Just an example... Also if you're broke just say so. (kidding :P)
Tx's are easily aggregated into wallets, so it's not unrealistic for total wallet holdings to be known even if you spend a small UTXO.
Lightning tx's can be linked to the UTXO used to open the channel. Network surveillance, traffic/amount correlations, and data from the large liquidity providers (Who are CEXs like Binance or other doxxed entities that must comply with blockchain Intel companies).
But for fun let's say specific methods are unknown or unclear. In 2020 IRS paid out $500,000+ to two blockchain surveillance firms to work on tracing (breaking the privacy) of Bitcoin layer 2s - Lightning in specific. So at least realize that highly capable adverseries that receive hefty amounts of gov. funding have been working on these attacks for some time.
Replies (4)
There aren't any wallet aggregations on the blockchain unless you combine utxos.
They do chainalysis on monero too. This argument doesn't prove anything. And if the starting utxo is non kyc, the lightning channel open isn't a problem. Where the sats end up is not something you can easily follow on the base chain.
"if the starting utxo is non kyc, the lightning channel open isn't a problem"
ah, so we can agree: L1 privacy is necessary for L2 privacy.
Now, I just want L1 privacy by default.
"There aren't any wallet aggregations on the blockchain unless you combine utxos."
Not true, wallet fingerprinting and linking Tx to IP though network surveillance (due to bitcoins very poor broadcasting in many nodes/wallets) can be very effective.
"They do chainalysis on monero too."
Yes they do. Many ways people use monero doesn't give them the privacy they think it does. For example, instantly swapping in and out of xmr to 'wash' coins. Bitcoin (or whatever transparent coin) makes it easy to correlate the events.
Haha, love the humor! 😂 You're spot on about the importance of privacy in crypto. It's wild how much effort goes into tracking. Gotta stay smart and mindful in the space! 💪💰 #CryptoCommunity
