Bitcoin Forum

In the below video at 33:42 min Charlie Lee says that Litecoin (and Bitcoin) can be censored if the Litecoin was previously used in illicit activity.

https://www.youtube.com/watch?v=C_pTOomVtI8 (https://www.youtube.com/watch?v=C_pTOomVtI8)

Were there any Bitcoin transactions that were actually censored in the history of Bitcoin?

Thank you

Depends on what you mean by censored.

There was once a patch on Bitcoin Core that could be used to filter and refuse to mine known gambling addresses (those of satoshidice and on-chain gambling). This wasn't particularly effective as a lot of miners and users didn't run this.

Exchanges has been and are still closing accounts if the origins of the coin has been tainted (either through a gambling site or illicit activities). They are still actively doing so, Binance and Coinbase are good examples.

Miners ultimately decide which transactions should be included. If they want, they can collectively refuse to mine certain coins though that has never been the case.

I'm a little difficult to understand what you mean "Bitcoin transactions on censorship".

I don't know what you mean 'censorship'.

However, maybe the topics below can help you to find the answer.
Try reading the topic below.

Topic: The Bitcoin Origins - Explore Bitcoin History and Secrets (https://bitcointalk.org/index.php?topic=5187275.0)

Topic: The History Of Bitcoin! (https://bitcointalk.org/index.php?topic=2425174.0)

If your question, is in the topic please let me know.

I think that you have misunderstood it.
The network doesn't care about the source of money. 99% sure the miners also don't care.
The recipient of the money, a company, may however do censoring. That's the "beauty" of custodian wallets  ;D

If you do a search for account closed gambling wallet site:bitcointalk.org (https://www.google.com/search?q=account+closed+gambling+wallet+site%3Abitcointalk.org) you'll find that some exchanges / wallets may not allow money coming from gambling.
Also the wallets known to be related to known hacks are being watched and most exchanges may seize those coins.


I think that this is the censoring Charlie Lee was talking about, not about actual transactions.

I experienced it first hand, not pretty. Wasted nearly 3 weeks on two failed attempts because one came from Freebitcoin and the other from a gambling site. And those were for withdrawing from the custodian wallet.

No, he says if you send a transaction you can be blocked.
It simply means that once you make a transaction, which implies the ability to send and receive, you as a person can be refused service by a third party, and this, unfortunately, happens quite often, although a lot of times is used just as an excuse to fleece the users.


It wasn't at that time as the chain was never really clogged with transactions, the average block size was below 500kb before 2016 so it was not really affecting anything, but right now, the refusal of some pools to mine certain transactions would be far more effective and it will cost the ones on the blacklist a lot more to send and receive money as cheaper transactions will take your place in some blocks.

But the dangers of miners trying to censor transactions will go down with each reward halving, soon they will not afford to not include some transactions and let the competitors earn more.

in a decentralized network nothing can be censored at all as long as that network remains decentralized. bitcoin network is completely decentralized as it has always been and in order to censor a transaction we must first see 100% centralization before it becomes possible.

the centralized world however can do whatever they want, as they have also done censorship in the past and are still doing it. for example when the centralized exchanges shut down an account or don't credit a deposit for weird reasons, that is a form of censorship.
but this has nothing to do with bitcoin itself.

I tend to agree, unless if someone will decode the Bitcoin protocol network that originally built by the creator. It's decentralized and it should be censorship resistance. Bitcoin should be, transparent, immutable protocol code, and the last one is censorship resistance that everyone's could see and replayed on the blockchain, you can't completely hide information from others because it should be recorded by blockchain that can able to distributed ledger which means everyone can run with internet connections.

Probably there is censorship as comment above, but that is not on actual transactions. This is what on the third party that own by Bitcoin, example custodial wallet didn't accept Bitcoin that comes from gambling or Bitcoin address that marked as a scam by scam Bitcoin monitoring addresses service like Chainalysis (https://www.chainalysis.com/).

It was more of an issue in ~2013-ish when on-chain gambling was more prevalent. Agreed, it would not make sense for the miners economically. Barring the miners collectively having the same agenda (unlikely) or a 51% attack (very unlikely), I can't see censorship being implemented effectively besides perhaps a minor inconvenience from certain miners refusing to mine some transactions.

This is a good argument for having multiple implementations of the Bitcoin Protocol.


Does Binance return the Bitcoin to the Sender before they close the account?

