Bitcoin Forum

http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/

This service is extremely dangerous as it undermines one of the key characteristics of Bitcoin as a MONEY: their complete fungibility. Further, since all Bitcoin transactions are public and pseudonymity given by opaque addresses is our ONLY financial privacy protection, services like this should be considered a direct and malicious attack on Bitcoin system.

I suppose the CORRECT response of the community should be to BOYCOTT any business that even remotely associates itself with this evil spynet.

By now, you should probably know enough about Avalon's dishonest and deceptive business practices to boycott it on its own merits, anyway...

what happened?

Add Bruce Wagner to the mix also.  That c*cks*cker got me for 10BTC earlier this year.

If you read it closely its not a bad idea.

If I get it right, someone who has a hard time with computers can use this service to get help doing "safe" transactions.
The rest of us opts out obviously.

These guys are probably hoping for a NSA contract to reveal addresses, but that was going to happen anyway. There should be ways to avoid that

while providing a red-flag system for businesses who have customers trying to use Bitcoin that’s associated with illicit use.

It severely damages the privacy of BTC mass use.


ya.ya.yo!

this is a bad idea.... very bad idea.

I stand by the boycott and would like to know the specific services i should be boycotting

this must be stopped.

It's an interesting idea, but I'm curious how many people will want to share their transactions with them.

Meh... as soon as these guys are up and running some other smart guys will come up with a system for "de-sanitizing".

Remember a couple of years ago all the conspiracy theorists were talking about one world currency, one world government, chips, all that stuff? Every day Bitcoin looks more and more similar to it. Sometimes I think we have been tricked into using a currency that offers us no privacy at all.

Yeah we may become insanely rich, but there is a price we pay for it.

If you read it closely its not a bad idea.

If I get it right, someone who has a hard time with computers can use this service to get help doing "safe" transactions.
The rest of us opts out obviously.

Waters says there are a few million Bitcoin addresses with positive balances. “If 10% of those were clean addresses, it would substantially improve the regulatory landscape state-side,” he says. He predicts in the future that every user will have at least one address that’s self identified, “or at least every user who wants to do business in the U.S.”

I don't think you do read it right, at least not in its complete intent. Look at the last paragraph:

50% of the fees in a block should be sent as tax to the government and transactions that dont have outputs as tax to government blacklisted. Businesses accepting tainted coins must pay a fine/serve jail time.....

Seriously thinking about selling my btc and buying ltc instead. Less chance ltc coins have blood on them.

Alex Waters -> Bitinstant
Matt Mellon -> don't know
Yifu Guo -> Avalon


Please feel free to contribute additional information from public sources!


ya.ya.yo!

FYI - Alex Waters hasn't had any involvement with BitInstant for months.


As I've said before (https://bitcointalk.org/index.php?topic=254535.msg2712392#msg2712392), this is a terrible idea. Anything that hinders the core properties of bitcoin as an ideal money, of which fungibility is one, does long-term harm to bitcoin, whatever the motivation. If bitcoin ceases to be a (near)ideal money, this whole thing becomes a lot less interesting.

That said, this is going to happen, whether it's through this company or the next one. If it's at all possible technically, it *will* happen. The bitcoin community needs to be aware of that, and develop technical solutions. Boycotting people or companies won't work. It sounds like CoinJoin is a potential fungibility-preservation tool, and I'd guess that efforts like the above are going to incentivize people to put in some serious work on a Zerocoin-implementing alt sooner rather than later.

yes if its not them it will be someone else, sure, but because its coming from bitcoiners, the community at large might just accept it...

https://bitcointalk.org/index.php?topic=333117.0

Bitcoins should not be assessed according to where they have been. That would ruin their fungibility and require coin blacklists that would create a central authority.

This post on Reddit explains how in 1749, a court sided with the Royal Bank of Scotland in its legal challenge to a request for such a blacklist. The court ruled that making money responsible for the acts of its previous holders would "render the Notes absolutely useless":

http://www.reddit.com/r/Bitcoin/comments/1le87j/bitcoin_core_dev_on_stolen_coins_and_transaction/cbycmhk

I really hope that Bitcoin gore dev team stays against about privacy violations or if not I hope all miners reject all plans supporting this kind of development lines possibly planned for.

Replicated here for discussion:

This is not a change to the Bitcoin Protocol, miners (or just people running fully-validating wallet and relay nodes) cannot affect this move. Although some kind of protocol integration will no doubt be proposed by someone or other.

