Still works over reputation, like drugs (another physical good). You could also split that into multiple exchanges. Parallel with different vendors or sequential with known honest counterparties.
You have to provide a phone number. Organising burner SIM and burner Phone and brushing up on opsec shouldn’t be insurmountable challenges for added convenience and security.
A swiss number is needed though. By law you need to provide your name and address to have a swiss SIM card. Preventing circumvention has proven difficult as you can imagine.
Significant use by drug dealers and sans-papier activists.
To me the goal of Fedimints is to use it at a trusted level e.g. Family members. So typically most of your family won’t have the technical knowledge for self-custody but a couple of people can take care of it for everyone - - > net positive.
If you use the biggest Fedimint managed by people you don’t know, then you have the exact same trade-off of the usual third-party custody like exchange
Of course everything is possible with the right amount of effort. However, people don’t want to get into shady grey zone areas amidst drug dealers and other criminals, just to buy Bitcoin anonymously, right?
For mainstream adoption, there must be a way to easily buy / sell Bitcoins against cash in order that it can claim the benefits that are always brought forward when talking about Bitcoin and to reclaim people’s freedom etc. Otherwise there isn’t really an incentive to go with Bitcoin compared to just keep money on a bank account. Of course, one the government can take away, the other not. But when they now that it exists and you don’t want to follow their orders they could just jail you for that and in some countries, send to a gulag. Not much better.
So there is a need for easy access to BTC, in an anonymous way, for cash, to accomplish to goals many talk about in regards to Bitcoin.
I think the problem is that anonymous value already is in the gray zone. On it’s own it is not illegal yet, but nearly everything around it is. What is there left apart from secretly saving income under your mattress? Even then nobody can take that money legally anymore. You can only spend it on small-time consumption. That’s where you secretly withheld it from anyways.
Edit: On a second though you have to declare it for taxes. So a big part of that anonymity is already lost.
Yes, that is not a problem in normal countries.
But Bitcoin fans say that it’s reclaiming people’s freedom. In an oppressive regime / dictator-led country, that would be highly problematic because they could find out you’re a dissident, freedom fighter, opposition or whatever and then they lock you away in a gulag if they can’t go after your money. For example Alexei Navalny - of course he won’t declare his wealth to Putin’s regime otherwise he would lose everything - so probably he needs to keep a lot of cash here and there. BTC would be a better solution for such cases - but only if it’s anonymous. Or if they think let’s say you insulted the king or dictator or whomever and they think you need to pay now a 100’000 CHF equivalent fine. They know you have the money but you don’t pay it because it’s in BTC and they can’t do something against it. So they will just seize your monthly income until everything is paid, plus surcharge, or they send you directly to the gulag. In some countries you even may face torture.
So in that case, what’s the whole point of decentralised currency - if there is no anonymity?
Then it might be better just to use the normal currencies as we have them now and profit from better security of your wealth, rather than trying to manage it on your own but there is no real benefit to it because they know it anyway and can get to it anyway just by other means.
If we argue the case of politically persecuted and other criminals. Then we aren’t particularily afraid of breaking the law and also ready to inconvenience ourselves a bit. Especially if that lowers the chance of getting caught and adds nothing significant to the punishment.
Dissidents in particular might also be able to receive donations. Cryptocurrency is highly mobile and enables you to pay for quite some services already. E.g. someone from the other side of the world donates over your website. You use it to pay for hosting space. No compromise of anonymity needed on your side. You might also be able to convert it back to cash through (probably) criminal services. And it is easy to take with you, if you have to flee.
So yes, especially in those cases it has certain benefits over cash (including anonymity). I don’t know about the dissidents, but online drug marketplaces have become a viable economic sector. It functions exclusively over cryptocurrency. The anonymity and convenience seem good enough. Even though the pressure from police agencies all over the world must be severe.