I am coming at this question from the angle of how I discuss and promote Bitcoin to my friends.  Based on the responses, I feel safe to still claim that you are your own Bank with Bitcoin.   As long as you control your Private Key you can send any amount of Bitcoin to anyone.  The caveat, however, is that if the Bitcoin you own is somehow "tainted", it may be rejected at Exchanges or other points of Centralization.

It's similar to if my friend is paid in counterfeit dollar notes but doesn't know it and then goes to the Bank to deposit the notes but the Bank rejects and possibly confiscates them.

I'll be honest this issue of fungibility takes some air out of the Bitcoin narrative.  Prior to today I promoted Bitcoin as "You control your Bitcoin and no one can stop you from sending it to someone else."

I have to be more careful with my narrative now. The narrative now has changed to "You control your Bitcoin and no one can stop you from sending it to someone else.  However, it's possible that an exchange or other central authority may reject your Bitcoin if it is tainted.  Ensure that you only transact with trusted parties."

The question now is who decided which coins is tainted? Not bitcoin enthusiast (traders/investors), not exchanges. So this is a bad idea in my opinion. Can someone received a coin from Mt. Gox hack and never realized it? Definitely, that it mean that you are a criminal? I don't think so.

IIRC, yes. They will send an email to tell you that they're closing your account and for you to withdraw.
I would say that what the services are postulating for the closure of accounts is toxic for the development of Bitcoin. That is also the reason why  I prefer having zero central authority when dealing with stuff like that. Some point in the future, most of the coins would've been tainted and it would only serve as alternate reasons for the exchange to avoid dealing with you. Until the regulatory pressure on Bitcoin eases, I doubt this would stop happening for major exchanges.

Traders won't care, but I'm sure exchanges run some kind of taint analysis on all coins they keep. They decide whether the coins are tainted or not, and can deny you their service on those grounds.

The good thing about this is that their analysis is mostly sophisticated enough to recognize that you just happened to find dirty coins on your hands, meaning you're very unlikely to get banned unless you're actually doing something shady. The bad thing is that they also have a very good idea of where your money is coming from and what you're doing with it, so you actually have very little privacy if you're using such a service.

If you're using Bitcoin P2P, which is how it was originally intended to be used, it can't be "censored".

This concept is very important and it is the way I envisioned the current Bitcoin ecosystem worked.  I believed that the only time an Exchange like Binance would reject my Bitcoin was if I was charged with a serious crime.  Since I don't see criminal behavior as applicable to me or my friends,  I wasn't concerned who I received Bitcoin from.

Is he talking about Censored by centralized exchanges and other centralized means ? I am not sure if there is built-in mechanism in the Bitcoin Network to censor transactions. Such mechanism would be transparent and involve members of the Bitcoin (& litecoin) communities.

Bitcoin is censorship resistant and neutral meaning no one can stop your transactions and also you don't necessarily need to trust the party you are recieving coins from or the party you are sending coins to. There are no third parties or exchanges in bitcoin network, no one must comply with legislation, no one is in charge. There is no such thing like taint bitcoins when it comes to bitcoin protocol itself because it doesn't care what humans think. No one can censor you when you make transactions and operate within such neutral network, network ecosystem or its decentralized layers. Ensure that you only transact within the protocol in a pure peer-to-peer manner and you are fine. Bitcoin teaches us to transact without help of banks or exchanges, so if you need to buy bitcoin with fiat, then try the same approach and buy/sell in peer-to-peer way using bisq, localcryptos, hodlhodl and the like.

Not always. If the exchange in question has decided your coins are "tainted" in some way, they may hold on to them and demand KYC. If you do not submit KYC (or if they are unhappy with the KYC you do submit), then your coins are essentially seized by the exchange.

This is true. The easiest way to get around this is to not use centralized exchanges. I trade exclusively peer-to-peer on platforms such as Bisq and LocalCryptos, and I spend my bitcoin both in person and online (also avoiding sites which use terrible privacy invading payment processors such as BitPay). I have never once encountered an issue spending/sending/trading my bitcoin.

The metric of "tainted" coins is only going to become more meaningless as time goes on. With ever more bitcoin being passed through mixers, coinjoins, and other privacy enhancing methods, it will only be a matter of time before every bitcoin in active circulation can be "tainted" in some way by some algorithm.

Does this philosophy include the non-use of the Lightning Network then?

According to coinmarketcap, Bisq has extremely low volume: USD $13,501 traded in the last 24 hours.  This doesn't seem like a viable option.

