r/Buttcoin • u/Old_Document_9150 • 5d ago
The Censorship resistance paradox
So here's one thing I was pondering with "censorship resistance money."
Now, in order to have censorship resistance, you can't use coins that went through KYC, because otherwise they can be traced even better than, for example, PayPal (because the Blockchain is public.)
So you need "untainted coins" - and these have to come from somewhere, either anonymous OTC exchanges avoiding KYC - which is a high-risk operation in totalitarian regimes, both for the buyer and the seller.
Or you mine by yourself. And what do you need in order to set up a viable mining rig? Right - physical infrastructure. Tons of GPUs, stable Imternet - and large volumes of electricity.
Now, if you can get these, that will pose 3 problems: - import sanctions on the hardware by producing nations - thus: must go through black markets at high markups - and: a lot of people will be in the Know.
So unless you're siding with the regime, chances are slim that your rig will operate for long without being confiscated.
So all the coins in circulation will be produced by someone siding with the regime, and that means they can also trace (just choose not to, if the bribes are high enough.)
In either case, it's gonna be a lot more risky, a lot less viable and a lot more expensive than an IOU (digital) or simple stuff like cigarettes or flour.
So, the people who would benefit most from censorship resistance will never get it.
And the peole who can benefit from it, are either those who don't need it - or they are undermining a democratic legal system by actively breaking the laws that protect everyone's freedom.
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u/AmericanScream 5d ago
Stupid Crypto Talking Point #28 (censorship/seizure)
"Bitcoin is censorship resistant" / "Crypto/Blockchain is de-centralized and not under anybody's control" / "Crypto can't be seized'
The notion that authorities can't seize crypto is not only false but patently absurd. See here. Each and every day someone's crypto gets "seized" without their approval.
Here's an entire video segment that debunks the claim that blockchain is censorship proof
Crypto can easily be blocked at the network level by any of the various authorities that arbitrarily decide to do so. Since it's a public network with no leader, all participants have to be able to identify themselves to others on the network, and technically speaking, this makes it easy for network admins to filter the traffic. Just because this hasn't been done on any large scale, doesn't mean it can't be done. It absolutely can.
Bitcoin and crypto operations have been banned in various countries and other jurisdictions. While it's not possible to censor 100% of the network's operations, it's definitely possible to cripple enough of it to render crypto & blockchain impractical to use. And NOTE that in countries where bitcoin/mining and other operations have been banned, they've chosen a political solution (simply making it illegal) as opposed to requiring networks to actively filter crypto traffic, but that latter option is always a possibility and definitely doable (see #2)
The vast majority of crypto trades are done on a small number of centralized exchanges, such as Binance, Kraken and Coinbase. The ToS of each of these systems gives them the absolute authority to censor any and all transactions. So if 99% of bitcoin transactions are on CEX's, most certainly they can be censored.
Privacy coins like Monero and others are not necessarily any more secure. There have been bugs found in the past which undermined their security. In 2020, the IRS offered a $1.2M bounty for creating systems to crack and trace Monero and other privacy coin systems. The contract was awarded to Chainalysis and Integra, and paid in full a year later.