Oddbean new post about login | logout Is privacy leaked when moving Bitcoin into Monero? My speculation is that you'd be seen going in and out of Monero, but not the stuff in between (which is still very beneficial). Can a similar outcome be achieved using tools already built for Bitcoin? (Lightning, Cashu, Coinjoin, etc). If so, why not just use those instead of abstracting farther away from your SOV asset?
Yea you have to do it properly Swap back to Bitcoin broken into different amounts and at different times. Don't consolidate after. -Cashu: Strong choice if you don't care about custodians for larger amounts sure. I would be worried about anon set of the mint though. -Lightning: Maybe could be decent choice if you dont mind dealing with complexities and painful UX (you don't get the full privacy possible on lightning without running your own node. Custodians and LSPs sacrifice at least some privacy). -Coinjoining: I wouldnt consider as a strong substitute since it is not only weaker obfuscation (nothing is hidden via encryption like the other options) it is also recorded on chain. "If so, why not just use those instead of abstracting farther away from your SOV asset?" Doesn't SoV imply long term? Swapping would be short term stuff. It shouldn't significantly affect the price at all. You could even make a tiny profit at these time scales from swapping.
Yes, swapping would be short term, which is why I'm concerned that such an incentive will ruin any of the privacy benefits from Monero. There is no incentive to stay in Monero for long unless you're okay with decaying purchasing power. I'd rather have something that is tied to Bitcoin so I don't have to constantly worry about moving in and out of something. Keeping small amounts with a custodian like a mint still seems safer than moving in and out of Monero to me. For the record, I ran Monero at one point and held some. I rarely had a chance to use it because hardly anyone does. Frankly, I'd rather build out privacy tools for the superior asset (without ruining Bitcoin) than sit around waiting for a completely different thing to never become mainstream. That's just my reality. All the talking points sound great, but it isn't getting widely adopted and I don't think it ever will outside of niche products like Mullvad and stuff like that. It just seems more logical to have Bitcoin adjacent options for those who want them than to focus on an entirely different thing that is totally separate. If they somehow tied it to Bitcoin without me having to hope someone is there to swap with me then fine. I will give it another look. I don't speak for everyone, but these are the main reasons I gave up on Monero and support Bitcoin projects instead.
I guess it's a matter of risk preference. Risk being rugged by custodians, or risk slippage in price. You might never be rugged. Or maybe you get rugged and instead of losing 5% from using Monero, you lost 100% from being rugged. Up to the person to decide, but I don't think there is a risk-free or cost-free option. You pay in time/money/hassle
The "you have to do it properly" is kind of where things start to break down for me. The alleged benefits of privacy by default break down once you realize that people don't have an economic incentive to stay in Monero, for various reasons. You can clearly see that now. So we are right back to not having privacy by default since people are expected to do things a certain way. I'd rather just have Bitcoin bound tools for people to use if they want to that doesn't require them to use an entirely different currency that they may or may not be able to get in or out of when they want to.
The "you have to do it properly" part also applies to moving BTC thru Cashu, Lightning, and Coinjoins as well not just Monero... The major problems arise from Bitcoin on-chain itself being transparent Cashu and Lightning are functionally different currencies and don't inherit on-chain network affects. I can't send on-chain Bitcoin to your lightning invoice. I have to get sats on the lightning network first somehow. Just because a merchant accepts on-chain Bitcoin doesn't mean they accept Cashu or Lightning. It's very likely that they dont.