Third installment of answers to hostile questions about bitcoin that @AaronRDay posed for Thanksgiving dinner. Prepare for Christmas dinner conversation with solid answers!
https://twitter.com/onedigitmoney/status/1996657034088128581
7. If the blockchain is public and exchanges require extensive KYC, how is bitcoin private or permissionless? (11, 12, 14)
Bitcoin is pseudonymous, not anonymous. That is, users are represented by a code rather than personally identifiable information. But every transaction is publicly visible—this is what allows anyone to audit the supply without trusting a central authority. This transparency is actually a tremendous advantage for a new form of money that is still gaining the trust of the public. Privacy depends on user behavior: avoiding address reuse, using coinjoins, Lightning, or other tools.
KYC requirements come from regulated exchanges, not bitcoin itself. You can acquire bitcoin peer-to-peer, through mining, through ATMs, or through Lightning—none require KYC. The permissionlessness is in the protocol; the surveillance is in the regulated on-ramps.
OFAC can require U.S. exchanges to block certain addresses, but they can't freeze the coins themselves or prevent peer-to-peer transactions. Sanctions affect regulated businesses, not the protocol's spendability. This is analogous to cash: governments can track some exchange points but can't track the cash in your pocket.
@SamouraiWallet @adam3us
Bitcoin is pseudonymous, not anonymous. That is, users are represented by a code rather than personally identifiable information. But every transaction is publicly visible—this is what allows anyone to audit the supply without trusting a central authority. This transparency is actually a tremendous advantage for a new form of money that is still gaining the trust of the public. Privacy depends on user behavior: avoiding address reuse, using coinjoins, Lightning, or other tools.
KYC requirements come from regulated exchanges, not bitcoin itself. You can acquire bitcoin peer-to-peer, through mining, through ATMs, or through Lightning—none require KYC. The permissionlessness is in the protocol; the surveillance is in the regulated on-ramps.
OFAC can require U.S. exchanges to block certain addresses, but they can't freeze the coins themselves or prevent peer-to-peer transactions. Sanctions affect regulated businesses, not the protocol's spendability. This is analogous to cash: governments can track some exchange points but can't track the cash in your pocket.
@SamouraiWallet @adam3us
8: If Lightning apps require KYC and face banking pressure, is it just re-creating the banking system? (13, 21)
Lightning is a protocol, not a company. Some companies (Strike, Cash App) implement KYC because they act as custodians and must comply with banking regulations. But Lightning itself is permissionless. Non-custodial wallets (Phoenix, Breez, Zeus) require no identification.
Claiming "Lightning re-creates the banking system" conflates custodial implementations with the protocol itself. Email does not re-create postal mail just because Gmail exists. Custodial services face banking pressure—that's why self-custody matters. The infrastructure exists to use Lightning without trusted third parties.
@jackmallers @roasbeef
Lightning is a protocol, not a company. Some companies (Strike, Cash App) implement KYC because they act as custodians and must comply with banking regulations. But Lightning itself is permissionless. Non-custodial wallets (Phoenix, Breez, Zeus) require no identification.
Claiming "Lightning re-creates the banking system" conflates custodial implementations with the protocol itself. Email does not re-create postal mail just because Gmail exists. Custodial services face banking pressure—that's why self-custody matters. The infrastructure exists to use Lightning without trusted third parties.
@jackmallers @roasbeef
9: Are corporate bitcoin treasury strategies just leveraged speculation like the 2008 financial crisis? (19)
MicroStrategy uses debt to acquire a scarce, non-debt asset. Is this leveraged speculation? Yes. Is it like 2008's mortgage derivatives? No.
The 2008 crisis involved opaque, interconnected debt instruments backed by systematically misrepresented assets, creating systemic counterparty risk. Bitcoin is transparent, has no counterparty risk, and isn't an interconnected credit instrument. These companies face market risk but don't create systemic contagion.
Whether companies should lever up to buy bitcoin is a separate question from whether bitcoin has value. If you think the strategy is reckless, don't buy the stock. Hold bitcoin directly.
@saylor @LynAldenContact
MicroStrategy uses debt to acquire a scarce, non-debt asset. Is this leveraged speculation? Yes. Is it like 2008's mortgage derivatives? No.
The 2008 crisis involved opaque, interconnected debt instruments backed by systematically misrepresented assets, creating systemic counterparty risk. Bitcoin is transparent, has no counterparty risk, and isn't an interconnected credit instrument. These companies face market risk but don't create systemic contagion.
Whether companies should lever up to buy bitcoin is a separate question from whether bitcoin has value. If you think the strategy is reckless, don't buy the stock. Hold bitcoin directly.
@saylor @LynAldenContact
Final "Killer" Follow-Up: What exactly did bitcoin revolutionize if it didn't replace banks and government money and you can’t buy coffee with it? (Original “killer” follow-up question)
Bitcoin created the first globally accessible, non-state, auditable monetary network. Anyone can hold value without permission, verify the money supply without trusting institutions, and transact on infrastructure no single entity controls. Bitcoin continues to have all these properties today just as it always has..
Banks can participate but can't change the rules. Governments can print their own money or accumulate bitcoin, but they can’t print bitcoin. Companies can build custodial services, but users can always choose self-sovereignty.
Early users could buy coffee with bitcoin only because so few people used it. The fact that the fees are too high for coffee is an indicator of bitcoin’s growth and success, not its failure. To make bitcoin work for the entire global economy will require scaling solutions, some of which—like Lightning—are already demonstrating promise. Bitcoin already solves a much bigger problem than the problem of small payments. Solutions for these applications are being developed, and Lightning already processes millions of transactions monthly at near-zero cost. These solutions will expand as bitcoin grows.
The revolution isn't that bitcoin killed banks or government money. The revolution is that bitcoin made them optional for the first time in the digital realm. You can exit systems that require trusting fallible institutions. That's what the bitcoin revolution accomplished—not exclusion of certain parties but optionality for everyone.
@dergigi @MartyBent
Bitcoin created the first globally accessible, non-state, auditable monetary network. Anyone can hold value without permission, verify the money supply without trusting institutions, and transact on infrastructure no single entity controls. Bitcoin continues to have all these properties today just as it always has..
Banks can participate but can't change the rules. Governments can print their own money or accumulate bitcoin, but they can’t print bitcoin. Companies can build custodial services, but users can always choose self-sovereignty.
Early users could buy coffee with bitcoin only because so few people used it. The fact that the fees are too high for coffee is an indicator of bitcoin’s growth and success, not its failure. To make bitcoin work for the entire global economy will require scaling solutions, some of which—like Lightning—are already demonstrating promise. Bitcoin already solves a much bigger problem than the problem of small payments. Solutions for these applications are being developed, and Lightning already processes millions of transactions monthly at near-zero cost. These solutions will expand as bitcoin grows.
The revolution isn't that bitcoin killed banks or government money. The revolution is that bitcoin made them optional for the first time in the digital realm. You can exit systems that require trusting fallible institutions. That's what the bitcoin revolution accomplished—not exclusion of certain parties but optionality for everyone.
@dergigi @MartyBent
If these answers helped you prepare for Christmas dinner conversations, share this thread. And if you have better answers or additional questions, share them as a reply. Bitcoin deserves serious engagement, not gotchas.
@CBVGuyonX
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