If the currency is acquired through mining, then it doesn't have to flow through an establishment that has a financial license. It can still be traced, but identifying the individual is much more difficult.

And there are other ways to make things hard to trace. Buy for cash on localbitcoins. Go via a privacy coin. Go via a sketchy exchange.

Miners still have to record the BTC they've added to the blockchain if am not mistaken.

The miner reward is sent to a bitcoin address. Anyone can create a bitcoin address without going through any 3rd party so it’s totally anonymous until you spend it.

Okay. So basically useless. And not exactly anonymous since to use it in any way would ultimately defeat the purpose.

Is there a use case for unspent bitcoin?

Is there a use case for unspent dollars?

>cash is fungible, as in each unit of currency has no ID

This may seem nitpicky to point out that it does, but since it does, I'm not sure of your point.

"A unique combination of eleven numbers and letters appears twice on the front of the note. Each note has a unique serial number"

https://www.uscurrency.gov/denominations/bank-note-identifie...

yes, the physical currency does. but as soon as its in a bank, thats lost.

moreover we are assuming that cash is ID at entry and exit, which its not, unless someone suspects something.

Isn't that the exact same way crypto works? It has a unique identifier, but as soon as you own it indirectly, on an exchange or something, then that clear link no longer exists. I'm wondering why it wouldn't be a parallel?

Cash is rarely verified. Sure they might do spot checks to see if its a fake. but its rarely tied directly to a deposit.

So when a cash machine gives you money, the ID of the currency not be tied to your account. When you spend that money in a shop, those notes will not be attached as having come from you as a customer.

With bitcoin, that all comes for free, we know when money left your wallet, what addresses it passed through to get to someone's else's. the whole selling point of bitcoin is that you can trace the provenance of each transaction right back to when that coin was originally mined.

For example, if I was to use bitcoin as a bank account replacement, everyone would know my employer, they would know how much money I give to my spouse each month. They would know who I invest with. They would know when I do my shopping at the super market. They would know when I'm having work done at the house. They would know if I got a bonus, and how much.

Some of those things I'm ok with, but a lot of things, I'm not

How do you trace funds through international exchanges that have throwaway wallets for the purposes of the transfer?

I'm curious too. At a guess, probably similar to attacks on Tor. In this analogy, those exchanges are like tor exit nodes.

Bearer bonds aren't really legal in most jurisdictions anymore due to the obvious potential for misuse. It's mostly a hollywood trope now. There are still companies where ownership is determined by bearer shares, usually found in tax havens and such.

> as in each unit of currency has no ID

If you mean physical units of currency that is no longer the case, most notes have serial numbers. In principle quite a lot of tracing can be done.

can be done, but often isn't. It requires someone to be suspicious to trigger the various institutions to start tracking it.

there is lots of scope for laundering by giving the cash to third parties, before it gets to the banks.

Laundering inside bitcoin is pretty futile, because we can trace from mining to current wallet. we don't even need to trace all bitcoins.

All you have to do is pay for something illicit, and you can trace the flow of money from wallet to wallet, until its either converted into real cash, or held as a "reserve"

It sounds like to me that the argument isn't that an advanced technology will go back through the ledger and identify people. It's that once people have been identified/linked to a public wallet, it's really easy to determine how they spent bitcoin because the record is public and permanent.

I agree, but there are people who create bank accounts (and I'm sure Coinbase accounts) with fake ID and use them for illegal proceedings. So while we can trust that the transactions log is accurate, it doesn't always prove a link to an actual person. My concern is someone having their identity stolen (or even just impersonation), used for KYC, then being linked to crimes without any deniability at all.

Edit: like IP address and torrent lawsuits etc.

Plenty of Bitcoins have been sized. People don’t memorize their private keys, they store them somewhere. It’s quite hard to minimize the attack surface of your crypto currency without also risking the coins being lost.

> Outside of some exchange link keeping a name = address record

"Outside of" is doing a lot of work here.

That's why mixing services exists. Other than that darknet is using Monero AFAIK.