The Great Divide: Privacy vs KYC

By Jinno | The Ceremony | 28 Nov 2023


 

  It was only when I decided to join the Bitcoin revolution that I discovered the limitations of my bank. I was mitigated to withdrawal limits, I couldn’t buy all the Bitcoin I wanted because I wasn’t allowed to spend all the available funds in my bank. But I had similar experience with the Exchange in my country: Two pieces of Identification, 2 Utility Bills marking my address and a photo of myself with a piece of paper of that day’s date. Do you know what I gave up when I freely consented to the release of this information? My identity, the providers of the Utilities of my home and the metadata embedded in photo which includes the GPS coordinates at the time of the photo, the timestamp of when the photo was taken, the model number of my phone, the pixel count of the photo. I wasn’t joking when I said the more I learn the more I want to be a Luddite. Why is this a problem?

  The Bitcoin that I bought through KYC is intrinsically linked to my identity. It doesn’t matter that my Bitcoin addresses are Pseudonymous the amount that I bought is tied to databases outside the blockchain that uniquely identify me. It’s a huge invasion of privacy but I wasn’t aware of this well I was going through the motions as well as many other things concerning the Bitcoin protocol that I was ignorant of.

  Currently I’m receiving letters from lawyers representing BlockFi/ Celsius and Emails from Hodlnaut informing me of the release of owed funds or how the courts are proceeding. I’m not owed any of my funds from any of these companies, what they might owe me are interest payments from promotions or earned amount from depositing my crypto with them. I remember inquiring to Celsius about some of these owed funds and they basically told me to KYC all over again. I was like keep it. But there it is again past KYC mistakes that doxxed me to the United States government, I’m not American but this is one of the governments I fear. If I could do it all over again, would I buy Non-KYC Bitcoin? Hell no I’m not paying above Market for privacy preserving Bitcoin as well as the bottleneck of liquidity: sure that Bitcoin isn’t linked to me personally but the past history of that Bitcoin is available all the way back to the genesis block that created it.

 

Becoming a Sovereign

 

 The most common form of chain analysis is focused on identification of transaction “change” outputs. This process is based on a series of heuristics that can be used to follow a user’s activity over multiple transactions.

  If this on-chain activity leads to an identified economic entity’s wallet cluster, investigators may be able to obtain a users’ Personal Identification Information associated with the observed transaction activity.

 Heuristics by themselves can be misleading and inaccurate however when combined with additional transaction patterns or external data such as wallet cluster labeling a more pristine flow of data is available for tracking.

 

Spending Privately

 

  Bitcoin operates on the UTXO model. Every Bitcoin consists of a transaction out (TXO) before an amount is spent, it is called an Unspent Transaction Output. When you create a Bitcoin transaction, your wallet will combine one or more UTXOs inputs, accumulating the amount you are looking to spend. When the transaction is broadcast and mined in a block, all of these UTXOs become spent, never to be spent again. A change output is created, when the new output transaction does not match the input amount (less miner fees). This change output sends funds back to your wallet, which are then available as another UTXO.

 In Bitcoin there are no fixed denomiations, so in your Trezor or Ledger you might have a dollar evaluation of $100 of Bitcoin but within your wallet theses UTXO total sum is 0.00268 with individual bills might be 0.001, 0.001, 0.0068.

 If you buy something worth $50 one UTXO 0.001 will be combined with 0.00068 to cover the $50 purchase plus miner fees of 42 sats (0.000042) $1.57 for total of $51.47.

 0.00168 = $62.69 - $51.47 = $11.22 or 0.00030215 is the change back to your wallet as a new UTXO.

 

 

Track Me If You Can

 

Custodial tumblers or mixers are one of the oldest privacy techniques employed at the application layer. The purpose of a mixer is to act as a swap service. Users depot coins to the tumbler and hopefully receive different UTXOs with a new transaction history in return. Ideally, the swapping process results in a “broken” transaction graph that servers the link between a user’s deposits and withdrawals.

 

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Now ideally you are looking for a minimum of 3 mixes each mix is going give a probability deniability of 5 with other Whirlpool participants. Something really important to consider is how are you looking to spend your Bitcoin or in what amounts do you plan on spending. So essential you are selecting your UTXOs or how many UTXOs that will be combined for the desired amount. The pools roughly break down to $18,000 \ $1800 \ $370 \ $37. Ideally you would take each of these UTXO amount and distribute each to a new wallet. So you remember the guy that lost 25 Bitcoins because he had all his eggs in one basket? He should’ve used Whirlpool in 0.5 denominations and had 50 wallets or maybe combine 10 UTXOs of 0.5 for 5 Bitcoin per wallet spread across 5 wallets. Analogies like bank, wallets, coins are used to make things relatable but in reality for privacy preserving measures a new methodology must be adopted.

 

 

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Equal output coinjoins have a unique on-chain footprint that can be idenified by the presence of multiple equal outputs. But the flows across the transaction for equal outputs are not deterministic. An analyst knows a privacy technique is being used but cannot reliably interpret the transaction. In this way, equal output coinjoins are similar to encryption. Observers of encrypted messages know a message exists (observation of coinjoin) but cannot decipher the message (reliably interpret the flows across the transaction).

 

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OXT.me history of my bitcoin going to BlockFi Gemini custodial wallets. Do you think this fractional reserve bank gave me back the same UTXOs that I sent them?

 

I thought you hated Bitcoin what gives?

 

  A wise man on Publish once said you don’t build privacy preserving protocols on a flawed blockchain. When I didn’t do the research myself I had to rely on what others said about Bitcoin and the philosophy of the Bitcoin whitepaper, who couldn’t get on board with that? Have you heard of Kevin Pham?

“As a former brainwashed BTC’er and Anarcho-Capitalist, I know the inner workings of these factions better than they do.

BTC’ers and BCH’ers are similar to Islamic extremist terrorist groups in that they’re religious zealots who believe they’re a chosen people destined to engage in holy war against evil governments and central bankers to save humanity; when in reality it’s all a psy-op perpetuated by a few Bitcoin elites to protect their ill-gotten gains.

Decentralization is the god they worship and leaders of rival cryptocurrencies are demonic single points of failure that should be struck down for “scamming innocent people” by promoting alternative implementations.”

 

  I’m not onboard with BSV but I might be a reincarnation of this guy. I believe most of the industry is DINO (Decentralization in Name Only) and there is a coming divide between KYC regulated cryptocurrencies and Grey and Black Market unauthorized cryptocurrencies. I have already chosen my side this means that I don’t ask for permission to use privacy tools, what my country says in regard to regulation is filtered through my critical thinking as a sovereign individual and if the government ever asks for taxes on my cryptocurrencies that they know I bought: I say with the same negligence of the ATF officer who lost a duffel bag of guns and his badge that I lost my keys in a boating accident. I was truly looking for an alternative to the state not the reincarnation of it.

 

 

 

 

 

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Jinno
Jinno

Shisō hanzai-sha


The Ceremony
The Ceremony

Deconstructing the remnants of the Bilderberger group, Jekyll Island and the Satoshi Round-table by alphabet soup assets that setup the Bitcoin Psyop. REDEDACTED - War is peace, Freedom is slavery and ignorance is strength. Discussing uncomfortable conversations best not said in polite society but openly on the Immutable Blockchain of the NSA servers.

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