Privacy on-chain fix this.
Discussion
lightning fixes it, too. and ecash
I was experimenting with Lightning last week. The most sensible and painless setup without babysitting a channel is to use a PhoenixD_Server, route sats to eCash mints, and exit to another Lightning wallet.
The main Lightning stash is kept with the Phoenix Lightning channel, but Acinq doesn't know where the sats go if the first hop is an ecash mint and you consolidate later with different denominations.
... And yes, I don't trust the default privacy on lightning, that's why ecash is really good for lightning
I don't think it's even a privacy issue. A lot of middle-class Americans aren't comfortable lying on their tax forms. And there's that one question that is phrased in such a generic way that if you bought even a single cup of coffee you're technically lying if you don't report it.
It sucks, but that's the situation. To me it's very similar to drug legalization; a lot of libertarian "cool kids" puff up their chest and go "well I've got my dealer so who cares"... But widespread adoption doesn't happen until something can go at least mostly above-board.
This is the *one thing* I wanted from the supposed "bitcoin president": a de minimum exemption. Still waiting!
Agreed, freedom and slavery are states of mind. Disobedience is necessary, and privacy is a tool that can prevent imprisonment by the feds.