BTC Sessions - Bitcoin Privacy Considerations, The Next Wave Of BTC Scams EP059

Episode Date: May 19, 2020

SUPPORT THE SHOW: MY ALL-ENCOMPASSING GUIDE TO GETTING STARTED WITH BITCOIN https://www.btcsessions.ca/post/how-to-buy-sell-and-use-bitcoin-in-canada Buy Bitcoin in Canada on Coinberry and get $20 after your first $50 purchase https://app.coinberry.com/invite/c5d52730857 Get the Ledger Backup Pack – Includes Ledger Nano X & S https://shop.ledger.com/products/ledger-backup-pack?r=faca LEDN offers Bitcoin backed loans – Sign up and get $50 free https://platform.ledn.io/join/0a00cca3dd61dea5909c95cd41f41685 Get Wasabi wallet and enjoy your privacy https://wasabiwallet.io/ NordVPN helps with your internet privacy – Get 70% off https://nordvpn.org/btcsessions Buy Bitcoin in Canada using Shakepay and get $10 for free after your first $100 purchase: https://shakepay.me/r/HUQFI60 If you value my work and would like to send me a tip, they are always appreciated! LIGHTNING tips: https://tippin.me/@BTCsessions Join my Telegram channel! https://t.me/btc_sessions SHOW RESOURCES: BlockFi customer data compromised https://www.coindesk.com/blockfi-hacker-sim-swapped-employees-phone-no-funds-were-lost TFTC article https://tftc.io/martys-bent/issue-741/ Coinjoin Flagging https://6102bitcoin.com/coinjoin-flagging/ Mentioned exchanges: https://bisq.network/ https://bullbitcoin.com/ https://www.btse.com/ Liquid integrations https://docs.blockstream.com/liquid/liquid-integrations.html Privacy wallets https://wasabiwallet.io/ https://www.youtube.com/watch?v=ECQHAzSckK0 https://samouraiwallet.com/ https://www.youtube.com/watch?v=icyeO70ICi4 NordVPN https://nordvpn.org/btcsessions Tor https://www.torproject.org/ myNode https://mynodebtc.com/ https://www.youtube.com/watch?v=GMovZg_3ERs https://www.youtube.com/watch?v=pyylkpR4DDk The Missing Cryptoqueen https://www.bbc.co.uk/programmes/p07nkd84/episodes/downloads

Wasabi wallet and fairly private. What's up everyone? I'm Ben with the BTC sessions and this is your daily session. Before we dive in, I just want to give a quick shout out to sponsors of the show, leaden.com. This is where you can use your Bitcoin for a few different things. They've got their Bitcoin back loans. That's the first thing I've ever used of theirs and that's where you can use your Bitcoin as collateral to get a Canadian or U.S. dollar loan. So in my case, I was in a pinch, needed some dollars, and I was able to lock up my Bitcoin in a dedicated address. I could audit it 24-7.

I got a loan within 24 hours, and when I paid that back, I got back all my Bitcoin, mitigating the risk of potentially having to buy back higher. They've also just launched Bitcoin savings with a USDC option, and you can get up to 7.5% interest on that, depending on the asset that you're utilizing. and then they've got their B2X offering, which uses the same loan mechanism to instantly buy more Bitcoin, effectively doubling your Bitcoin on the spot. If you want to check them out, there's a link down below in the show notes, and if you click on that and you use it to get a Bitcoin back loan, they will give you 50 bucks worth of Bitcoin for free. And secondly, if you want to help with this show in another way and you're not already securing your Bitcoin with a hardware wallet, first of all, please do look into doing so because it's

in your best interest to keep that shit secure. If it's just sitting on an internet-connected device like your phone or your computer, that can be compromised and you can have your funds stolen by a digital attacker. So it's always good to have a device, like, for instance, a ledger. So if you want to click the link down below, you can check out some of the products that they have, namely the Ledger NanoX and the Ledger NanoS. I have both. I use lots of different hardware wallets, but one of the ones I use is Ledger.