Bitcoin history facts:

2009-01-03 18:15:05 Historic moment Genesis block created
2009-01-13 18:20:08 50 coins where mined
2009-01-16 19:18:35 those 50 coins where sent to address 12higDjoCCNXSA95xZMWUdPvXNmkAduhWv
a total of 77,624 BTC  where received at this address until 2011-06-04 then cashed out
http://bitcoin-otc.com/viewgpg.php?nick=I}ruid
http://bitcoin-otc.com/viewratingdetail.php?nick=I}ruid&sign=ANY&type=RECV

Quote from: franky1 on October 16, 2013, 02:50:53 AM
|}ruid is Dustin trammell

Dustin D. Trammell
 I am both I)ruid and I}ruid.  I)ruid is the correct spelling.  I use the alternate I}ruid spelling on IRC due to the IRC protocol not allowing the close-parenthesis character ")" to be used in nicknames.
https://bitcointalk.org/index.php?action=profile;u=23696,  yes VIP status with a registration date of June 2011

HD Moore,  Dustin D. Trammell and Tod Beardsley,  all co-founded AHA! (the Austin Hackers Association) many years ago.  All three still attend monthly meetings.
AHA is a white had hacker group that is Government friendly (Cahoots) and a hacker against the hacker.

HD Moore: Information security researcher and programmer, Moore developed security software utilities for the United States Department of Defense.
Dustin D. Trammell:  Entrepreneur, Security Researcher performing research within the fields of vulnerability exploitation, network protocols, steganography and covert communications, and Internet telephony
Tod Beardsley:  Technical Lead for the Metasploit Framework and Metasploit Pro, Founded Austin Hackers Anonymous  August 2006

Straight talk a US Government Snitch

Now depending of your view point you could ask is it a surprise that DPR is where he is?  Was SR past its use-by date and has served its purpose.
To Alternative coins look attractive with 100% knowledge from the start who is behind it and is truly decentralized.
With this known affiliated friendliness to the DOD Bitcoin is tainted to say the leased from the very beginning.

Not sure  ::), but maybe this is where genjix gets his dresses: http://hanleymellon.com/

I'm on the fence with this one, albeit leaning toward, "Mongo no like!"

“This needs to exist for regulators to approve of use of Bitcoin in the U.S.,” says Waters. “We don’t want to be the sheriff of the Bitcoin community. We just want to create an ecosystem of clean addresses.”

In the short term, they talk about a limited database that keeps track only of registered identities and their activities with participating companies, but it’s obvious that their ambitions are grander and that a longer term prospect is to take advantage of the transparency of the Bitcoin system to keep track of which Bitcoin is tainted by associations with black markets. Waters says that the development of that aspect will depend on “community feedback.”

can we stop this?

People can choose which version they run / install and in the worst case Bitcoin will be forged / split in two versions. Privacy violating and altered new which sure will arise. However, it could be also end of bitcoin. I hope this craziness will be taken seriously and whole community will stand against this kind of changes. Im not sure where the biggest pools are located, they will have the power to choose.

can we stop this?

We can stop this by making sure that its not viable, by tweaking our practices and the ecosystem to be an environment that things like this just can't work in. This means: Anonymous mining, Discouraging address reuse, coinjoin (https://bitcointalk.org/index.php?topic=279249.0), etc.  Importantly, people need to step up and fund the development of privacy tools.  Today there is no business model for decenteralized privacy tools that people can use casually and thus pervasively.

Remember a couple of years ago all the conspiracy theorists were talking about one world currency, one world government, chips, all that stuff? Every day Bitcoin looks more and more similar to it. Sometimes I think we have been tricked into using a currency that offers us no privacy at all.

Yeah we may become insanely rich, but there is a price we pay for it.

Yes, but not by negotiating with every fool who attempts it, for there are far too many fools in the world.  I've personally talked two startups out of similar business models in the past.

We can stop this by making sure that its not viable, by tweaking our practices and the ecosystem to be an environment that things like this just can't work in. This means: Anonymous mining, Discouraging address reuse, coinjoin (https://bitcointalk.org/index.php?topic=279249.0), etc.  Importantly, people need to step up and fund the development of privacy tools.  Today there is no business model for decenteralized privacy tools that people can use casually and thus pervasively.

