The problem of fungibility with xmr swaps

xrx

Most coins like btc, eth, doge, and almost all top coins are transparent and therefore not fungible. A tainted coin will not be worth the same as a clean coin as the usability is inversely correlated to taint. Further complicating is the seriousness of the taint and the proximity of the taint to the original problem. So even if you know the coin is tainted, its very complicated to work out how badly it is tainted and what the actual value could be.

So my question is how do I know the coins I am receiving for my xmr are not tainted on decentralized solutions like atomic swaps, bisq, haveno, etc?

block

As far as I know, you cannot tell if the coins are clean unless you have access to CipherTrace or similar. You do have plausible deniability if you can prove that you received the coins in a swap.

xrx

Do you know how I can prove I used something like Haveno? And even if I do, doesn't that open the door for a list of "unapproved" exchange methods?

carrington

As block said, unfortunately you need the tools used by blockchain surveillance companies to check for taint and to avoid receiving BTC which might be arbitrarily seized from you later on.

xrx

Ok, so what is the point of swapping xmr for non fungible coins then? I'm really trying to understand here. I want to engage in trading but don't see how it could work outside of a CEX that has already seized any tainted coins.

carrington

xrx

This is why I won't be using atomic swaps to trade Monero for BTC. I guess there are always some people who are willing to do that and they can compete on price.

sgp_

Generally, people are incentivized to perform swaps to make money. The risk of receiving tainted coins certainly is a disincentive.

xrx

Ok, thanks for the replies, I think I've got it now. We will just have to wait for people to realize that non-fungible coins don't work for money. They need to be discarded, not swapped.

sgp_

Even if non-fungible assets aren't good money, that doesn't mean they're valueless. NFTs are a good example of things that have value but aren't good money. Still, agreeing to swap fungible XMR for a random piece of "art" probably isn't extremely compelling unless the incentive is high enough.

I think there are plenty of reasons for a few swap providers to be involved, but most people aren't going to want to swap a traceable asset like BTC with a random person.

armeen

Looking at how COMIT's XMR-BTC atomic swaps are designed (https://comit.network/blog/2020/10/06/monero-bitcoin), would it not be possible for Alice to ascertain the cleanliness of Bob's BTC between steps 2 and 3?

sgp_

armeen this is correct. A BTC purchaser can run the BTC through chain analysis software (if they have it) to see if it is "clean" or not before completing the trade. The most competitive atomic swap providers will probably do this.

block

sgp_ Is there any chain analysis software that is available for non-businesses?

sgp_

block the solution is probably to form a business that companies are willing to sell their products to. There are more than 3 names out there who sell tools.

carrington

There was a popular one which I forget the name of, but the team announced they would no longer maintain the project several months ago.

darkie

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