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Issue #825: The transition is only temporary

Issue #825: The transition is only temporary

Sep 16, 2020
Marty's Ƀent

Issue #825: The transition is only temporary

The practice of KYC/AML compliance is a hot and controversial topic among Bitcoiners. There are many individual bitcoiners who believe that acquiring bitcoins via services that force KYC/AML on users aren't "doing bitcoin correctly". The only way to stay true to the core values of Bitcoin is to acquire bitcoins in a peer-to-peer fashion without the yoke of KYC compliance data being attached to those UTXOs. Everyone who acquires bitcoins via a KYC/AML compliant exchange is hurting Bitcoin.

While I agree with the anti-KYC/AML sentiment and think the data collection that comes with these practices does considerably more harm than good to users, I do not believe many individuals acquiring bitcoin via KYC/AML compliant exchanges dooms the network in the long-term. As our friend Guy points out, KYC is a transition problem that exists due to the fact that Bitcoin hasn't attracted a critical mass of people and liquidity to enable a robust enough circular economy that renders KYC compliance obsolete... yet. Unfortunately there are not enough people accepting bitcoin as payment and paying others for services in bitcoin for individuals to break away to a bitcoin circular economy with ease. It can certainly be done. In fact many people do use bitcoin as their first and last currency today, but most users are not there yet.

We do our best at to contribute to the circular economy the best we can by accepting bitcoin as payment for merch and contributions, paying for services like VPNs with bitcoin, and even contributing open source code to make it easier for merchants using Shopify to accept bitcoin payments directly via BTCPay Server. However, it would be silly of us not to admit that most people using bitcoin today are using it as a speculative vehicle or store of value that is most easily accessed via centralized exchanges that require KYC/AML compliance from their users. It may make some people uncomfortable, but it is simply the state of things as they stand today. And I'm here to tell you that this is OKAY.

Bitcoin is a permissionless system that anyone can build services on top of, including services that are forced to collect KYC/AML data. With that being said, that does not mean that these services will be around forever, at least in their current form, or that they will be able to enforce their KYC/AML compliance once the transition from a Fiat Standard to a Bitcoin Standard has been completed. Once a critical mass of users, liquidity, and services that accept and pay in bitcoin has been reached and users are sending and receiving in a peer-to-peer fashion thanks to open source software like BTCPay Server, it will be much harder, if not impossible, to force this type of compliance on individuals. It will become a law that is too dumb and expensive to enforce.


To that I say, this is a long stretch. Especially considering many users will have moved their coins to personal wallets that are not easy to confiscate, many users will have made many hops in personal wallets further away from the exchange they purchased their bitcoin from, and many others will have CoinJoined their UTXOs - helping to destroy the tracking heuristics used by chain surveillance companies. On top of this, what a weak argument. Aren't we attempting to stage a revolution here? Too many people know what a con job Executive Order 6102 was, how bad it bastardized the gold standard and forced us towards the dystopian fiat system we are subjected to today. There are too many out there who think bitcoiners will just roll over and hand over their sats. I find this very hard to believe. Especially when you factor in Bitcoin's superiority when it comes to discrete self-custody, plausible deniability, and the fact that confidence in government institutions is at historic lows.

To think that people would willingly go along with this without a fight is pretty dumb. But I am just a lowly newsletter peddler. What do you freaks think?

Final thought...

Procrastination is a hell of a mistress.


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