I'm not sure how you can call it worse than the status quo.

Last week my bank informed me that I passed my ATM limit for the year and it's going to give me a small daily allowance for the rest of the year. And then lied me on the phone that it's a requirement from the central bank. This is neither a joke nor a metaphor - this literally happened to me this month (ING in Romania -they're widely considered the best bank here). Ah, they're an ATM-only bank, they have no tellers, so I can simply not take my money out, unless I make an account with another bank and have it transferred. And this just means I'm going to hit another set of limits.

There is a concerted effort to control the financial movements of the population. If you fit within common patterns you don't see it. I'm probably barely at the edge - I've moved on the order of tens of thousands - and I'm hitting it pretty hard. Revolut had my account completely blocked for a couple of months earlier this year, while completely ignoring my calls. Couldn't even close it, since it was not on zero and couldn't take money out of it. And this was for moving around on the order of thousands over a few months, mostly sending money to a few friends. This is not money laundering, this is simply using the money I make very legitimately and paying taxes for.

Worse from the perspective of privacy: right now, if you use cash your transactions are not traceable and if you use electronic systems they're subject to whatever rules the institutions you use have (e.g. your bank definitely knows who you interacted with for as long as they retain that data).

Bitcoin, on the other hand, makes every transaction public and permanent so anyone in the world can track you and they can retroactively link your activity at any point in the future. If you're trying to stay anonymous, every transaction you make is an opportunity to have your identity permanently revealed if you or the other party are compromised. If, say, you make a donation to a political campaign now and power changes hands a couple of years later, there's no way to retroactively scrub that record. People will say “oh, use a tumbler” — which is again putting a permanent “I'm trying to hide illegal activity” flag up in any of the situations where you really need it (not to mention the risk of being caught in someone else's activity and having to explain that you had no idea that you were using the same tumbler as a mafioso).

Note that I'm definitely not saying that the status quo is great, only that I think it's worse to make promises which the system cannot deliver. If people actually believe the Bitcoin salespeople and act as if it's privacy-preserving, they're at more risk than doing nothing at all.

> People will say “oh, use a tumbler” — which is again putting a permanent “I'm trying to hide illegal activity” flag up in any of the situations where you really need it

This is probably a correct analysis. It's very disheartening though.

Replace tumbler with encryption and you'll get the picture. My desire for privacy shouldn't be a reason to "Minority Report" me.

By the way, I know you didn't say otherwise - I'm just pointing out how bad the status quo can be.

Oh, I agree — the part of me which grew up reading the CYPHERPUNKS-L list wants this to work but one of the big things I've learned is how all of the fun cryptography is just a tiny part of a social system.

The worse than status quo comment of the grandparent refers to privacy, in the current system your bank (and whomever they sell the data to) knows everything, in a public and transparent ledger possibly everyone knows about what you use your coins for. It's not the case of Bitcoin right now but this move is concerning in this regard.

I'd like to hear more about such limits. Do they base it on total money withdrawn, or number of withdrawals? If you don't mind, what was the limit approximately? Is it only about cash withdrawals, can you use card and online payments as before?

About 60k eur anually.

It's ironic, but a fair share of my withdrawals were simply because the pandemic made me want to have a cash reserve on hand, in case of emergencies. Plus a used car purchase and some renovations. Very white money, taxes already paid.

Interesting that there's a limit. That's also probably many times more than I have withdrawn in my whole lifetime.

Aren't cash transactions over 5000 eur illegal in whole EU? The limit certainly stems from there (even if it isn't explicitly set by central bank). I'd definitely have lawyer on retainer if I personally moved 60k/year in cash around.

The privacy comes from the system being censorship resistant, so the platform itself can not require you to KYC yourself to the state in order to use it, or be shut down or blocked by the state.

The irrepudiable public record of transactions is needed to make it censorship resistant, and does indeed come with severe privacy risks, though those can be mitigated with zk-proof cryptography (e.g. https://aztec.network/).

> The privacy comes from the system being censorship resistant, so the platform itself can not require you to KYC yourself to the state in order to use it, or be shut down or blocked by the state.

That's definitely a good example of the sales pitch, but think about how it works in the real world:

1. Nobody wants random numbers, so you have to link your Bitcoin addresses to real world identities on every transaction. Anyone you deal with can deanonymize you if required or compromised, which means that if you actually have cause for concern this is not a system you can trust.