And this one, again, just adds that extra layer of security between your coins and potential hackers and mitigates that risk of having somebody compromise your coins. Highly recommend you check them out. And they've got some good deals right now. You can save like 27% on some of the packs where you get multiple devices. There's a backup pack where you can get a nano-s and a nano-X. So be sure to check them out. With that, let's dive into the news.

So I'm going to be focusing on two different topics today, and the main topic that I want to focus on is privacy. And the reason this came up, I saw a lot of this circulating this morning, is that BlockFi had a hacker sim swap, one of their employees, and they got access to a lot of customer information. And this is important for a specific reason, and I'll get to that in a moment. So here's the quote from a CoinDesk article here. It says, on May 14th, there was a data incident at BlockFi that exposed certain client account information for a brief period of time. While no information was accessed that would enable the intruder to access your account or funds, we believe it is in the interest of transparency to share the following details

with you and all of our other clients who were potentially effective. reads the memo, which was shared with CoinDesk. BlockFi said the hacker access confidential data, such as names, dates of birth, postal addresses, and activity histories, other sensitive account information, including bank account details, social security, tax identification numbers, passport and driver's license, and photo scans were not affected in the data breach the company said. User funds were also not affected. So BlockFi, again, is an online.

service where you can get savings accounts and loans and things like that. Now, the reason this is interesting is number one, the data that was accessed allows people to see confidential data, as they said, like names, days of birth, and postal addresses as well as activity histories. And the reason that this is scary is because the attacker had the ability to see who you are, where you live, and how much Bitcoin you have, at least that's been cycled through their service. And the thing that is much more worrying is that BlockFi flags and closes accounts of individuals that take care of their own privacy through CoinJoin. So Zach Prince from BlockFi said in a tweet,

it's prohibited activity referring to CoinJoin, and we reserve the right to freeze slash return deposits from mixing services. Is there something specific you want us to be more transparent about? We don't have a choice based on how we are regulated. Now, that's not true. CoinJoin is in no way illegal activity. The issue here is that a lot of people are relying on the advice of chain aliasis. and other blockchain analytics companies, which are in the business of getting you to flag stuff based on their heuristics and their assumptions about transaction behavior and try to paint a picture of who owns what Bitcoin.

And so there's kind of this conflict of interest when you have companies that are relying on chain analytics companies that are incentivized for you to continue using their service of scanning and trying to decipher what's on the blockchain and who owns what. And so there was an article on TFTC from already Bent today talking about KYC laws and all of that. And he talks about how, again, in this era, it's so prudent to actually be utilizing things like coin. join to protect yourself from this. Now, there are only a few entities that have been shown to be flagging coin join transactions. Paxos, and again, there's one issue and source, and then some other

ones that have come up have been Binance, Paxful, BitFenex, and BlockFi in two sources. Now, it's also interesting, and we'll get to this in a moment, but while BitFey, FNex was mentioned here as flagging coin join. They also allow for other instances of privacy preserving technologies, which seems to be at odds with their stance on coin join, or at least with that issue that has arisen. It doesn't seem to be a widespread practice yet, but it's more so the hypocrisy of saying we're not going to allow people to utilize coin join even after withdrawing from our service will still flag your account but then leaving all of that data and information which the person was originally trying to protect using coin join and leaving that information

available to hackers. Now, what I wanted to touch on today, particular, is what to think about when trying to observe privacy. So number one, let's talk about where you get your Bitcoin. Of course, the easiest way to maintain privacy when purchasing and obtaining Bitcoin is to do peer-to-peer transactions, somebody know, just buy from someone, a friend, trust a relative, and then coin join after the fact, because then that breaks the links between you and your coins. Secondly to that, you could use something a little bit more digital, but still decentralized, not requiring K.C, something like BISC. Now, the issue with something like BISC could be liquidity in your area. You may not be able to find individuals to transact with at a decent price point, depending on the

and where you're from, but it is definite possibility. Another one is called Hoddle, Hoddle, and you can check them out as well. Now, beyond this, you can go to KYC'd exchanges that have technologies that allow you to have some semblance of privacy. So ones that pop to mind are bull Bitcoin for two reasons. Here in Canada, they do two things. They use wasabi coin join in their system with the Bitcoin side. go through there. So what that does, it protects the individual who deposited and sold their

