The below is a direct excerpt from Marty’s Bent Issue #1260: “They use debit and credit card purchases to make lists.” Subscribe to the newsletter here.
Nothing highlights the need for bitcoin more poignantly than attacks on transactional privacy. Last week, a Geneva-based global standards body approved the ability for payment processors to issue a new merchant code for companies that sell firearms to consumers. The idea behind the dealer code is that it will give law enforcement the ability to more easily track down criminals who use these firearms to commit crimes, but one can be sure that making a list like this paves the way for abuse by despots in the future.
The fiat system that has been in place for the past five decades makes this kind of unfettered surveillance possible. The nature of KYC/AML (know your customer/anti-money laundering) injected into every layer of the financial stack that people are forced to interact with on a day-to-day basis has ensured that the individual cannot escape the Eye of Sauron. There is no way to solve this problem from within. The likelihood that governments and their corporate partners will one day wake up and decide they have a moral obligation to stop spying on people is anchored at 0%. The only way out is to build an entirely new financial system that does not allow this type of blanket surveillance to be imposed on the public and that is exactly what Bitcoin provides.
Yes, bitcoin’s privacy safeguards are below average and most people acquire bitcoin by interacting with trusted third parties who engage in KYC/AML monitoring. However, I think these poor assurances and user behaviors will change over time. As tooling improves, people will become smarter bitcoin users. Creating a culture of zero address reuse, coin control, and the use of tools like Samourai’s Whirlpool will make the ability of on-chain monitoring companies to identify end users much more difficult, if not impossible. As bitcoin adoption increases and people start moving their UTXOs into wallets they control because it’s easier and they understand that’s where their bitcoin is most powerful, the circular economy of bitcoin transactions that have never touched services instituting KYC/AML monitoring will increase dramatically. Exacerbating the problems of chain monitoring companies.
Imagine a world in which it has become completely normalized for merchants to accept bitcoin using BTCPay servers they control from customers who use Samourai Wallet, BlueWallet, Muun Wallet or any other noncustodial solution on the market. . The number of transactions that will be facilitated and completely independent of the yoke of KYC/AML will, at some point, reach a critical tipping point and the type of labeling that current payment processors attach to gun purchases will only be Not practical.
This is the future we should be working towards. This is why it is extremely important to educate current and future bitcoin users on best practices when it comes to receiving and sending bitcoins in the most private way possible. Even though it is relatively easy to track some on-chain transactions today due to people linking their UTXOs to KYC services, I am confident that spreading and normalizing this type of bitcoin usage will go a long way to combat the evils that KYC-related use has worked to date.
Financial privacy isn’t a bad thing, no matter how much the powers that be want you to think otherwise. Fortunately, we have the ability to build a future where financial privacy is possible. The only thing that stands between humanity and this materializing future is action. Go ahead and educate, start accepting and sending bitcoins using the proper tools, and work to improve those tools so that they are as easy as possible for others to use.