaries of the Bitcoin project. None of them (with the rare exception) strives for revolutionary changes, limiting efforts to advertising of already available stable technology and a hope for the growth of Bitcoin's applicability (at the expense of, among other things, a departure from the original «independent» concept in the direction of complying with requirements of various local authorities and organizations).
But let's return the topic of anonymity. Yes, Bitcoin is better than a bank account in terms of independence – you can become a participant of the system and manage your coins on your own. Nobody will be able to block your resources or to confiscate them – this is the important advantage of decentralized cryptocurrencies. But the Bitcoin is worse than even a bank account in terms of providing anonymity of payments because the transactions by all users are recorded in an open form in a publicly accessible database (blockchain) and are stored there forever which enables their tracking and analysis directly or through a publicly accessible software.
At the moment of payment, its size, residual balances, and all previous and subsequent transactions by participants become accessible to any interested person. Until a match between the address under analysis and a particular individual is set, this information is abstract. But, as soon as an interaction with the physical world occurs (for example, when an IP address, bank details for encashment, the address of delivery of goods, etc., are recorded), it is possible to unambiguously trace all the financial story of a particular person.
Those willing to «confuse a bit» a history of their transactions can send their coins through a sequence of their or other (for example, exchanges, casino, etc.) addresses. But regardless of the number of such transactions, the entire transactions chain is recorded and is available for further analysis.
Those seeking greater anonymity can use third-party services that offer mixing of the Bitcoins (so-called "Mixers"). As any other «add-in services» that make Bitcoin's current infrastructure and extended functionality, they serve primarily the interests of their owners. When passing your Bitcoins and trusting the provision of their anonymity to third-party organizations or private individuals, you must realize all associated risks. And blocking of «inconvenient user» accounts is the not the worst case scenario for the users of services – Bitcoin enhancers.
Okay, I will not immerse in the analysis, I will only say that, at the moment, the Bitcoin is not the best by the speed of payments or the provision of anonymity, or the dynamics of improvements. Many important Bitcoin functions (and this concerns the anonymity of transactions too) are executed not through Bitcoin itself, but through the use of third-party (typically, centralized) «add-ins» services, which adds uncertainty and risks to the overall architecture of the Project.
THE NEED
The governments of many countries are productively working on establishing complete monitoring and control over the movement of funds both, of their citizens and the citizens of other countries. A stereotype is being imposed on the public opinion: "If someone hides something, that most likely means that this person a criminal evades paying of taxes, sponsors terrorism or is involved in other sins." In some countries the use of cash, precious metals, cryptocurrencies, offshores, and other tools making financial monitoring more difficult automatically makes you suspicious.
But the common sense tells the people that the expression "Money loves silence" is not related to a crime, but is grounded in elementary everyday carefulness. Nobody being in sound mind shouts about how much money they have in the pocket, does not write everywhere about their income amount nor flaunts everyone a bank statement with a list of card transactions.
The organizations also seek to cover the detail of their financing activity; they do not publish lists of customers with their order details because it will at a minimum upset customers and attract ill-wishers (including competitors).
And, if the citizens of developed countries can at least hope that spying at their finances is driven by some national interests, in the countries with the high level of corruption people justifiably fear that their private information will most likely get to people with hostile intentions.
Okay, I will not immerse in philosophy and simply state the fact that the majority of people and businesses have the desire (and often the need) to preserve anonymity of their finances. And they are driven not by some bad intentions but by the desire to protect themselves from falling become victims of others' malicious or criminal plans.
BITCOIN
Unfortunately the set of legal tools for preservation of financial anonymity is rather limited and inconvenient in use. The appearance of the first cryptocurrency (Bitcoin) in 2009 brought people a hope that they will after all receive anonymous money in a fast, convenient, and uncontrolled by anyone way. In fact, some promising and the revolutionary ideas and technical decisions were incorporated into the Bitcoin concept.
Years went by... Today, in 2015, Bitcoin has become the most known and popular cryptocurrency, leading by the number and the volume of financial transactions conducted with it. Unfortunately, these are among the few criteria by which Bitcoin managed to hold its leadership in the world of cryptocurrencies.
The reason being that since its start-up, the Bitcoin network underwent no important changes and now remains close to its initial technological level (if one does not account for some front-end improvements which do not affect the network operation principles). For example, over the last years, nothing has been done towards implementation of anonymity mechanisms, which is in conflict with users' expectations, but is being lobbied by the current Bitcoin developers (unfortunately, the unknown creator of Bitcoin removed himself from its further development).
In my opinion, the cause «of a stagnation» lies in the blocking of technological development of the Project because of the lack of motivation, management, and funding. It is not a secret that miners and large investors are the primary beneficiaries of the Bitcoin project. None of them (with the rare exception) strives for revolutionary changes, limiting efforts to advertising of already available stable technology and a hope for the growth of Bitcoin's applicability (at the expense of, among other things, a departure from the original «independent» concept in the direction of complying with requirements of various local authorities and organizations).
But let's return the topic of anonymity. Yes, Bitcoin is better than a bank account in terms of independence – you can become a participant of the system and manage your coins on your own. Nobody will be able to block your resources or to confiscate them – this is the important advantage of decentralized cryptocurrencies. But the Bitcoin is worse than even a bank account in terms of providing anonymity of payments because the transactions by all users are recorded in an open form in a publicly accessible database (blockchain) and are stored there forever which enables their tracking and analysis directly or through a publicly accessible software.
At the moment of payment, its size, residual balances, and all previous and subsequent transactions by participants become accessible to any interested person. Until a match between the address under analysis and a particular individual is set, this information is abstract. But, as soon as an interaction with the physical world occurs (for example, when an IP address, bank details for encashment, the address of delivery of goods, etc., are recorded), it is possible to unambiguously trace all the financial story of a particular person.
Those willing to «confuse a bit» a history of their transactions can send their coins through a sequence of their or other (for example, exchanges, casino, etc.) addresses. But regardless of the number of such transactions, the entire transactions chain is recorded and is available for further analysis.
Those seeking greater anonymity can use third-party services that offer mixing of the Bitcoins (so-called "Mixers"). As any other «add-in services» that make Bitcoin's current infrastructure and extended functionality, they serve primarily the interests of their owners. When passing your Bitcoins and trusting the provision of their anonymity to third-party organizations or private individuals, you must realize all associated risks. And blocking of «inconvenient user» accounts is the not the worst case scenario for the users of services – Bitcoin enhancers.
Okay, I will not immerse in the analysis, I will only say that, at the moment, the Bitcoin is not the best by the speed of payments or the provision of anonymity, or the dynamics of improvements. Many important Bitcoin functions (and this concerns the anonymity of transactions too) are executed not through Bitcoin itself, but through the use of third-party (typically, centralized) «add-ins» services, which adds uncertainty and risks to the overall architecture of the Project.
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