[lifewallet_dev]

Well, this argument falls whenever you try to use Bitcoin P2P (user to user shouldn't care where the coins come from) or with P2P exchanges like Bisq or Local Bitcoin.

Now that's a different universe than what OPs lives (just by the fact Bitcoin goes up and down in fiat value would be enough to make it "non-fungible" by that logic), but I can assure you many of us exists.

And I'm not even mentioning how Lightning Network fixes this as well, making coins very hard to impossible to track.

[magicjosh]

Got an article on how Lightning fixes this?

This article is alarming to me as a normie user. I'm curious about going off the big exchanges and using my coins. What if I receive crypto through OpenSea that Coinbase deems soiled?

Although I don't like it, I could see private verification service popping up for P2P. "We make sure the coins are good before the transaction goes through".

Makes me wonder how much of a "walled garden" Bitcoin is. Sure, hold it on exchanges all you want, but don't try to use it or we lock your account.

[therein]

It is no different than depositing to an exchange that doesn't do this and then withdrawing. Or some other service with a centralized wallet.

That being said, those outputs will simply become someone else's problem later on, in limbo created by the uncertainty on whether them being held by an exchange clears their past history or not.

[darawk]

That would stop being true for P2P if exchanges started blocking tainted coins, though. If that happened at scale, then P2P users would have to start validating themselves before accepting them, which is a real privacy nightmare. Of course, eventually exchanges will start blacklisting anyone with a mixer in their history, too.

[advisedwang]

I think it basically still holds - I wouldn't want the bitcoins from someone I suspect got them from crime, knowing they could be traced forward and cause problems for me.

[rglover]

For the sake of consistency, would you say the same thing about paper/fiat currency?

[advisedwang]

If I sell my couch for paper money to a someone that got that money through a crime or in violation of a sanction, I don't realistically have to worry that someone could try and claw back that money from me by tracking the payment.

Paper money has serial numbers, but likely nobody record them during the criminal transactions. Even if they KNOW which serial numbers are involved in a crime (maybe they robbed the mint), there's no database that tells them I have that note now and no infrastructure to catch someone from spending it.

(Of course perhaps the money is clawed back because there's text messages on the criminal's phones about buying the couch. But that's another story)

[wmf]

At least in the US, paper money is exempt from nemo dat but crypto isn't. https://en.wikipedia.org/wiki/Nemo_dat_quod_non_habet

[mypastself]

I’m not the person you’re responding to but yes, if the transaction history of tainted cash was publicly available and easily traceable, I’d be vary of receiving it.