Bitcoin from the person who's buying it. And so when somebody's looking at the blockchain and seeing transactions being sent out from the Bull Bitcoin platform to people who have bought it, they can't really decipher where those coins originated from because they've been mixed. Now, beyond that, Bull Bitcoin has also added liquid, which is a side chain of Bitcoin, which allows for confidential transactions. And when I say confidential transactions, you can still see a transaction happening on the liquid side chain, but you cannot tell, one, how much is being transacted, or two, what the actual asset is. So you can have liquid Bitcoin on there, or you can have other, other denominated tokens like stable coins, things like.

that. So that also helps for privacy. Of course, you have to get into and out of the liquid network, which could require, again, trading it on a KYC exchange. But there is some semblance of privacy there. Bitsy does the exact same thing. They allow you to deposit and or withdraw via a liquid Bitcoin with confidential transactions. So obviously that's not at odds with, with, you know, know, maintaining your privacy, I would love to see further privacy additions like coin join on Bitsy. So maybe I'll try and wink, wink, nudge, get them to move on that. But we'll see. Now, the interesting thing that I said before when it came to this list of people that are flagging coin join, one of them came out of BitFenex, but BitFinex also deals with the liquid network, which

allows for confidential transactions. So it just kind of seems to be at odds with their stance in supporting liquid, but having flagged potentially some coin joint transactions. Anyways, there's a list of places that accept and deposits and withdrawals in liquid. I'll link that down below. Side shift is also not KYC'd. Side shift allows you to switch between various. various different coins, stable coins and Bitcoin and liquid Bitcoin, and you don't have to sign up with any sort of ID or anything like that. So you can do small trades there. Now beyond that, once you clear the hurdle of actually obtaining Bitcoin, what's your next step? Well, I've already alluded to this, but using Coin Join to break the links between you and the coins you've just obtained.

obtain them even from an individual, even on something like BISC, that individual that you've transacted with knows the coins you have. And so that is still a point where you could be tracked. And so in using some in coin join, either through wasabi wallet or through something like samurai mobile mixing with their whirlpool, this breaks the links between you and your coins. But you have to keep in mind what you do with your coins after you've mixed them. If you go to spend a transaction that combines the mixed coins with coins that are somehow linked to your identity, then you ruin the hard work that you've just done. So you have to be conscious of that, but I'm happy to see tools like Wasabi and Samurai Wallet out there, and it definitely improves and helps uses with their privacy.

I do have tutorials on both. I will link to those down below. Now, outside of that, there's other ways that you can leak your data and your privacy. So one of them would be your IP address. And so your IP address can be essentially linked. It links your browsing and basically anything that you do on the internet with a location, like a physical location. And so that can be tracked. And so in executing Bitcoin transactions, those can be linked to IP addresses.

In visiting Bitcoin-related websites, that can be linked to your IP address. And so utilizing something like a VPN, a virtual private network, that puts you through other servers, other IP addresses, and encrypts some of your browsing data and allows you to preserve some of that privacy. Now, keep in mind some services like perhaps NordVPN. you do submit data to them when you sign up and you pay obviously with a credit card for a service like that. Well, they then know who you are. So you would essentially be at risk of somebody knowing that you're using a VPN. And so NordVPN can see what you're doing.

So there is a risk of some data loss there. Now, outside that out of that, there's also Tor. you can use Tor, which is essentially fully encrypted, and that makes it. So nobody can really see what you're doing, so you can use the Tor browser for that. And there are wallets that have Tor enabled, whether it be Wasabi wallet or Samurai wallet, Blockstream Green is a good one, and those are the guys that also made the Liquid Network. So privacy focused, it seems to be some key players that are trying to focus on privacy, and they come up time and again.

Now, outside of that, when you're making a Bitcoin transaction, it's important to know that in order to use Bitcoin, you have to be running a copy of the Bitcoin blockchain known as a node. And if you are not doing this yourself, then you're relying on your wallet provider or service to do it for you, which means the person running that node can then see your transactions and everything you do. And so to further preserve privacy, it is in your best interest to run your own node.

