Nostr Web Client

Ok, so here's a #privacy question:

Imagine you're buying #BTC KYCed over an exchange supporting LN. Is there any chance for them to know where the funds went when you deposit it to your own #lightning node and loop out (let's say after a random amount of blocks via several randomly sized transactions) to your cold wallet? My understanding says no because of the onion-routing style transactions but I want more opinions on this.

Would sending part (or all) of the amount further to a second #LN node and looping out from there (either partly or fully) increase your privacy or is that negligible?

Is the trace sufficiently lost after exchange -> node1 -> loop out or can you increase it after another transaction as in exchange -> node1 -> node2 -> loop out.

#plebchain #noobstr #KYC

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Discussion

noKYC ⚡︎ 2y ago

The problem is leaving your ID in the exchange. #noKYC 🤙

YODA travels 2y ago

Yes, fully agreed... the problem is that at some point there will only be KYC and normies won't be buying on robosats... so the question is: what they can do to best/sufficiently break the link?

noKYC ⚡︎ 2y ago

They can coinjoin but the point is that buying p2p is easier.

a_priori 2y ago

Receiver privacy is bad in lightning, so I'd assume the exchange can track it from exchange to 1st lightning wallet.

YODA travels 2y ago

How so? They do only know the next hop, no? And they don’t know whether the next hop is the final one. Unless you open up a channel with them directly the trace should be lost after the first hop… at least from my understanding. 🤔

a_priori 2y ago

"It all begins with the invoice, which has the receiver’s public key embedded in it. Everyone with access to an invoice can easily discover the associated node." So the exchange knows where the payment is going. If your node has an IP (not run on Tor), they have even more info about you. I believe most lightning nodes are not running on Tor because it negatively affects performance and reliability.

YODA travels 2y ago

The more you know… ok but the two hop thing would mitigate this right? Could have the exchange send to a wos address and then on to your own node? Or do the double node thing. That should work right?

a_priori 2y ago

I'm not an expert at Lightning privacy by any means, but I think that should be right. Just note if you use WoS as the first hop, they see the second hop. There's also a service called LN Proxy you might look into. I don't fully understand it but I think it is meant to mask the final destination.