Quote from: jseverson on August 27, 2018, 08:57:53 AM

Quote from: bitcoindusts on August 24, 2018, 02:17:01 AM

The moment you cash-out your bitcoin to a bank or an exchange or to any other means that requires a real world identity, pseudonymity is lost. Satoshi's rally for privacy goes down the drain. Your identity is uncovered. They can already trace your bitcoin wallet address and all other wallet addresses you transacted with.

Did satoshi really rally for privacy though? I genuinely don't know. I always thought that the focus was on decentralization.

Satoshi definitely had privacy in mind when he designed Bitcoin. The primary focus was on removing third party trust, but the whitepaper specified the reasoning for anonymous public keys and for the practice of never reusing addresses -- privacy:

Quote

10. Privacy
The traditional banking model achieves a level of privacy by limiting access to information to the
parties involved and the trusted third party. The necessity to announce all transactions publicly
precludes this method, but privacy can still be maintained by breaking the flow of information in
another place: by keeping public keys anonymous. The public can see that someone is sending
an amount to someone else, but without information linking the transaction to anyone. This is
similar to the level of information released by stock exchanges, where the time and size of
individual trades, the "tape", is made public, but without telling who the parties were.

As an additional firewall, a new key pair should be used for each transaction to keep them
from being linked to a common owner. Some linking is still unavoidable with multi-input
transactions, which necessarily reveal that their inputs were owned by the same owner. The risk
is that if the owner of a key is revealed, linking could reveal other transactions that belonged to
the same owner.

Quote from: jseverson on August 27, 2018, 08:57:53 AM

I'd say the way out is mixers because you can cut or at least shorten your trail with them, but the moment you transact with another person (or most of the time anyway), you cede some level of privacy.

That's why it's important to break the chain of transactions, whether through a mixer or non-KYC services with proxy/VPN. Even still, there are sophisticated methods to deanonymize transaction trees. I'm hoping that new privacy methods like Dandelion and CT will be available sooner than later.