Now, one that I've done a video on is MyNode. You can put it together yourself, make a dedicated device. There are other plug-and-play options like the Noddle. I'm blanking on some of them. Kasa was around for a while. It's now an open-source project. But anyways, I really like Minode. It, again, and it has Torr services, it has VPNs.

just everything you can be using Bitcoin, Lightning, you can connect all of your various wallets to My Node so that you are utilizing your own full copy of the Bitcoin blockchain and you're not leaking data there. So in summary, there's a lot to think about when it comes to Bitcoin privacy. There's a lot of ways that you can leak data. And I don't want you to feel overwhelmed by this, but I guess approach it as a challenge and it's a sliding. scale. And as you implement more privacy techniques, your privacy will get better and better. Nobody gets 100% perfect, but you can take these steps and gradually work your way towards being more private, whether it being transacting peer to peer to get your Bitcoin, using an exchange that has some

semblance of privacy practices, making sure that your coin joining after you obtain coins, and then trying to hide some of your internet habits using something like a VPN or Tor. And then running your own node, they're all just steps on the way to obtaining as best privacy as you possibly can. Now, I wanted to move on, so stepping out of the privacy realm, and this is just something that's been on my radar the past little bit. There have been a new influx, at least in my perception, of Bitcoin-related. scams. And I think part of that is I'm seeing a lot of renewed interest and newcomers coming into the space. It feels very reminiscent of 2016 before we had our parabolic run in 2017. And while it's fun to have those runs, with that comes a whole new slew of scammers. Obviously, Big Connect, that's why I have it on the screen here, was one of the big ones in 2017, 2018, that really screwed a lot of people.

And there's some underlying themes that I find in a lot of these. The reason I want to talk about this today is actually I received a message from somebody earlier today on a social media platform asking me about a platform they've been using for about a year. And I just had to touch on it. And so this is a website called Trade Hub Limited. There's plenty of stuff like this out right now. And I just wanted to point out some red flags here.

So essentially, a lot of the language here, it's broken English. A lot of the stuff doesn't make sense to people that have been in and around Bitcoin for quite some time. but to somebody who's new, they may not have any idea. A lot of these terms are just Greek to them anyways. But what you can check out is when you go to how it works or if you look into any sort of guarantees that they're giving, guarantees of percentage gains are a huge red flag. And so when I looked at this one, they have different plans.

And so the way that it works is you deposit your money. Your money is then utilized with a trading bot. And this is a common theme across a lot of these scams. And this trading bot will somehow miraculously always turn a profit and pay out some of that to you. So in thinking of that, if somebody had access to one of these bots, why would they ever share that information with anybody? Because the more people that utilize it, the less effective it is in any. aggregate because more and more traders are doing it and eventually it becomes a zero-sum game where

nobody can win. So if you had some incredible knowledge of a strategy that always, always turn to profit, it's in your best interest to not share it with a single person and just make your money over and over and over again until it becomes unprofitable. Anyways, their plan, it says, you can deposit $5,000 as a minimum and obtain a 1.25% interest rate daily, daily. Now, some of you may look at that and go, okay, I'm 1.25% daily. That seems small or reasonable. That's until you look at how that compounds over the course of even just a single year. And so I went and I took a look at this.

And first of all, no reputable financial institution even has a compound interest calculator where you can work out daily interest with an actual interest rate that is compounded daily. It's just, yeah. So what I had to do is go into a compound interest calculator. Take the principal, the $5,000 minimum, deposit, the rate of return, 1.25% is listed as annual. So in order to calculate what you would get in an entire year of 1.25% compounded daily, I had to pretend that my 1.25% was compounded annually over 365 years instead of daily over 365 days. But you get the same number. Anyways,

total for $5,000 with no additional deposits. If this were legit, you would get returns of $460,754.5. In what world does it make sense that every person with $5,000 with $5,000 to spare or that can get a $5,000 loan, could plunk it in an automated system and turn around half a million dollars in a year for doing nothing. It makes zero sense. What is actually happening on platforms like this and similar ones that make these kinds of promises

is if you're an existing user and you're getting payouts and you're actually able to withdraw, you're withdrawing other people's money. You're withdrawing newcomers to the platform. When you come in, you drop your money. Your money gets paid out gradually to other people and to the owners of the platform as they take in their profits. But then as you start to withdraw, you are taking the money of other new people brought into the platform. Often also, these types of platforms will encourage you to add more people and bring in more people and give you a kickback.

