432 sats \ 1 reply \ @aoeu 19 Sep 2023 \ on: One big UTXO or several small ones for cold storage? bitcoin
Definitely create separate wallets for the KYC and non-KYC stack. You could technically use a single wallet and keep their respective UTXOs separate, but this would get complicated, in my opinion. Better to just have dedicated wallets for each that you could secure with a single hardware device or as part of a multisig.
I wouldn't go too small on the UTXOs because who knows how high fees could get in the future. If you keep several 50k UTXOs, fees eat up a large portion of that even now. I'm keeping my UTXOs at 300-500k minimum for that reason.
I'm a little hesitant to coinjoin all my stack because their will likely be other privacy options that are developed on L2 that might even work better. And, the issue that I have with the KYC stack is that no matter how many rounds of coinjoin I do, they company I KYC'd with still ultimately knows how many totals sats I bought through them. They wouldn't be able to trace the individual sats, but the total number would still be known in case of a rare "Executive Order 6102"-type order.
Under-rated points. The threat model of KYC coins is super important. If Coinbase (or whoever) knows you bought 10m sats, then it doesn't seem too far-fetched that an aggressive government will eventually want a detailed accounting of where they are now. They might not know the UTXOs, but they know what you had.
This is my chief worry about how things could go realistically. Someone always jumps in and says what an accounting nightmare this would be, how it's not feasible. I agree! Jesus, it's so confusing to keep track of your UTXOs if you did anything other than park them in cold storage immediately after buying them. But it doesn't have to be feasible, it just has to chill legitimate market use. If you can't buy them or spend them on anything without getting sideways with the government, hardly anyone will bother.
Btc won't "die" but I'm not keen on waiting out $500-$1k prices for the next twenty years, or moving to El Salvador or whatever.
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