Bitcoin Isn’t “Private”… Does it Matter?

by birtanpublished on August 15, 2020

Bitcoin isn't private or is it but if it is in private does that even matter in the grand scheme of things let's talk about it today what's going on everybody it is your boy crypto Bobby I hope you were having a great day great night wherever you're watching or listening in

From and today yes we're gonna talk about Bitcoin privacy and whether or not Bitcoin is private and whether or not that really matters in the grand scheme of things in the current situation in the long term and a lot of this is is

Stemmed by an issue today an indictment from a US grand jury with a dark web website that dealt with child pornography which is obviously a terrible thing I don't want to fall into the Vitalik world of debating that

Versus heroine or anything like that but there was a dark web website called welcome to video that again dealt with child pornography and they used Bitcoin to process transactions and because of the fact that they used Bitcoin they and

Their users ended up getting caught which brought up this whole debate about Bitcoin not being private not being anonymous and that that may or may not be a bad thing for Bitcoin the the lack of privacy with Bitcoin as it relates to

Something like this issue so I want to talk about that and a lot more and today's discussion if you are new to the channel by any chance make sure to hit that subscribe button if you've been around for a while

Smash the thumbs up button I'll eat more buffalo chicken wraps if you do so today again there was relatively big news that came out and this was around this welcome to video sites which dealt with illicit videos on the dark web and chain

Alice's brought this story to light with the Department of Justice and if you're not familiar with chain alysus I've talked about it on the channel before and it's definitely worth understanding and worth knowing about

So today the Department of Justice announced the shutdown it was the largest ever shutdown of a child pornography site and they found over 300 users in 38 countries that they've been able to arrest

They also found minors that they were able to I guess rescue and save which is obviously a good thing as a whole but at a high level this website operated out of South Korea was the South Korean citizen that ran it and allowed users to

Buy content elicit videos illegal videos with Bitcoin or to upload their own and they as a user I guess you would register for an account and you would have a specific Bitcoin address that was tied to that account or multiple

Addresses if you had multiple accounts whatever it was but all in all the site had 1.3 million Bitcoin address is registered to it and that was between 2015 2018 the site earned nearly $350,000 for the Bitcoin amongst

Thousands of individual transactions so in the grand scheme of things $350,000 probably not all that much in comparison to traditional Bitcoin transactions and in the grand scheme of thing but obviously when you look at what that was

Used for sure it's still a big deal and yeah so that's that's kind of where where that stood but why is this important why does why are we talking about this in any way whatsoever well it's important because the government

Was able to or multiple federal agents were able to to determine okay these individuals are buying these elicit videos utilizing Bitcoin so how do we find these individuals well we can track their Bitcoin transactions and the

Relatively crazy thing about how this occurred is that the vast majority of these transactions actually were sent from exchanges from kyc to individuals so if we look here and we zoom in on this document we can see that chain

Alysus again they track Bitcoin and blockchain data and analytics so they can tell when somebody sends money from one place to another and if they've ever KY seed through if they've ever completed know

Your customer kyc they've ever KY seed through any of that they can track that person and find where they're paying and how they're paying and how they're utilizing Bitcoin or other crypto assets so you can see here that people were

Paying for these illicit videos with Bitcoin it directly from exchanges where they were KY seed so you can see by Nance here you could see bitch rack so you could see hewwo B you could see Zappo you could see Polonia acts you

Could see crackin you could see a variety you could see coinbase a variety of different website so how did these people get caught essentially bitcoin is supposed to be this private anonymous cryptocurrency that the media loves

Talking about right you know you could do anything you want with Bitcoin because it's private and it's anonymous well the key here is the on and the off ramps with Bitcoin if you have ever gone to coinbase

Or two-bit tracks or to crackin and you sign up on coinbase and i say hey my name is Rob hey own and here's my birthday and here's my ID and here's all my information coinbase is gonna give me a Bitcoin address they're gonna tie my

Information to that Bitcoin or to multiple Bitcoin addresses and then in the future if I ever send that Bitcoin to another place there are services that coinbase and other exchanges used that tie my information to those addresses so

Even if it is not on coinbase anymore coinbase or these other exchange or these other services such as the chain analysis we'll know hey that was raw pay own that sent his Bitcoin to some hardware while

Potentially or to another while it doesn't necessarily matter but they'll know that was robbed pay on that sent that information somewhere so what happens in this scenario well federal agents such as the Department of Justice

Such as the FBI such as international law enforcement whatever it might be they have contracts with chain alysus and they can use analysis to find the information of somebody who sent their Bitcoin from an

Exchange to an illicit website they can identify hey this is an illicit website and this person paid for something from coinbase to that illicit website and that is essentially how at a at a pretty high

Level how a lot of this went down now why does this matter in the grand scheme of things when you're looking at it well there's a relatively interesting conversation that was sprung up by Joe Wiesenthal who works at Bloomberg and a

