Privacy first vs transparency first

[GrandMasterDash]

On 18 Jan 2016, Evan Duffield proposed a block size limitation increase (see link)[1]: The proposal sought a determination that has dogged bitcoin for some time. The block size was never increased in dash, it was simply a tool to measure MNO sentiment. This proposal is much in the same spirit, to measure sentiment and to send a clear message to the core team.

Previously, Evan Duffield has expressed his view on fungibility (see link)[2]:

"I believe the central problem with Bitcoin is that the public ledger, although a remarkable accomplishment, also allows a gross invasion of personal privacy by permanently listing all transactions the users have ever done publicly. I would imagine many groups are working to tie the addresses used to real identities and then following the money around to see what is happening with it.

There was also a lot of talk recently about tainting coins to check and see if they’re “clean” (note: he means colored coins). I believe that all coins should be considered equal and you shouldn’t mess with the fungibility of the coins themselves."​

...and (see link)[3]:

"How do you make a stable environment for it without losing fungibility of the individual coins? How do they expose users to privacy-invasive situations and things like that. I was watching and waiting for the Bitcoin team to do something about the fungibility issue but it never happened.
....
With Bitcoin, every transaction is traceable back to the coinbase transaction. What that means is that the coinbase is where the actual coins were created - that's when the miner mined them originally and then they start this path through the network from user to user. You can follow this procession and if at any point a user is identified as owning a specific address it suddenly means that anything they do after that is traceable. If you can identify one of the other addresses after it, you know that they did business with that person. The closer that those two transactions are, the more likely this happened.

Eventually a lot of these addresses and users are going to be identified. There will be companies selling these data, which is an invasion of privacy and no one wants a system that is susceptible to those types of attacks especially with a global ledger on the internet."​

And thus Evan Duffield's Private Send was born.

Since Evan Duffield made these comments, block chain privacy has increasingly eroded. Indeed, dash itself now has an official compliance partner (Coinfirm) that has two-way relationships with various carriers and exchanges and more. (see their relationships with Bisnode / Vodafone)[4]: and (Bisnode / D&B Germany)[5]: Companies like Coinfirm are building advanced tools to uncover the identities and risks associated with transactions. The net result; not all coins are equal.

Additionally, recent events between Coinbase and the IRS have highlighted significant issues regarding block chain transparency.

Dash is now at a crossroads. In order to find a balance between privacy and transparency we must ask, do you want a transparency-first block chain or a privacy-first block chain?

Vote "Yes" if you would like to see dash switch to a privacy-first block chain (permissioned transparency).

Vote "No" if you want to keep dash's transparency-first block chain (privacy via mixing).

Definition:
Dash is an example of a transparency-first block chain, meaning, all transactions can be easily seen (public) and mixing is used to obfuscate.

Monero, for example, is a privacy-first block chain, meaning, all transactions are obfuscated but can be seen with a view key.


[1]: https://www.dash.org/forum/threads/dash-birthday-trademark-resolution-blocksize-limitation.7696/

[2]: https://medium.com/@simon/the-bright-side-of-darkcoin-a923facddc3c#.w1boqumbz

[3]: https://www.coingecko.com/buzz/interview-evan-duffield-dash

[4]: https://www.bisnode.com/international/news-and-inspiration/cases/vodafone--db-hungary/

[5]: https://www.bisnode.com/international/news-and-inspiration/cases/forbo--hoppenstedt-360/

 

[demo]

Please add the "other" option.

 

[GrandMasterDash]

Please add the "other" option.

I can't.. I want this to go through as a proper proposal, it will require Yes or No votes.

Unless there is something particularly missing, I want someone (yourself?) to submit this proposal and I'll reimburse them.

 

[halso]

Do you think shapeshift has changed the fungibility debate?

If I have tainted coins, I could shuffle them a bit, shapeshift them to a privacy based coin, another quick shuffle, and then transfer them back to the coin of my choice. Job done.

I believe the eth hacker has already done something similar.

I really like the idea of the proposal though. I think there should be more proposals that test issues just like this.

 

[TroyDASH]

This might be a false dichotomy. Could you define in tangible terms what exactly you mean to be "privacy-first" versus "transparency-first"?

 

[GrandMasterDash]

This might be a false dichotomy. Could you define in tangible terms what exactly you mean to be "privacy-first" versus "transparency-first"?

Thanks, I have updated the proposal to try and define their meanings.

 

[GrandMasterDash]

Do you think shapeshift has changed the fungibility debate?

If I have tainted coins, I could shuffle them a bit, shapeshift them to a privacy based coin, another quick shuffle, and then transfer them back to the coin of my choice. Job done.

I believe the eth hacker has already done something similar.

I really like the idea of the proposal though. I think there should be more proposals that test issues just like this.

I am confident ShapeShift is already in a two-way partnership with companies like Coinfirm, thereby tracking transactions across different chains. ShapeShift has had significant funding yet they still have a fairly low upper limit on transactions - I think maybe around 2 BTC - anything above that will almost certainly trigger a refund or an id verification process. Compliance also means they're logging IPs, browsers etc, and forced to keep records for a number of years.

