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new here and haven't found an answer to this conceptual question:

Crypto is said to have solved the coordination problem through rewards and punishment (honest users are rewarded; dishonest users are punished). From my understanding, this is dependent on transparency of the blockchain as it would be impossible to hold an anonymous user accountable for dishonest behavior. While dishonest use can be considered subjective, I read that BTC addresses this by allowing users to manually adjust their network to exclude dishonest nodes. To do this, one must be able to identify the "dishonest" node.

With something like Monero, I learned that the two nodes involved in a transaction are completely anonymous and that the transaction is also obscured. If this is true, then wouldn't it be impossible to identify and take action against a dishonest user? Without the ability for an individual node to subjectively discriminated between honest and dishonest nodes, wouldn't you lose all the trust in the system? How would this satisfy the coordination problem if there's no longer a means of punishment.

If that's a bit confusing I can elaborate: The Lemon vs. Peach problem often used by Monero enthusiasts describes a situation where the seller has an advantage in a transaction because they have relevant knowledge of the merchandise. If the seller continues to sell lemons, then eventually all the peaches will disappear due to buyer uncertainty within the system. It seems to me like this relates to privacy cryptos in general. If one participates in an anonymous transaction online, then the seller has the advantage. If the buyer is cheated once, then how can they be certain that they're not dealing with the same "dishonest" seller in their next transaction? We have a system of rating IRL where you can write a review for a business to let others know that they're reputable or "honest", whereas with privacy crypto you can't even recognize who you did business with.

Doesn't this pose an issue for privacy crypto in general? You're kind of entering into transactions based on blind trust with no option for recourse? Is this just the nature of privacy cryptos/privacy in general? You've effectively reduced the trust within a network to zero if members cannot actively recognize and choose who to trust.

Would it be incorrect to assume that Monero/privacy cryptos depend on IRL credibility with total node anonymity whereas Bitcoin connects the two assuming you didn't anonymously acquire BTC?

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  • AFAIK You can ban nodes in Monero as well. Other major differences are: 1. Dandelion: Improves privacy, proposed for Bitcoin and used in Monero. Hopefully AJ or someone can implement Dandelion Lite with no DoS risks involved. 2. Confidential transactions: bitcoin.stackexchange.com/a/101872 3. Signatures: Schnorr signatures will improve privacy after Taproot 4. Stealth Addresses: BIP 47 can be used in Bitcoin for privacy. Concept of stealth addresses: programmingblockchain.gitbook.io/programmingblockchain/…
    – user103136
    Commented Apr 10, 2021 at 6:15
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    Does this answer your question? Is there something about Bitcoin that prevents us from implementing the same privacy protocols of Monero and Zcash?
    – user103136
    Commented Apr 10, 2021 at 6:16
  • Thanks for the response but I guess my misunderstanding stems from not having used Monero yet. After having read the white paper I'm still not understanding what insurance you have in transactions with others via Monero i.e. is there any form of receipt to prove you paid or were paid and by whom? If not, what prevents fraud? Like if I make a purchase, can the merchant only see a certain amount of Monero but not who sent it? This would be extremely risky for both parties involved. Can you link individual users to nodes to ban out dishonest users? Commented Apr 14, 2021 at 22:47
  • Your can ask questions related to Monero in monero.stackexchange.com
    – user103136
    Commented Apr 15, 2021 at 2:12

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