Lot of people will debate this and call it fun or whatever you might want to call it which is fine but I think it still does bring up a relatively interesting debate because there are some merits to his points and there are

Some some parts of it that are relatively easy easily debatable so Joe had a whole tweet storm but at the high level hit his crux is every time there's a big criminal bust involving Bitcoin in this case this video listed video

Website so every time there's a big criminal bust involving Bitcoin and people's identities are revealed the hollers come out and say we never said it was anonymous the blockchain is public everyone can

See it we just claim it's permissionless sorry but that's garbage and here's why then he goes on to say the key reason now is that bitcoin is being pitched as digital gold not as a medium of exchange but of a store of value and then

Crucially the question is where's that value being stored and then goes into saying Gold has historically done a great job of storing your purchasing power and in his opinion the theoretical value of Bitcoin stores in the freedom

To transact if you're deep platformed from banks because your views are unpopular odious or illegal nobody in the Bitcoin ecosystem can prevent you from transacting so if Bitcoin can't offer anonymity to users when they do at

Times have to transact and it's useless because if you can be identified by the government then you're punished and therefore de facto censored until true anonymity or near anonymity is developed into Bitcoin it's incomplete and not

Delivering on its promise so it's lamed defense to say was never meant to be anonymous nonsense without anonymity there's no censorship resistance and no store value I would disagree on a number of different points but I do think that

It is worth discussing at a high level because he does make interesting he does make some interesting statements around Bitcoin and the usefulness of Bitcoin and why do I say it's it's interesting well he is right that in the standpoint

Of if you are participating in something that is nefarious from the government or deemed not politically correct there's a variety of things but if you are participating in something that the government or regulators don't like

There is a high likelihood that you will be quote unquote deep platformed but when we're looking at deep platformed in this context it's mostly around illegal things and it doesn't matter what currency you're dealing with if you are

Participating in illicit activities people that there there are incentives in place for for governments and for regulators to ultimately find you as a as a person to the Bitcoin network itself the key thing to me least is the

Bitcoin network itself is never going to censor you the miners probably for the most part miners aren't gonna care what your transaction is for as long as they're getting paid to do so they're going to participate in the facilitation

Of that transaction on the other end of the spectrum if you are transacting in Bitcoin and it is for purposes that other individuals such as governments deemed to be illegal illicit whatever it might be then you can certainly be in

Trouble if you are not very very careful about the privacy of your Bitcoin transactions so that is something of note and the key always does come down to the on and the off ramps that is the big thing where a lot of people have

Traditionally again believed that bitcoin is anonymous or because I know when I send my Bitcoin to an address nobody's gonna know who it is because maybe I just created that address whatever it might be but if

You've ever KY seed if you've ever gone through a process of no your customer on a regulated exchange your information in the Bitcoin world is out there on centralized services such as a chain alysus and the government

Most likely knows who you are where you're going what you're doing when it does come down to your Bitcoin into your crypto currency trading so that's something you definitely want to think about whether you're doing something

Perfectly normal perfectly fine trading having good time storing your value that's fine or if you're doing something completely illicit and in bad either way there's a good chance folks know in the background that might be you so know

Bitcoin isn't fully private and no I don't think you should expect full privacy when transacting in Bitcoin especially again if you have KY seed and attached your identity to your Bitcoin at any point in time is that a detriment

To the future of Bitcoin no I don't believe so a lot of this does come down to on ramps and off ramps and then increasing privacy solutions such as lightning such as mixers and things of that sort that

Is a whole nother subject of discussion that you could really dive very deeply into but no I don't think this impacts the long-term value of Bitcoin and or the store of value thesis and and a lot of the things that Joe talked about but

I do think that it is certainly worth a high-level bit of discussion now on the other end of the spectrum when you are talking about exchanges and we're talking about centralized exchanges a lot here right tying your identity to it

One thing that I think is interesting and we've seen a lot of discussion on Twitter about this exchange in particular but there's others out there as well and this is is be AXI or BCC I don't even know how to pronounce it but

This was an exchange that a ton of people talked about on Twitter in the past they had a very popular referral program they have a token and it is based in the US and they were claiming the people online were claiming at this

Hey this is gonna be the bye Nance killer this is gonna come out it's gonna come out of the gate hot is really gonna crush it and this is gonna be a super popular crypto currency exchange and the AXI has

Since really in the past like three four months since it launched basically falling on his face today it has twenty thousand dollars in volume in twenty four hours that is a centralized exchange and the lesson to

Me here is when you're when you're evaluating a centralized exchange if you are a traitor or if you're on the very off chance thinking of starting your own centralized exchange which I would highly advise you not to do but if