We must vote with our wallets— not our spending, but how we choose to transact and what developments we fund. As a spending group the people who really realize the importance of privacy and fungiblity will always be a small enough minority that short-sighted business people will find it all too easy to go without their business.

Some kind of service that makes ALL coins dirty would be useful, as it would invalidate attempts to block 'dirty' coins.

How about a community interest mining protocol (used by choice of course) that could somehow take the mining fees and use the to spinkle 'grime' into transactions.
Have no idea how that would work but surely it must be possible.

Yes, but not by negotiating with every fool who attempts it, for there are far too many fools in the world.  I've personally talked two startups out of similar business models in the past.

We can stop this by making sure that its not viable, by tweaking our practices and the ecosystem to be an environment that things like this just can't work in. This means: Anonymous mining, Discouraging address reuse, coinjoin (https://bitcointalk.org/index.php?topic=279249.0), etc.  Importantly, people need to step up and fund the development of privacy tools.  Today there is no business model for decenteralized privacy tools that people can use casually and thus pervasively.

We must vote with our wallets— not our spending, but how we choose to transact and what developments we fund. As a spending group the people who really realize the importance of privacy and fungiblity will always be a small enough minority that short-sighted business people will find it all too easy to go without their business.

No, it's not actually.

You idea however is what people are already working on. Which is just mixing coins constantly. It's not "grime" but it keeps them moving.

I agree and support everything you said here, Gregory, but I'm afraid that might not be enough.

Working around balcklists is feasible, through the means you cite. But the threat here are not blacklists, the threat are mandatory whitelists.

You may coinjoin your coins as much as you want. If you want to use them in "the land of the free" you'll have to give away your freedom and privacy by declaring them to Big Brother. Otherwise your output might just be frozen by the "law abiding merchant" that receives it.
Mixers are not enough to fight back. But I fail to see alternatives.

I know you and many other bitcoin developers have brilliant minds... I hope you manage to come up with a solution.

You may coinjoin your coins as much as you want. If you want to use them in "the land of the free" you'll have to give away your freedom and privacy by declaring them to Big Brother. Otherwise your output might just be frozen by the "law abiding merchant" that receives it.
Mixers are not enough to fight back. But I fail to see alternatives.

I know you and many other bitcoin developers have brilliant minds... I hope you manage to come up with a solution.

I agree and support everything you said here, Gregory, but I'm afraid that might not be enough.

Working around balcklists is feasible, through the means you cite. But the threat here are not blacklists, the threat are mandatory whitelists.

You may coinjoin your coins as much as you want. If you want to use them in "the land of the free" you'll have to give away your freedom and privacy by declaring them to Big Brother. Otherwise your output might just be frozen by the "law abiding merchant" that receives it.
Mixers are not enough to fight back. But I fail to see alternatives.

I know you and many other bitcoin developers have brilliant minds... I hope you manage to come up with a solution.

The alternative is to give up on "law abiding businesses" and create infrastructure that assists individuals in operating censorship-resistant business models (http://bitcoinism.blogspot.com/2013/11/censorship-resistant-business-models.html).

I'm not sure you can gather enough info from this article to legitimize the personal attacks.  Then again, this behavior isn't surprising on bitcointalk.  

These guys have done a lot of development for the bitcoin community.  They are actually very nice people.  I used to work with 2 of them regularly.

I'm not saying this project is a good or bad idea.  I'm looking forward to hearing more info.

Slow your roll.   ::)

Not just privacy and fungibility issues, security too.

White-listed addresses are innately insecure. Re-using addresses makes them more vulnerable to theft.

If you run a full mining node, blacklist the whitelist. Work out how to prevent all "white" addresses from ever getting their transactions processed.

...

If you run a full mining node, blacklist the whitelist. Work out how to prevent all "white" addresses from ever getting their transactions processed.

Alex Waters has not worked for BitInstant for a long time, you should take that down. He helps run the Apex Incubator as far as I'm aware.

edit: source, i've met him in person. also his linkedin: www.linkedin.com/pub/alex-waters/10/605/29b

If you run a full mining node, blacklist the whitelist.

The alternative is to give up on "law abiding businesses"

You're assuming the white-list will be public. It needn't be.

Adam Back sums the situation up nicely.

https://bitcointalk.org/index.php?topic=333882.0

Well towards getting some kind of reasoned response from Coin Validation I tweeted a link to Alex Waters & Yifu Guo for the above thread.  

