Nostr Web Client

You're totally right. For most, secure element hardware wallet with a simple 6 digit pin will do. They're open to attack from the secure element manufacturer and state intelligence backdoors but they're also likely completely KYCed and have no on-chain privacy so the state is not in their threat model anyway.

If one has larger holdings hiring nostr:nprofile1qqs0w2xeumnsfq6cuuynpaw2vjcfwacdnzwvmp59flnp3mdfez3czpsprpmhxue69uhkummnw3ezumr0wpczuum0vd5kzmp0ksxxx2 and having his company or another competitor set up an elaborate multisig setup would be ideal. That way they handle all the cypherpunk security stuff.

For us autistically obsessed cypherpunk types, yeah we are going as hard as possible mainly for fun.

viper_1 20h ago

Thanks. As a thought experiment is there a super low tech solution to make KYC irrelevant? I am thinking of something like a person buys a cold card; buys a bitcoin on coinbase; creates a 24 seed phrase “base” wallet. Then 100 wallets from that with passphrase and sends 1/100th of the bitcoin to each sub wallet. Each subwallet has had its public address used once to receive the 1/100 bitcoin. How would you make the 100 different passphrases such that 1) the person does not remember them 2) they are not physically written down anywhere near the person 3) the process that created the phrases the first time can be re created anytime and anyplace with not more than a public computer and a pay phone. Such that the person can say honestly they do not know / have access to the coins themselves at anytime, and yet they or their future heirs could. It need not be that all the phrases can be re created at the same time- in fact it would be better if the process actually required time.

A dumb example would be say the person creates 100 different nostr accounts; makes only one post with each account posting a single passphrase to a single subwallet. Then deletes the nostr public and private keys. Then creates 100 free throw away email accounts. With each email account they send a single email to their work account, home account, friend account etc. the email is set to be delivered in the future - in 1 month for account 1, 2 months for account 2, etc….

Email 1 has the npub of nostr1

Email 2 has the npub of nostr1&2

Email 3 has npubs 1,2,3… etc …

Then deletes all the emails.

So that all takes a day. Maybe destroy the computer used for all that after.

Practically then you have 24 seed words you need to keep but does no good on its own. Month after month you get a rando email leading you to nostr and to a a passphrase but only if you know what the email refers to. It’s vulnerable if the email fails but subsequent emails include previous links.

I’m sure there a much better way but on the surface this seems to make kyc less useful even to wrench attacks and creditors.

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Discussion

Daedalus 20h ago 💬 2

Each of those 100 transactions would still be linked to the original on chain you have to break the on chain link either by swapping to Monero and back but in a different amount or by using a coinjoin transaction like Ashigaru whirlpool. Coinjoined UTXOs are not accepted for selling at any exchanges and many merchants don't take them either so going Bitcoin to Monero back to Bitcoin is your best bet as most non-KYC exchanges on trocador.app or through Cake Wallet dont flag as tainted Bitcoin. I've used Pegasus swap, exolix, fixed float and more and never recieved a tainted UTXO.

As long as you're using Tor routing on whatever Bitcoin wallet you're using you have a strong degree of unlinkabikity from your final Bitcoin UTXOs at this point.

Going to the basics here since it seems you're a little new to blockchain analysis, each Bitcoin transaction spends one or more Unspent Transaction Outputs (UTXO) and results in a recipient UTXO (The full amount you're sending to the recipient) one change UTXO (the remainder that you're recieving back as change) and the fee which goes to the block miner. On-chain each transaction you make is linked to at least the UTXO that was spent to create it. If you spend two or more UTXOs then you also link those to the same owner.

If you split a UTXO that is legally linked to you (KYC process and wallet verification exchanges require before withdrawal) into 100 and anything happens with those that would be considered illicit, say the IRS claims you owe taxes on those, you're going to be the first suspect and you'll have to basically prove your innocence that you don't own them anymore.

A coinjoin breaks this link by mixing your UTXO into basically one giant transaction with many other users UTXOs and outputs equal value UTXOs at the end making each equally likely to be owned by each input. Because there are almost certainly tainted UTXOs as at least one input, you basically taint your coinjoined UTXO with that coins history in the eyes of Chainalysis.

Swapping to Monero looks like you send the Bitcoin UTXO to an exchange's wallet (known by law enforcement) but due to Monero's untraceability (I can explain more about this if you're curious) there's no inclination as to what happened to it on chain, while you now have that value of Monero in your wallet. If the exchange has their transactions subpoened by law enforcement (happens all the time so you have to assume it's the case) then they do know that you swapped to Monero. This is why I propose buying Monero in the first place, as in the US this is a taxable event. If you're insistent on buying Bitcoin I would ensure your cost basis at time of swap is as close to 0 gains as possible compared to time of purchase to avoid tax authority scrutiny. From then literally nobody, even state intelligence, knows what you do with Monero. Now if you swap that same value of Monero back to Bitcoin in one transaction, on chain that could be guessed to be you, but if you say had $800 of Bitcoin to $799 of Monero, then like 30 min later swapped $400 of Monero to Bitcoin on one exchange then $300 on another and $99 another day there's just no way that that's linked to you with any degree of remote certainty that could stand up in court. You get away with completely KYC free Bitcoin UTXOs.

Does that answer your question? A little long winded but I hope that helps.

viper_1 18h ago

Understood- I am just veering off from the privacy and into what can be done in a KYC world.

Assuming all KYC transactions can and will be linked to person A’s initial buy as you stated.

Is it still possible for person A to easily divide the coins then ….

1) render themselves presently unable to access the coins (such that they honestly cannot access and no state actor pressure or other pressure can change that)

2) yet ensure they will recover that access over time incrementally

3) and similarly grant that future access across space to heirs or friends?

Daedalus 17h ago 💬 2

I think I understand what you're getting at, but I'm not sure with just Bitcoin if there's a way to lock up funds on chain until a future date or something. I also don't know what attack vector that really defends from, you're better off just not having any evidence that you own Bitcoin from any threat actor. Perhaps someone else can weigh in more.

viper_1 6h ago

Thanks

I am assuming there are a lot of already KYC bitcoiners on Coinbase.

Google cannot verify but says Coinbase holds 1 million. Add owners from whatever other kyc places (PayPal?) and it must be a lot.

I would imagine (I do not know I am just speculating) that once person A is known to have _had_ bitcoin then chain analysis is just one technical way to find coins.

Extortion would be more direct.

I think the boating accident phrase is funny but fragile and unlikely to endure under pressure.

It would seem there is a role for openly - even on chain - formalizing some process like the above whereby the owners demonstrably lose all access now with intend of slow recovery across time and space.

Extortion seems to be an impatient process.

viper_1 5h ago

Also when I wrote extortion I suppose I am writing about “mundane” extortion. Less three letter agency stuff or wrenches, more divorce lawyers and slip and fall schemes. Or Person A’s landscaping biz goes bankrupt but the judge thought the LLC paperwork was misfiled and opened creditors a door to Person A’s personal funds.

Also for the record I am not being dismissive towards the financial trauma of boating accidents, I am very empathetic, having had several myself.