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Issue #675: Elaborating on a chain analysis take

Issue #675: Elaborating on a chain analysis take

Feb 17, 2020
Marty's Ƀent

Issue #675: Elaborating on a chain analysis take

Last week on Rabbit Hole Recap I asked the above question during a segment on how much government agencies here in the USSA have paid chain analysis companies to track cryptocurrency usage of Americans. Alex's tweet caused quite a stir as everyone and their mother came out of the woodwork to voice their take on chain analysis companies and my question about the people who decide to work for them. The subject seems to have a lot of people pretty heated, so I figured it would be beneficial to take some time this morning to elaborate on my thoughts on the subject.

For you freaks that are unfamiliar with the function of a chain analysis company, they market themselves to exchanges, government agencies and other services as analytics companies that can help track cryptocurrency users across their preferred blockchains and de-anonymize them using a combination of the personal data provided to cryptocurrency services and on-chain heuristics, among other things. Chain analysis companies position themselves as the easy way for "crypto companies" to comply with KYC/AML regulations foisted upon them by overarching regulators and governments.

First off, many people who presented their hot takes in this thread didn't properly understand the context of the quote because they hadn't listened to the podcast. The comment wasn't meant to mean that all chain analysis is bad and that we should prevent people from doing it. That would be stupid and wishful thinking. The current nature of Bitcoin's ledger makes chain analysis inevitable.

The comment was meant to make the people working for chain analysis companies - which act as extensions of the State and its regulators - to seriously contemplate what they're doing; helping erect the digital panopticon for their fellow citizens. They're building tools that normalize the practice of companies collecting obscene amounts of data on their customers under the guise of KYC/AML compliance. Compliance that has been continually ignored at MASSIVE scale by the banking system that is supposed to curtail it:

These are but a handful of headlines that Uncle Marty could point to that highlight the double standard that exists in our society when it comes to the enforcement of these laws. Individuals are presumed guilty until proven innocent by every service they sign up for while those who are able to facilitate money laundering en masse are able to skate under the radar for years before they get a slap on the wrist in the form of a fine that is essentially a cost of doing business.

If anyone has been paying attention, these laws are in place to CONTROL the little man; we plebs. Again, in a world in which KYC/AML compliance is forced on everyone, individuals are presumed guilty until proven innocent. Forced to send their most intimate data to insecure databases that are highly prone to being hacked. We're talking date of birth, home address, social security numbers, bank account information, pictures of passports and driver's licenses. All sent to be hacked and sold on the Dark Net to people looking to commit identity fraud. Or worse, find someone they want to harm.

If the government, regulators and law enforcement agencies want to stop the bad guys and prevent harm on a large scale they should do a few things. First and foremost, they should stop being lazy assholes and conduct some actual, old fashioned detective work. Build cases against individuals, approach a judge with the evidence and acquire a warrant that gives them access to the information they are looking for. They should end the War on Drugs, one of the major justifications for these Draconian overreaches on personal liberty. A completely nonsensical, undefined and amorphous "War" that cannot be won and has led to an incalculable amount of personal harm, unnecessary incarceration that tears families apart and ruins communities, and death. Last but not least, they should clean their houses. Houses filled with backdoor deals, overt criminality and the enablement of atrocities no pleb that is being subjected to their laws would ever consider.

In your Uncle Marty's mind, this is part of the reason Bitcoin exists today; to break away from this nonsensical system that does way more harm than good. To create a system that doesn't force people to give up their personal information to strangers.

Chain analysis companies that act as extensions of regulators are actively working against Bitcoin and its goals as they attempt to highlight subjective "chain taint". Marking individuals who engage in Chaumian CoinJoins to preserve privacy as "suspicious", causing exchanges to flag their accounts. They aim to de-anonymize users when they should be using their knowledge to do the exact opposite; highlight Bitcoin's pain-points as it relates to privacy and work to make tools that help smooth out those pain-points.

Luckily for us, there are chain analysis teams that do the opposite of bootlicking companies like Chainalysis and Elliptic. Teams like Samourai Wallet that not only build and distribute CoinJoin'ing software that helps bitcoiners achieve better privacy, but also build ethical chain analysis tools that let bitcoiners know whether or not their UTXOs are easily trackable through the blockchain. Tools like, and provide ethical analytics that help bitcoiners achieve better privacy. We need more of this.

Those who build companies to de-anonymize bitcoiners to appease a corrupt, overarching and dying system should be publicly shamed. They are middlemen out to make a profit, they are enemies of freedom in the Digital Age, and they are most certainly enemies of Bitcoin.

And again I ask, what the fuck are you doing?

Final thought...

The Circle of Life is beautiful.


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