Thank you all for your replies, I think everyone agrees here how it "should be" and indeed I risked my post and my used terminology to further legitimize the thinking of adversaries.
I'd have one clarification to my original post. It may not be clear why I put PJ/CS to the same box. One way of thinking of CoinSwap is to swap coin histories and PayJoin is to share coin histories. For the purposes of this attack the consequences are roughly the same so that's why I think it's ok to put them under the same umbrella in this discussion, but I wouldn't die for it :)
And indeed I perhaps wrongly called this the "Taint Issue", maybe it should be called "Coin Discrimination Issue" or something like that, not sure if we have a term for this, but I'm sure we should have a term for this as unlike some other, so far theoretical attacks on Bitcoin's fungibility, it is currently being applied in practice.
Thought provoking. In my opinion bitcoin should be designed in a way to
where there is no distinction between "clean" bitcoins and "dirty"
bitcoins. If one bitcoin is considered dirty then all bitcoins should be
considered dirty. Fungibility is important. And bitcoin or its users
should not be concerned with pleasing governments. Bitcoin should be or
remain neutral. The term "clean" or "dirty" is defined by whatever
government is in power. Bitcoin is not to please government but to be
independent of government control and reliance on government or any other
centralized systems. To act as censorship resistant money to give people
freedom from tyranny. I'm just saying that if anyone can determine if a
bitcoin is clean or dirty then I think we are doing something wrong. What
is great with certain protocols like coinjoin coinswap and payjoin there
is that plausible deniability that hopefully would spread the entire
"taint" of bitcoin collectively either for real or just as a possibility
to any blockchain analysis entities (with no real way to tell or interpret
with accuracy).
Bitcoin should be designed in a way where the only way to stop "dirty"
bitcoins is to reject all bitcoins.
If "dirty" bitcoins is actually a real thing then I guess I could have fun
by polluting random peoples bitcoin addresses with "dirty" coins right? No
way to prove if it is a self transfer or an unsolicited "donation". I
just do not see how any bitcoin UTXO censorship could work because of
plausible deniability.
If any company actually used UTXO censorship then customers can just use
services that are respecting of freedom and do not use censorship.
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