What I would like to know is a way to test your utxo before you send it into a KYC exchange, to know if they are tainted or not. Since we have no way to know where the coins that you recieve are comming from, it would be useful to run the utxo through some sort of database, like similar to haveibeenpwned website but for addresses, and this way one would make deposits and transactions with a better peace of mind.
This is exactly what blockchain analysis companies do. I am strongly against them! Essentially what you want to do is to make sure that a UTXO pass certain rules. Thus, what you want to do is to mess with Bitcoin's fungibility, making it look like some coins are good and some coins are bad.
Let me draw a picture for you. Let's say that instead of you, bitcoin nodes decide to do coin analysis.
Imagine a node, that runs blockchain analysis and validates only the transactions that pass certain rules. This would be a disaster for Bitcoin. All our efforts, all our hopes would be gone!
By the way,
Bitcoin Knots is hard form of Bitcoin Core. They do exactly that! The node allows only for specific input size, making it impossible for them to validate transactions from Whirlpool coinjoins. Do you think this is correct?
Do you know that KYC exchanges are allowed to run blockchain analysis software to allow incoming funds only from coins that haven't been mixed or coinjoined? Do you think this is correct? Imagine receiving a UTXO, making coinjoins with it, to make it impossible to tell which input matches which output, and then sending it to a KYC exchange to cash out. Then, the exchange will simply run its software and they will say "thanks for gifting us the bitcoin, good luck in your life".
Do you also know that "The zkSNACKs coordinator will start refusing certain UTXOs from registering to coinjoins." ? This is a tweet that was made by wasabi devs. Just saying... I didn't invent this tweet, I didn't imagine it... They said that they can "potentially" refuse your coins from being coinjoined. Do you think this is correct?
I am in favor of coinjoins. I am in favor of doing whatever you like with your coins. Don't fall into the trap of "tainted" bitcoin. If you want the piece of mind, just do some coinjoins and you will be fine.
Don't use KYC exchanges anyway because they know who you are! So they know who "takuma sato" is in real life.
Use bitcoin as a tool. That's what it's meant to be.
Decide wisely who the "enemy" is. If you are worried that you own coins from illegal activities, let me tell you that anyone potentially owns this kind of coins, even if we use coinjoins. The only way to tell if the coins you own derive from illicit activities is to run blockchain analysis.
But please, make sure to remember that KYC exchanges are a disaster. Blockchain analysis is a disaster. Use reputable open source software instead and maintain your privacy. Let's say that in order for you to be private, you need to find a way to make "takuma sato" a persona that receives coins from a campaign, but then this persona sends the coins somewhere and nobody knows where.
Cypherpunks say (I think it was
https://bitcointalk.org/index.php?action=profile;u=976210 who said it):
- "If you’re not doing anything wrong, you have nothing to hide."
- "No! Because I do nothing wrong, I have nothing to show."