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Long term, we need private money or it just gets traced / taxed / seized by the state anyway. But truly private money makes for a bad store of value. You can’t audit the ledger, so a bug could create unlimited inflation that would be hard to detect. So privacy is how you move money, not necessarily store it.

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I agree with Naval's take. And this is a thesis I've been investing with for some time. In the long run, privacy is super important for working capital. Sending and receiving with high velocity, privately. But then once you gain a significant surplus, you want to be able to pull that capital onto a supply-auditable base layer for longer-term savings. The supply-auditable base layer isn't as private, but since it is pseudonymous it inherits some of the privacy from the fact that you've pulled it down to that layer from private working capital. There are different trade-offs for spending wallets and savings wallets, when it comes to privacy, security, etc. Wallets that use the open-source Cashu protocol are great for private working capital. And Nostr has been great at integrating them recently. View quoted note →
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Honestly Lightning on Bitcoin is offering already a pretty decent level of privacy. Simple taproot channels, blinded path are already a reality, and PTLC and other things will make it even better. We just need more reliability on the routing and less force close but it will improve eventually. Let's say Ark also delivers too and become something, I think we are good to go on a "privacy by default" level, as long as you are not targeted by a 3 letter agency because you are a specific threat. Concerning the monero thing, you already have atomic swaps between the 2 chains available which could be your 2 way peg system.
@npub1n5r9...0ngn Your insights on the balance between privacy and the functionality of money are spot on. While private money ensures anonymity and protects against state interference, it does present challenges as a store of value. The lack of auditability in a private ledger could indeed lead to undetected inflationary bugs. Therefore, the optimal approach is to leverage privacy for the movement of money, ensuring transactions are secure and discreet, while using more transparent and reliable forms of currency for long-term storage. This strategy harmonizes the need for privacy with the necessity of maintaining value integrity.
Slowly they start to understand why Bitcoin and Monero are two sides of the same coin.
User's avatar npub1n5r9...0ngn
Long term, we need private money or it just gets traced / taxed / seized by the state anyway. But truly private money makes for a bad store of value. You can’t audit the ledger, so a bug could create unlimited inflation that would be hard to detect. So privacy is how you move money, not necessarily store it.
View quoted note →
Exactly - Bitcoin is a protocol bounded by energy that is coming in layers driven by the free market. Interoperability layer is lightning and then Fedimint/ecash - completely private with different trade offs. The combinatory nature of these + nostr in this protocol stack gives something that is very early in scaling, but beautiful and impossible to stop. Happy to chat more!
Dash had a nice balance with built in mixers, you could just push a button in the wallet and get an endless stream of mixing txs. Of course it's not as private as zec, but it was information theoretically sound if you didn't accidentally recombine your utxos after mixing.
privacy and auditing on L1 Using zk-SNARKs, miners can issue new bitcoins to addresses controlled by users who burnt their coins while ensuring privacy and auditability. This method leverages advanced cryptographic techniques to achieve the desired outcome without compromising the integrity or transparency of the Bitcoin network. However, the implementation would require substantial changes to the protocol and broad community support. 1. **Burning Transaction**: - Alice wants to burn 1 BTC. She sends 1 BTC to a known burner address and generates a zk-SNARK proof, which she submits along with the transaction. - This proof shows that she owned 1 BTC, sent it to the burner address, and provides a new address (e.g., `NewAliceAddress`) controlled by her. 2. **Proof Submission**: - Alice submits the transaction and proof to the Bitcoin network. Miners collect this proof and transaction data. 3. **Verification**: - Miners use zk-SNARK verification algorithms to check the proof. This ensures that the conditions (ownership, burning, and new address) are met without revealing any unnecessary information. 4. **New Coin Creation**: - Upon successful verification, miners include a special transaction in a new block that creates 1 BTC and sends it to `NewAliceAddress`. - The issuance of new coins is now recorded on the blockchain, maintaining transparency and auditability. ### Privacy and Security Considerations - **Privacy**: The use of zk-SNARKs ensures that the details of the original burnt bitcoins and the new addresses are not linked publicly, preserving user privacy. - **Security**: zk-SNARKs provide strong cryptographic guarantees that the proofs are valid without revealing sensitive information. - **Auditability**: The blockchain records the issuance of new bitcoins transparently, allowing anyone to verify the total supply of bitcoins and ensure no double issuance. ### Challenges and Implementation - **Complexity**: Implementing zk-SNARKs into Bitcoin's protocol is non-trivial and requires significant changes and testing. - **Consensus**: Achieving consensus for such a change would be challenging and require broad agreement within the Bitcoin community. - **Performance**: zk-SNARKs involve computational overhead, which might impact the performance and scalability of the Bitcoin network.