2. Almost all transactions will require conversion to real currency at an exchange. This is, of course, a great place for a government to require KYC since the exchanges and businesses in your country are subject to local laws.

3. The network requires an easily-blocked protocol to send large amounts of data on a continuous basis. This makes it easy for a government to block unapproved exchanges — and, of course, since trying to circumvent the system is effectively waving an “illegal activity here!” flag that means that any transactions you try to make over something like a VPN have a high level of risk unless they're parties which you are certain are fully outside of your government's control. How much do you really trust that guy who says he works for the resistance with your full transaction history?

4. The next point on the sales pitch is usually “use a tumbler” or “use separate wallets for everything”. These are impractical on a regular basis, guaranteeing that people will be compromised by mistakes and again have their full public transaction history linked, and there's a huge trust problem: do you really believe everyone you interact with will keep your identity history? Will you ever make a mistake and use the wrong wallet? Will you always have so much money available that you never need to transfer funds? What happens when the police search your phone and find a banned Bitcoin client, which is to say a signed confession? Are you certain the tumbler you're using isn't compromised or run by the police? What happens when the police find someone else using the same tumbler to launder money and now you're being charged as an accomplice for the mob and are trying to prove that you were just breaking the law for some lesser crime and had no knowledge of what those guys were doing?

None of that is practical: real people are not going to want or reliably keep some kind of strict opsec regimen AND they're not capable of vetting that the software is actually implementing the promised privacy features. If you actually care about censorship, the first questions you'd want to think more deeply about are how people discover and use this system: can you be certain that the exchange someone told you was private isn't a sting operation? Is the person you're trying to send money to really who you think, and operating with perfect opsec?

At every point, the answer is “it's safer to use real cash” because then at least your risk exposure is limited to a single transaction at a specific point in time rather than a retroactive unveiling of your lifetime history.

Now, that's not great and it'll be cool if someone does come up with a truly robust anonymous system but that is not and never will be Bitcoin so it's recklessly irresponsible to run around telling people that Bitcoin is good for privacy and censorship avoidance when it can never meet those goals. It's also irresponsible to tell people that some new thing which was just developed is safe to use when it'll take decades both to prove that and develop safe community practices around the tool — many of the approaches people have hypothesized are not known to be safe in the context of an adversary with significant network visibility or statistical analysis capacity.

The other thing to remember, as we've seen with cryptography, is that you need to look at the whole system. One very nice trait about cash is that it's a robust system: I don't need to analyze a complex software stack and operating network to understand the threat model. It doesn't help anyone if, say, someone comes up with a great anonymous coin system but the local government is actively promoting exchanges and apps which are compromised — and even if you really are correct in believing that your opsec will be perfect for life, that's probably not true of everyone you deal with.

>>3. The network requires an easily-blocked protocol to send large amounts of data on a continuous basis

No, you only need to be able to receive/transmit the data relating to your own addresses when using a light client. The full nodes can sit outside of any censored country.

>>The next point on the sales pitch is usually “use a tumbler” or “use separate wallets for everything”. These are impractical on a regular basis, guaranteeing that people will be compromised by mistakes and again have their full public transaction history linked, and there's a huge trust problem

I agree that that is true with Bitcoin, and that is why I don't promote Bitcoin.

>>It doesn't help anyone if, say, someone comes up with a great anonymous coin system but the local government is actively promoting exchanges and apps which are compromised

Good point.

> No, you only need to be able to receive/transmit the data relating to your own addresses when using a light client. The full nodes can sit outside of any censored country.

Yes but don’t you think the government would monitor traffic to those and either block connections which aren’t made by approved local banks or ask you to prove you weren’t evading local laws? I just don’t see how this could safely be addressed with an optional network most people have no reason to use.

>>Yes but don’t you think the government would monitor traffic to those and either block connections which aren’t made by approved local banks or ask you to prove you weren’t evading local laws?

It's very little data being used by light clients, that can be routed a thousand different ways, not to mention encrypted.

And yes governments could certainly do a lot of things but I think that as the object of enforcement becomes the end users, the political cost of enforcing laws against technologies becomes higher, and a blanket crypto ban would require pretty Draconian measures against end users.