Well towards getting some kind of reasoned response from Coin Validation I tweeted a link to Alex Waters & Yifu Guo for the above thread.  Couldnt find their email, but their twitter handle are easy to find, and they appear to be very current.

https://twitter.com/adam3us/status/401104148558397440

Adam

I think I speak for many in saying thanks for your input Adam, it seems to me there are too many business minds involved in the decision making of Bitcoin whose only concerns are the profit for themselves aspect.

Thanks for the info, updated.


Whoever has additional information, feel free to post.


ya.ya.yo!

np, love your username btw!

Brendan Diaz (http://www.linkedin.com/in/brendandiaz) works with Alex Waters at Apex (who I assume is "incubating" this startup) as the COO, you should put him down under Alex's "people" as well

Alex on reddit: http://www.reddit.com/user/alex_waters
yifu:     www.linkedin.com/in/yifuguo

I agree and support everything you said here, Gregory, but I'm afraid that might not be enough.

Working around balcklists is feasible, through the means you cite. But the threat here are not blacklists, the threat are mandatory whitelists.

You may coinjoin your coins as much as you want. If you want to use them in "the land of the free" you'll have to give away your freedom and privacy by declaring them to Big Brother. Otherwise your output might just be frozen by the "law abiding merchant" that receives it.
Mixers are not enough to fight back. But I fail to see alternatives.

I know you and many other bitcoin developers have brilliant minds... I hope you manage to come up with a solution.

You libertarians are just crazy, your whole focus on wrapping your self in secrecy and eliminating any accountability in society you create the very Dystopia you fear.  To stretch a metaphor from TLOTR (a better work of fiction then anything Ann Rand ever wrote btw), your think passing out copies of the one ring will make the world a better place because the common man will somehow be 'equal' to elites.  Equally unaccountable and equally likely to abuse that power I think (you know even Frodo succumbs to the temptation, because you know know power corrupts etc etc).  If you want a world free of abuse of power then you can't fight fire with fire, you need universal accountability and transparency so abuse of power can be seen by everyone rather then fester in the shadows.  

And seriously of all the realms of our lives were privacy might be justified, out financial and business transactions are the last ones that are deserving of privacy.  I would really expect more libertarians to understand how markets work, they require information and the more the better.  Information asymmetry between two parties makes a fair meeting of the minds impossible and thus leads to market inefficiency.

See David Brin (my favorite author btw) on the subject of privacy, http://en.wikipedia.org/wiki/The_Transparent_Society  And
http://www.metroactive.com/papers/metro/02.06.97/cover/brin1-9706.html

there are a lot of services out there which are a serious threat to privacy.

take Coinapult.  This company has an enormous database of Bitcoin Addresses to Email Addresses.  The NSA routinely buys such companies out(through their partner VC firms) and adds the database to their system for monitoring the populace.

Remember a couple of years ago all the conspiracy theorists were talking about one world currency, one world government, chips, all that stuff? Every day Bitcoin looks more and more similar to it. Sometimes I think we have been tricked into using a currency that offers us no privacy at all.

Yeah we may become insanely rich, but there is a price we pay for it.

Preface: Your upvotes contribute to his google search.

I believe it is worth exposing each person in this new CoInvalidation team. Yifu is a dishonest criminal of bitcoins, dollars, time, and his actions speak to a nefarious character. Google him, it's been covered.

Well, what about the other guys? The coin purse, cofounder, and government connections guy is Matthew Mellon.

First, let me preface this with saying Matt has really great family lawyers. They have attacked (and removed) a lot of articles exposing him and reporting on his past. If you report on this on your blog, he will send legal to come after you.


So, who is Matt?

Matthew Mellon is part of one of America’s most influential and wealthy families — with ties like Gulf Oil, Carnegie Mellon University and Alcoa. Matthew inherited a $25 million trust fund at only 21, and started blowing it on cocaine, guns, celebrity company, and whatever other ridiculous or dangerous things he could get his hands on. He almost overdosed, and instead of reforming, he divorced his wife went back to hit the slopes some more. He fired his next fiancee, and left her financially dry, only to jump to another woman shortly after.