You're evaluating a centralized exchange right now the incumbents the ones that are already in existence are actually pretty good no matter how much people on a bitch and moan about coinbase or by Nance or Gemini or Kraken for

Whatever reason maybe had a bad customer support experience maybe you think that fees are too high whatever for however much people on a bitch and moan about the existing options you need to make your new exchange differentiated and if

You don't nobody's gonna use them and differentiation in the crypto world is not doing the exact same thing as somebody else with her a ferrell program maybe that could work for a short amount

Of time in 2017 but we're not 2017 anymore we're in 2019 where real businesses need to be created and if you are not innovating and creating new products if you are not creating any type of differentiation around your

Exchange then you're not gonna have a lot of success and you could see a company that raised a good amount of money like be actually that has a lot of employees and they're not having much success off the top and part of that is

Just the prioritization of marketing and a focus on crypto twitter and places like that which i don't think have as much value as a lot of people placed on them at least not at the given time crypto twitter now and i love it my

Favorite place but it's basically the same 1000 people are yelling back and forth and back and forth at each other and getting mad at each other about a bunch of random different shit so it's it's a smaller group of people than it

Than it used to be and lying solely on that not focusing on things like hey you know maybe what matters on a cryptocurrency exchange like liquidity and relationships with market makers and having assets that

People want that maybe a little bit differentiated from other exchanges or even different products to that type of thing is is important to have any type of success in the long run if you are coming into a new business you're trying

To compete with something like a coin base or a buy Nance or a Gemini there is no reason at least for me probably for a lot of other people to trade on something like a B AK C versus going to coin base or to Dubai Nance

I can buy every single thing I can trade every single thing there that they have other than the native B AXI token so there's no reason to go there why would I want to I wouldn't on the other end of the spectrum you've had some other

Exchanges that have been centralized exchanges that have launched in the in their you know recent times FTX is one that a lot of people have looked at now not available to us traders but it is a derivatives platform that has a lot of

Exotic assets and tokens that are relatively innovative in comparison to other exchanges are there issues with the the company that runs it potentially market making or being the sole market maker on their own platform yeah there

There are a lot of issues they can get into with it but the fact that they have these leverage tokens and these moon doom tokens and things like that relatively innovative stuff in comparison to just having a two BTC pair

That nobody cares about and it's a lot more liquid on other exchanges so when you are looking at these different businesses especially centralized exchanges that have these established footholds

In the industry you're gonna start something do something with some differentiation because you're just gonna sit there and not have all that much success if you're not differentiated and finishing up with

Some commentary as crypto Bobby or favorite entrepreneur in the Bitcoin crypto industry so as a lot of you guys know and girls know start a proof of talent recently and in the past four months or so building a

Business in the crypto world has had obviously its set of enjoyable times and unique challenges but something that I've realized very much and I think this applies just all business in general but one of the things that I have very much

Realized is how important it is to play the long game and this could be with content on YouTube tweeting with building just relationships but playing the long game is so important when it comes to building something sustainable

And specifically the proof of talent like every business relationship that I have I have very limited time at this point and I try to treat every relationship with as much respect and attention as I possibly can and

Especially now to where I've had a lot of scenarios where I've had these seemingly inconsequential conversations with people the months ago I've talked to somebody and I don't have anything good for them or their company doesn't

Seem like a good fit to work with or they're just we're not the ideal partner together and seemed like a pretty inconsequential conversation not much is gonna happen from it right but three months later four months later they may

Be introduced me to somebody that they know that turns out to be very influential or has a need that I could really help out with or maybe they have a friend that's coming into the job market or maybe there's a higher manager

That I spoke to three months ago that was that one company needed to help hiring and actually left the company that they were at and now is looking for a job or somebody was the CEO at a company and they ended up transitioning

Out of that company and now they're looking for a new job opportunity so I've realized that you never know what's gonna happen from some of the conversations that you might have and while things might seem not significant

In the time always treat them with as much respect and attention as you possibly can because you never know what might come of certain things in the future so that's my my quick little Bobby the

Entrepreneur this is some of the things that I've just seen gotten a chance to learn really over the past three months and I mean I've known that over time I've worked at a lot of large companies where our different sales deals and

Things like that have happened just from long-term effort but it's been super apparent to me with proof of talent especially with an industry that's as small as the crypto world is right now it is a very small tight-knit group of

People so I think that just compounds how important it is to just treat these relationships with with a lot of respect in the long run outside of that folks I hope you enjoyed this video we'd love to hear your thoughts on on Bitcoin privacy

As a whole is Bitcoin does Bitcoin privacy matter is it private is the student-student anonymity does that really make that much of a difference or do this Bitcoin need to be fully anonymous for it to have its really true

Value in the long run we'd love to hear your thoughts in the YouTube comments or if you're listening on the podcast tweet me at krypter krypter underscore bobby thank you so much for your time signing out

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