for doing so because they know they're just going to make a ton of profit off that person as well and they're going to bring in more people. And so it just becomes kind of this this giant pyramid scheme. The thing is when the number of new people coming on to the platform can no longer feasibly pay out the existing users. So when the number of new people starts to diminish, inevitably these people have to shut down. That also happens when the value of the underlying asset like Bitcoin, in the case of BitConnect, starts to diminish and again cut away at the profits of the people running the platform, they just cut and run. They disappear with everybody's money and you're left holding a digital account that says you're rich, but you really have nothing. And so all I wanted to call out here was

be diligent. I know most people watching this now, a lot of you guys, especially like we're not, we're not in the midst of some crazy parabolic run. So a lot of you have probably been around for at least a little while. And a lot of this is a no-brainer to you. But who it's not a no-brainer to is the new people that will be coming into the Bitcoin ecosystem in the coming couple of years, especially if post-having, we start to see a rise in Bitcoin price. And so my call to you is to be diligent and to bring up stuff like this to individuals and try to help them through this because what they're going to see is an asset that used to be worth a fraction of a penny. I'm talking about Bitcoin here. Something that used to be worth a fraction of a penny

is now worth tens of thousands of dollars. And because that happened, and it's been around for 12 years plus, but by the time some of these new people may be coming in, it's not going to seem ridiculous to somebody to get a return of one and a quarter percent every day. To them, that's going to seem pretty reasonable in the context of Bitcoin going up millions of percent,

in its lifetime, but they're not going to realize the why as to why Bitcoin succeeded and how that kind of parabolic growth happened from inception, but over time those gains become less and less. Whereas something like this, where it's trading profits, it does not happen that way. So again, my call to you is to try to, in a friendly way, talk sense into people and divert them away from this and encourage them to get anybody that they've brought in unknowingly into a bad investment like into something like this to let them know how unrealistic it is to get them to get their friends out of it and you know swallow their pride say hey I made a mistake get out while you can this could be very bad news and I don't want you to get hurt it's the best thing you can do

One thing I always point people to is this absolutely stellar podcast series called The Missing Crypto Queen. And it's about a giant Ponzi scheme called One Coin, which unfortunately is actually still running. It's been kind of hobbled, but it still lives on. They start targeting people in third world countries that maybe might not understand this as well. It doesn't really work as much in a lot of Western countries now that it's kind of run. course, but they've still got markets that they can cash in on, I suppose. But I encourage you to take a listen through this and recommend it to others because it's enthralling, seeing how crazy this stuff can get and how that hope of incredible returns can just drive people to throw

common sense out the window and get completely taken in by stuff like this. It's eye-opening. Anyways, guys, I'm going to wrap it up there. I know it was a bit of a rambly video today, but a couple of things that I just wanted to touch on and were important to me. Anyways, thank you guys so much for watching. If you're here on YouTube,

do remember to hit like, subscribe, and share, but also check out the other platforms I'm on. I'm now streaming live to Facebook Live. Twitter via Periscope. I'm on Twitch. I'm on D-Live. I'm on library. a bunch other places, but be sure to check me out everywhere.

Also, if you prefer audio only, I am on pretty much any podcast platform that you could want, Apple Podcasts, Spotify, Google, pretty much everything. If you want to help out the show in another way, you could hit up my sponsor, Leden, down below for those $53. You can also check out grabbing a Ledger, NanoX or NanoS, link down below. And if you really liked what you saw, you can always hit me up with a Lightning Network tip. Yep, that's at my tippin.me page. It's tippin.combe slash at BTC Sessions. With that, I am out.

Have yourselves a wonderful rest of your day, a wonderful evening, and I'll see you guys next time for your daily session.