Opinions on tainted coins?


#1

Hi everyone, I’ve been thinking about something that doesn’t appear to have been discussed here yet. It’s no secret that Bisq is popular among the Monero community, where the lack of fungibility of bitcoin is generally acknowledged. Specifically, there are often some very large offers on bisq where the individual is trading btc for xmr, has many offers up at the maximum size of 1 btc, and is willing to go considerably below market rate (-3%). Just based on the size and discounted rate of the offers, as well as the fact that XMR is being purchased, I suspect that these individuals are attempting to offload ‘tainted’ btc for a more fungible asset without the full understanding of the btc buyer. It seems dangerous to use a truly anonymous DEX to purchase an asset with questionable fungibility, but I don’t really have any good solutions to this type of attack. Should bisq somehow attempt to reject tainted btc? Why or why not?

Thanks.


#2

Quite frankly I don’t think Bisq should try to do anything about this.
If we do, we are the ones that are making the coins tainted, we would be the exact problem we are trying to fight against.

We should treat all Bitcoins equal and due to Bisq’s decentralized nature, I don’t really think we can safely do otherwise.
Decentralization here isn’t just a selling point, it is there to make Bisq unable to treat all of it’s users equally and transparently. This is why when Bisq can’t do something, it often shouldn’t, at least in these scenarios.


#3

1/ How is it practically knowable that a btc is tainted or not ?

2/ In the case you point, BTC buyers are also Monero sellers, and, in the crypto community, monero people are generally quite among the most conscious about anonymity issues. And today, there exist some useful tools. Wasabi eg seems to be able to do good job with BTCs.


#4

1/ I assume there will be some AML lists in the future, if there already aren’t some out there.
Then you will need some form of authority to determine what makes the list and what not, which will most likely be some government organisation.

Not sure how this is done for fiat now, but I am sure it will be quite similar for Bitcoin in future, although hopefully less widespread for some time.

2/ Yeah, there are some ways to mix your coins, that is true. Manfred had some ideas with CoinJoin to mix coins in Bisq, but I am not sure why that never lived on. Perhaps devs in general just got real busy with DAO and other stuff.

It is a legitimate worry that Monero sellers might have though. They trade non-fungible coins for something that could be fungible in the future (and might already put some flags on you from the government), but even with coin mixing, these coins can always be flagged, even if it makes no sense for governments to do so.

We just shouldn’t feed the problem in my opinion. Fear is how governments always keep people in line, they could never censor us on their own, they count on us censoring ourselves.
So I don’t think we should do anything about it, they will have a lot of trouble to force a decentralized network to obey their rules if we don’t want to.


#5

Market makers / speculators will take their time selling, people who want to use the funds will sell at more aggressive pricing.

For anyone who really cares about anonymity it makes a lot of sense to swap BTC to Monero. This doesn’t make the XMR buyer a suspect (expect if you work in a body that tries to limit individual rights) and certainly not an “attacker”.

Now, regarding market “rate” and being below it. When anonymity is important there is little point in buying XMR with BTC in an exchange with KYC policies.

The product traded here is therefore different: it’s “Anonymous XMR”, for a slightly lower rate. That makes a lot of sense for me.
BTC seller in this case provides the service of providing this anonymity, for that they earn a profit. Hardly an “attack”.


#6

if we banned use of all dollars used for illegal activity- there would be no dollars left to use. Also seeing as how what defines legal and illegal in terms of money transmission is usually based on nothing more than making sure the law maker (or it’s lobbyist) are not losing out on potential profit for themselves. regulation just makes us the lower denominator. Certainly a good starting place for human discussion on the topic of freedom. Though, I agree with alexej996 in the way of not entering such an arena of thought or even consideration on the level of software or the Bisq platform. Machines only see numbers anyhow. 1 BTC = 1 BTC
-AJT


#7

When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it. - F. Bastiat