I have to be honest, barely a day goes by when I'm not frustrated by the completely false narrative being broadcast by basically every public speaker on the topic of Bitcoin:

* Bitcoin is fully traceable and not fungible

* Chainalysis works on bitcoin

Triggering me today 😂 .. was the "What Bitcoin did" podcast on the interesting topic of human rights in authoritarian countries. This narrative in full force there, too.

Is it completely hopeless to get people to understand better? 1/n

The result of this misunderstanding will be more and more stuff like this:


i.e. governments believing they can trace bitcoin, prosecuting or sanctioning people who are innocent, and paying huge sums to disgracefully evil companies attacking your privacy.

Meanwhile nobody knows where these coins are; and yet the technique used (public coinjoin I could call it) is the most basic possible: reddit.com/r/Bitcoin/comments/


Bitcoin is not traceable for at least two simple reasons; 1/ that satoshis are not watermarked and 2/that it is completely possible today to make transfers off-chain (I mean in the most general sense; you can make transfers from A to B trustlessly without a connection between the two on the blockchain, using atomic swap variants). Since transfers can be invisible you don't really know what any specific transaction means.

Saying "oh that's only theoretical because few people use techniques" just doesn't cut it:

1/ People do use LN, more and more
2/ People do use coinjoin, not that much, but it's pretty powerful
3/ You have literally *zero* idea how many scriptless script swaps have already happened (using ecdsa-2pc)
4/ it's also mostly not possible to distinguish p2ep type coinjoin from ordinary transactions, depending on pre-existing knowledge

This mostly brings us back to the real issue: centralized control points, like exchanges. Chainalysis type firms rely on this as a crutch, and if your ID is a given there, and all you do is move between exchanges, *no* cryptographic tricks make any difference anyway. Learn to trade p2p!

The most common perspective from thoughtful people is, that well we should have better, really strong privacy baked in. Guess what, I want a pony and Roger wants a 100MB block. There are no free lunches, and completely cryptographically "blind" transactions come at a cost. Apart from novelty of crypto (which itself is serious), consider the arguments I made here: joinmarket.me/blog/blog/the-st

I know that blog post is probably a bit eccentric and difficult to read, so the basic idea is just that by definition, you're reducing the security when you blind transactions, and I think (it's not so clear) that you're almost by definition worsening scalability too. Blockchains are a design specifically for public verification. Take the meaning of transactions off-chain is probably the right direction.

Meanwhile, in summary, saying "bitcoin is fully traceable" is at least as wrong as saying "bitcoin is anonymous". /finito

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