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In the world of full spectrum surveillance, since some time it has become more than evident that Bitcoin isn’t that anonymous at all. All transactions can be traced on the blockchain. There is a certain probability that this data can be handed over to big brother governments upon request, and your commercial connections with certain people, products or online services -- would be easily revealed.

Some of the bitcoin blockchain monitoring companies do deanonymize bitcoin users and their commercial activities.

So, what would be the main advantage of Bitcoin over Monero?

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So, what would be the main advantage of Bitcoin over Monero?

  • Bitcoin is more scalable. Monero inherently requires every full node to maintain an ever-growing database of spent outputs, and is many times slower to validate transactions for. Bitcoin uses a UTXO set whose size is proportional to the number of coins currently in circulation, not its history. Longer term, I believe this means Monero's technology wouldn't be able to sustain the amount of usage Bitcoin sees without seriously hurting its decentralized properties.
  • Bitcoin has a larger ecosystem. Currencies - especially worldwide currencies - show a strong network effect: nobody wants a currency that nobody wants/uses. In the long term, I expect that this will result in just one or a few cryptocurrencies, and Bitcoin has a much better change being one of those.
  • Bitcoin is less of an experiment. Monero has planned hard forks twice a year, determined by a rather centralized group of developers. This allows them to evolve much faster, but also means it's hard to consider it a decentralized currency (AFAIK even their developers will say this). For example, a government would likely have far less difficulty to force certain changes into Monero than in Bitcoin due to an ecosystem that is just much less eager to follow one group.
  • Bitcoin has more hashpower. Bitcoin is less vulnerable to a 51% attack than any other (decentralized) cryptocurrency.

In general, I see Monero as a research project to experiment with better privacy technology, not as a currency in its own right. However, that does not mean the technology being developed there can't benefit Bitcoin or its users. Bitcoin absolutely needs better privacy. And I believe it will get it too - partially due to better technology, and partially due to better practices.

Bitcoin is naturally slow to adopt changes, but improvements are continuously being worked on (search for things like MAST, TumbleBit, Layer-2 payments, Taproot, signature aggregation, scriptless scripts, confidential transactions, ...). Do I expect Bitcoin to one day have better privacy than what is possible with Monero's technology today? Probably. Do I expect Bitcoin to have better privacy than what is possible with research technology at the time? Probably not. And that is fine.

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No personally identifiable information is stored on the Bitcoin blockchain. It is true that there are some speculative methods that may identify the originating IP of a Bitcoin transaction but, those use an educated guess method and are unreliable - particularly if a node connects to the Bitcoin network using Tor then the educated guess method is unusable in determining the originating IP.

In a broad sense, the issue of privacy is universal. If you purchase goods or services online you must ordinarily provide a name and often a delivery address. If you purchase in store this may not be necessary. If the merchant shares the information that they have about a transaction (or is forced to hand it over to a government) then with payment details the details can be mapped to a set of utxo's on the blockchain which funded your purchase transaction, and any change address. This is terrible for privacy.

As I understand it this situation is improved with Monero by the use of stealth addresses, nonetheless, the details that are retained can still be handed over.

For myself, I see the privacy concerns of Bitcoin as a non-issue - just use Tor. You cannot avoid informing a merchant of information necessary to complete a purchase. Pieter Wuille has a more academic view and states:

Tor does not hide account linkage or amounts. Without very proactive measures anyone you interact with can probably make a reasonable guess how much money is in your wallet (by distinguishing change from payments), what software you are using, and with further analyses what sites you interact with. All of these are terrible properties for a currency, threatening its fungibility. Note that privacy is always optional - even when using stealth addresses or confidential transactions, you can prove to anyone what your balance or transactions are. It just becomes opt-in rather than opt-out. – Pieter Wuille

Whilst I can appreciate how such linkages are mapped, it is beyond my comprehension how such linkages are useful if Tor is utilised since without an originating IP it seems speculative to link further transactions over those immediately attached to a particular transaction into the available information set, I do not think it is useful, nonetheless, I will take Pieter at his word.

This answer has been edited in view of the discussion by Pieter Wuille in the comments.

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    I disagree with everything you're stating here. Bitcoin has advantages due to better scalability, larger ecosystem, more conservative security, and better long-term prospects as a result. However, its privacy properties are suboptimal, and they need and hopefully will be improved over time. There is no need to downplay these issues.
    – Pieter Wuille
    Commented Mar 17, 2018 at 20:28
  • @PieterWuille I do not disagree with anything that you comment, the question is about surveillance (and intelligence gathering). Do you not agree that the answer is accurate for that as it currently stands?
    – Willtech
    Commented Mar 17, 2018 at 20:54
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    Your answer seems to argue that Bitcoin's weaker privacy is a good thing. I think that is completely wrong.. Bitcoin has advantages, but the things you list aren't.
    – Pieter Wuille
    Commented Mar 17, 2018 at 21:13
  • @PieterWuille I am not ashamed to admit that you know the cryptocurrency ecosystem and the applications far better than I do. I see the current privacy question as a non-issue (just use Tor), everything else is public knowledge on the blockchain apart from what a merchant may share, and whatever you make of it you do not have the individual any more than that without their IP. Albeit that there is still room for significant future improvements - many of which, as you noted in your answer, are in the pipeline. Future enhancements, I presume, move to obfuscate the record on the blockchain?
    – Willtech
    Commented Mar 18, 2018 at 0:58
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    Tor does not hide account linkage or amounts. Without very proactive measures anyone you interact with can probably make a reasonable guess how much money is in your wallet (by distinguishing change from payments), what software you are using, and with further analyses what sites you interact with. All of these are terrible properties for a currency, threatening its fungibility. Note that privacy is always optional - even when using stealth addresses or confidential transactions, you can prove to anyone what your balance or transactions are. It just becomes opt-in rather than opt-out.
    – Pieter Wuille
    Commented Mar 18, 2018 at 2:06

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