Of course, people can use VPNs and such like, but identifying people and risks is not done in isolation; you have a large pool of users and you gradually eliminate certain people and risks until you have a small pool of useful information. It's like putting together the pieces of a puzzle; the more you complete, the clearer the picture becomes.

 

[TroyDASH]

Thanks, I have updated the proposal to try and define their meanings.

Thank you, I think that is a fair distinction--

 

[demo]

I can't.. I want this to go through as a proper proposal, it will require Yes or No votes.

Unless there is something particularly missing, I want someone (yourself?) to submit this proposal and I'll reimburse them.

What is the goal of your proposal?
Suppose the masternodes vote "yes" for the privacy-first blockchain, what will be your next step?

 

[GrandMasterDash]

What is the goal of your proposal?
Suppose the masternodes vote "yes" for the privacy-first blockchain, what will be your next step?

Whatever the outcome, I hope core listen and treat this issue with the seriousness is deserves. OTOH, it might be we later find that the wishes of MNOs are not aligned with end users. But in any event, the votes really should be used for governance, not just marketing.

 

[mastermined]

i voted transparency first because there are a lot of tradeoffs when going the xmr privacy first route. this subject is toknormal's bread and butter and he really opened up my eyes to the bigger picture of transparency. his explanations of the subject are pretty deep and i still get lost but overall i get it. i think 90%+ of people in crypto don't understand the importance of transparency first so hopefully tok will weigh in. in the meantime check out this oldie but goodie...

Bitcoin 101 - A Free Market for Transparency:
Anonymity is great. And Bitcoin provides anonymous payments better than anything we've seen online (feb 2014). But what few realize is that Bitcoin also does transparency, and it does transparency better than anything we've ever seen in human history. This transparency is the focus of this first video looking at bitcoin as a revolution. Because bitcoin is the first ever tool (in human history) that can provide provable transparency, we could finally see transparency explode via the free market (competitive edges given to those who disclose). This one simple change seems innocuous but it could have major repercussions.

Intro: When people talk about bitcoin, they talk about a revolution. The trouble is, many people can't even figure out what the revolution is. Is it really a revolution to have lower fees on credit cards and remittances? While these are big changes, they are hardly revolutionary. This series begins to look at the bigger picture, the jaw dropping changes that bitcoin could provide. And no future may be stranger or more earth shattering than the inherent capabilities of bitcoin to provide a free market for transparency. And this isn't transparency like we are used to, this is the possibility of absolute financial transparency. Not only would it eliminate the need for the IRS, but it stands to erase corruption and improve government. Amazing stuff. Hope you enjoy.

 

[GrandMasterDash]

Unfortunately transparency is not universal. For example, the UK recently passed the Investigatory Powers Act (ISPs must keep logs of their customer activity)... members of parliament are exempt! But let's talk about money... money spent on defence... secret. Backhanders and sweeteners to policy makers.. secret.

So yeah, transparency for the little guys because "nothing to hide", but a different story for others.

How about tax havens.. oh yeah, once upon a time, only for the rich... and when they get caught they say, "but we complied with all tax laws (and loopholes)". Ah but now, suddenly everyone has access to the new tax haven called "bitcoin" and now the IRS is interested (Coinbase.. who's next, LBC?)

Privacy-first guarantees an even playing field. It prevents a "clean coin" (now) not suddenly becoming a "tainted coin" (later).

 

[toknormal]

Privacy-first guarantees an even playing field. It prevents a "clean coin" (now) not suddenly becoming a "tainted coin" (later).

How about the entire blockchain becoming "tainted" ?

"Tainted" is subjective term. An authority can just define certain assets as tainted whether justifiably or not. Accordingly they can simply "taint" entire blockchains as off limits and thats you sunk comprehensively because it's far easier to police the entry and exit points of a "privacy-first" blockchain than it is to police the internal transfers in a "transparency-first" one.

There's also the question of why are blockchains transparent in the first place. The answer is because thats how they fundamentally derive their value. Messing with that is like an airline messing with safety in order to cut costs - it'll just blow up in your face IMO.

I can understand people's concerns with privacy. But lets think it through. First of all, blockchains are not bank accounts - that is a fundamental difference with credit money. You are not trading your state of credit using your identity, you're trading an anonymous public token and just because you happen to hold a private key to an address doesn't make you the owner of it. What happens when you hand the key to someone else and they spend it ? Does that make them the owner ? Who actually clicked the button "Send" button anyway ? Even if I am associated with a given address, what happens when the coins move only 1 hop to the next address ? How can "the authorities" possibly know who owns that address ?

My personal opinion is that obscuring blockchain addresses doesn't make a damn bit of difference to privacy because all the information about you has to be gleaned from off chain anyway. It's just a gimmick to help pumpers boost speculative values of alt coins on exchanges IMO.