Some stuff he's done that went public:

Matthew Mellon historically had a nasty breakup which exposed his crack, cocaine, and business embezzlement. (http://www.theweek.co.uk/people/38861/matthew-mellon-fights-%C2%A330m-law-suit-brought-ex-girlfriend-noelle?WTmc_id=rss)

Matthew Mellon is friends enough with this ex-Paris Hilton boyfriend asshat, having borrowed him funds which also funded Brandon's drug use. (http://www.hollywoodinterrupted.com/2008/11/11/brandon-davis-heir-abhorrent/)

Matthew Mellon was likely involved in a hacking scandal which his lawyers cleaned up nicely. The problem with making a website also apologize is it leaves traces. (http://www.zdnet.com/matthew-mellon-apology-3039251750/)

Matthew Mellon also threatened lawsuit to take another article down here. "the wealthy Matthew Mellon thought they needn't act as average people, so instead they've, through their attorneys, tried to scare us." (https://news.hitb.org/content/xatrixorg-threathened-lawsuit)

A report still up shows that Matthew Mellon allegedly hired wire-tapping on his ex-wife. (http://www.theguardian.com/technology/2007/apr/25/hacking.internetcrime) Do you trust him with your validation? On further research, he was arrested and charged. (http://www.highbeam.com/doc/1G1-133761030.html)

For you political folks, I will let you make your own decision on Matthew Mellon's contributions to Paul Ryan and Mitt Romney. He has donated both separately (majorly to Ryan) and combined. This includes the defunding of Medicare and Medicaid. (http://www.nclr.org/images/uploads/pages/HCRCall042711_Transcript.pdf)

I'm sure I could keep digging wonderful things, but this post is getting too fucking long. Matthew Mellon, and associates Alex Waters & Yufi Guo, if you read this: fuck. you.

Alex Waters, you're next. And Kashmir Hill - thanks for your previous exposure but you are a shill. Your spin shows your lack of spine and willingness to suck the institutionalized finance dick. Fuck you too.

A setup where you know the address you send money to... but where no one can determine where the funds in a given address came from.

Nope , i'm not going to quote this.

The only setup I'm aware of that could do what you say is e-cash (blind signatures, part of Open Transactions). But this algorithm requires a server to perform the settlement. Perhaps the servers could evolve to multiple hidden servers where very few trust is needed. If you could easily move money from one e-cash server to another (can we?), and if you could be sure they can't steal from you (multi-signatures!), then we could practically have an e-cash decentralized network. Perhaps it's time to study Open Transactions...

Privacy should exist everywhere but there should be a balance. A way to follow the money trail must exist to prevent institutional corruption. For this reason we cannot have secrecy in financial transactions. We can have privacy though.

Privacy should exist everywhere but there should be a balance. A way to follow the money trail must exist to prevent institutional corruption. For this reason we cannot have secrecy in financial transactions.

But I want to know if a politician or police officer is being bribed because democracy depends on it. A free society depends on transparency.

Your last paragraph just kills your initiative.The usage of such language is just inappropriate and it will turn into a double edge sword.. There are lots of people who although might be angry at Yifu&Company , when reading that will say "Fuck You" not "Fuck Yifu"

Privacy should exist everywhere but there should be a balance. A way to follow the money trail must exist to prevent institutional corruption. For this reason we cannot have secrecy in financial transactions. We can have privacy though. I don't think everyone needs to know what books everyone else is buying.

But I want to know if a politician or police officer is being bribed because democracy depends on it. A free society depends on transparency.

Get an undercover officer to attempt the bribe the police officer or politician in question. Do you really think it's impossible to solve these problems without throwing privacy under the bus?

Yeah this is like allowing three man to create a Central Bank all over again. Are people that stupid?

Wow that's crazy!!

I think I'm going to support their business, just because.

But that's not what this is. In some ways, this is worse than a client/blockchain fork. At least the differing market price for Bitcoin and TaintCoin would help to settle the fight. Any Bitcoin based business would then have to choose which of the coins to support, and watch how much custom they receive from each if they choose both.

This CoinValidation group is the beginnings of a way to gradually force customers to disclose their identities, not via the protocol, but by good old fashioned legislation.

This would be weird.

One could own two companies, one that accepts only tainted coins and one that accepts only untainted.
The two companies could trade with each other to do inventory management, using off-block-chain settlement (such as fiat, gold, ledger entries, whatever).
The burden would be an additional company registration and some overhead, but why not address both markets?

And.

Should we expect a company to arise that automates this dual-company approach?  Might it be owned by one of these coin-tainters?