It doesn't matter how good your technical solution is if the law says that the scrambling doesn't matter.

The threat being considered in this thread is a future crackdown on bitcoin and how the blockchain may be used against bitcoin owners. Legal threats seem very relevant.

I don't think people appreciate the fact that government agencies have the cheat codes to the server of life.

While some will try to do everything the legal way, the the wily people who believe they are getting away on some kind of technicality sometimes find themselves charged with a different crime, or maybe just unlucky after a pre-dawn police raid or traffic stop goes south.

So let's say your name is Paul. In this scenario, I steal your bitcoin. I go over to a gold seller named Peter and use your bitcoin to buy gold. You report your bitcoin stolen. The guy who sold me gold owes you bitcoin, but I don't. Effectively I have simply robbed Peter.

Nah in the real world code isn't law. They'll do what they do with stolen cash. They confiscate it, and create a liability on the person who gave it to you. Or squeeze you both.

But you don't know who gave it to you, because it's obfuscated. Which is the whole problem this law was supposed to solve.

My read on the article is that they're considering two different frameworks: one where everything that comes out of the mixer is considered fractionally dirty based on the inputs. Or, randomly picking an output and tainting it 100% under the "FIFO" method.

The idea isn't necessarily to de-anonymize the transactions here but to disincentivize people from using mixers. Either a haircut kills a portion of your value, or you lose it all, the idea is you won't do that again.

That doesn't change that legally it still kills all your money, and creates a liability on the person who put in the dirty money. If you figure out who they are it's all you, you're welcome to sue them. If not, you've learned a hard lesson.

I'm fine with either.

Again, the whole problem is that the bad actor can pass off their stolen bitcoin before anyone knows its tainted. So it doesn't matter if you didn't use a mixer, if that bitcoin ever went through a mixer it could potentially be a live hand grenade. People could just mix large numbers of bitcoin periodically so everything is suspect.

You're not solving the problem, you are just introducing new problems that affect other people in the hopes that the entire system becomes unworkable.

I would argue that solves the problem, just not in a way that you are a fan of.

In much the same sense that you could abandon your house when you have termites: you're not solving the problem, you're just avoiding it in an incredibly inefficient manner.