As mastermined alluded to, I've rambled on this subject forever and I think it's good that people get to air their views on it. It will probably be an ongoing discussion in perpetuity but I think that Dash has a perfectly struck balance between transparency and privacy. It isn't even a compromise - Dash has actually decoupled the two so that each can be enhanced independently of the other. Bitcoin has them coupled and Monero has them coupled so those two approaches are out for me and I've voted accordingly.

Proof of the pudding: Ask any Monero holder if they'd swap their share of the XMR coin supply for an equivalent share of the bitcoin supply and see how fast their "privacy" concerns fly out the window then.

Once you have an extreme level of plausable deniability in the coin, thats the job done IMO. Bitcoin has that simply with 1 hop (compared with credit money). Dash adds extreme on top of extreme.

 

[demo]

i voted transparency first

No you didnt. You voted the opposite. Check your vote.

 

[demo]

Whatever the outcome, I hope core listen and treat this issue with the seriousness is deserves. OTOH, it might be we later find that the wishes of MNOs are not aligned with end users..

So you created this poll for the Core team to listen and treat the issue with the seriousness it deserves. This is too abstract for me. What exactly are they supposed to listen? How exactly this seriousness is defined?

I am confident that whatever the result of this poll is, the core team will declare that this issue is already treated with the seriousness it deserves. Maybe they will also declare that for now on they will treat the issue with more seriousness (if they want to be pleasant). So what? I predict that the issue will fade after the statements of the core team. At best, you will just win a useless verbal reassurance. Unless of course you have a plan to follow, unless you have something else in your mind that will keep the issue alive.

So what follows? What is your next step?

But in any event, the votes really should be used for governance, not just marketing.

This is also too abstract for me. How the votes can be used for governance? Suppose we have the current result:

<vote histrory>
Do you want a transparency-first block chain or a privacy-first block chain?
Yes, I would like to see dash switch to a privacy-first block chain (permissioned transparency) 2 vote(s) 33.3%
No, I want to keep dash's transparency-first block chain (privacy via mixing) 4 vote(s) 66.7%
</vote history>

How this specific set of votes can be used for governance? I ll tell you what I think.

A method shoud be defined-voted in order to extract a result from this poll. And then the core team should be compeled to apply the decision. If they deny to obey, then the MNOs should react, they should vote in the budget appropriately, they should dismiss the current core team and hire another one, capable (or willing) to implement the decision of the MNOs. This should be the next step, IMHO. But this step requires awareness and vigilance on behalf of the MNOs (they should vote down in the budget the core team). Unfortunately everybody knows that MNOs are nochalant sleeping whales. So I am not very optimistic with your plan.

Maybe another plan is smarter, because whatever appears as a nuisance suits better to the nonchalant and sleeping character of the MNOs . You have 5 dash and you want to spend them for whatever budget proposal will help the privacy goals. Use them wisely, wake the MNOs up, become a nuisance and maybe this will bring some real results to your cause.

 

[qwizzie]

As this "forum poll" (which i personally think is pointless and a waste of time so i'm not even voting on it) is posted in the pre-budget / budget proposal forum, i would like to know when we can exspect
a budget proposal from OP polling the masternode network about this so i can just vote no and get it over with.

If OP has no further plans to actually poll the masternode network, then i think this thread should be considered getting moved to the general section of our forum.

 

[GrandMasterDash]

As this "forum poll" (which i personally think is pointless and a waste of time so i'm not even voting on it) is posted in the pre-budget / budget proposal forum, i would like to know when we can exspect
a budget proposal from OP polling the masternode network about this so i can just vote no and get it over with.

If OP has no further plans to actually poll the masternode network, then i think this thread should be considered getting moved to the general section of our forum.

I am making this a formal proposal soon.. you can choose to not vote

 

[GrandMasterDash]

So you created this poll for the Core team to listen and treat the issue with the seriousness it deserves. This is too abstract for me. What exactly are they supposed to listen? How exactly this seriousness is defined?

I am confident that whatever the result of this poll is, the core team will declare that this issue is already treated with the seriousness it deserves. Maybe they will also declare that for now on they will treat the issue with more seriousness (if they want to be pleasant). So what? I predict that the issue will fade after the statements of the core team. At best, you will just win a useless verbal reassurance. Unless of course you have a plan to follow, unless you have something else in your mind that will keep the issue alive.

No less abstract than Evan's block size proposal.. nothing happened there either.

 

[toknormal]

I see we're up to 5 votes against now. Those'll be the "Furious 5" then.

Suggest OP's next response:

Now hip to the theme of the privy chain boogie and the ridding of the exposeé,
What you hear is not a test, am a’rappin cryptografee
And me, ma gang from the ring-sig spam wanna hide ya merkle tree,

Now tok and his flock like to holler & squawk
‘bout their precious transparencee
No, I ain’t diggin ma coins between ma loins
but in a chain that “they” can’t see

Don’t push me cos am close to the edge…
...am tryin not to loose ma head

(Apologies to "Wonder Mike" for an element unauthorised plagarism deployed in desperation ).

 

[GrandMasterDash]

The proposal is now live:

https://www.dashcentral.org/p/Privacy-Transparency