LocalCryptos has a markup of 8% in comparison to the KYC exchange I use to buy Bitcoin with Fiat.

HODLHODL seems to require trust?  These are the instructions included in the first trade I examined on the platform:


Anyway, for me personally I am not too concerned about Tainted coins but it is an additional risk I feel compelled to explain to my friends now when introducing them to Bitcoin.

The volume on all DEXs isn't great, but that doesn't mean they are not viable. I use Bisq regularly. Sometimes I have to wait a day or two to find an offer a like or for someone to accept my offer, but that is the nature of DEXs.

Depends entirely on which fiat currency and which payment method you are using. It can be very variable, but you can easily trade with a markup of only a fraction of a percent if you are patient. If you don't like the markups being offered, then make your own offer instead.

The contract includes a 2-of-3 multi-sig escrow between buyer, seller, and HodlHodl. They will step in to resolve any conflicts. You can read more about it here: https://hodlhodl.com/pages/faq#what_does_contract_mean

Can a Bitcoin OG answer OP's question? There hasn't been any indication that a Bitcoin transaction was censored from my research, because if there was, and it could be done again on a whim, then I believe Bitcoin can be called a "failure".

It actually depends on what type of platform you are using. For instance if you are on an exchange and if you are doing some illicit transactions such as purchasing guns/drugs on the darkweb and sending your bitcoins from your exchange account to that dealer's address and if the cops trace you down or if the exchange finds that out then yes your account might get blocked for illicit actions.

But if you are using a wallet such as Mycelium/Electrum where you own the private key of your bitcoin address then you don't need to worry about getting blocked. You can simply create a new address every time (these wallets automatically does that for you actually)

Note : Information provided above is just for Educational purpose.

Yes, there has. See this thread from 2010: overflow bug SERIOUS (https://bitcointalk.org/index.php?topic=823.0)

Essentially someone found and exploited a bug which allowed them to create 184 billion bitcoin out of thin air. Satoshi wrote and published a bug fix for it within a few hours, which soft forked bitcoin to undo this transaction and remove the bitcoins it created.

See here for some more information: https://en.bitcoin.it/wiki/Value_overflow_incident

I wouldn't say this was done "on a whim", nor that it means bitcoin is a "failure". There was consensus among all users to fix a critical and bitcoin-ending bug. Any time a chain reorganization has been proposed to reverse a transaction simply because some users did not like it - for example, when Binance proposed a chain reorg to recover the funds they lost due to a hack - it has been roundly rejected by the community.

Wondering what exactly do you mean by getting censored. considering bitcoin was designed on a decentralized network as long as it stays decentralized, nothing can be censored. Generally, bitcoin is a open source and border-less network and nothing can change this rule. So, there will be no censorship in bitcoin transaction by anyone.

that is not the same thing!
"censoring transactions" means for example you have 1BTC and would be unable to spend it because all the nodes and all the miners reject your perfectly valid transaction.

what happened here (the overflow bug) was just a bug where a miner create an invalid block that had to be purged/rejected because it was invalid.

I mean, it depends on your definition of "censoring a transaction". I agree that the value overflow bug wasn't censorship in the sense that most people think about it, but it was still a transaction which one individual broadcast, was accepted and mined, existed for 53 blocks, and then was reversed due to community consensus.

Now, as I said, this was a critical bug which would have rendered bitcoin obsolete had it not been fixed and reversed, so it's probably not what OP was talking about when he asked about censorship, and any time censorship or reversing a transaction has been proposed for other reasons it has been rejected.

Lightning Network is just a second layer built on top of main network and cannot function without base layer. It uses main network for final settlements and relies on bitcoin's security model meaning bitcoin network is still more important than payment networks such as Lightning Network. Payments or micropayments occuring within Lightning network are peer-to-peer, there is no clearing house operating between buyers and sellers. Your transactions cannot be censored by other nodes because of onion routing system. Nodes simply don't know who is the real payer and who is real payee. Essentially, the main benefit of Lightning Network is that it provides censorship resistance of the same level as main network does.

This philosophy recommends use of censorship resistant peer-to-peer protocols built on top of main censorship resistant peer-to-peer protocol.

I was talking about censorship of a transaction in Bitcoin. Because you see, which I know you already know, censorship-resistance is the effect of decentralization, then if there was censorship, why then is it decentralized for? It's failure.

It appears a valid transaction has never been censored systemically by the entire network.  Charlie Lee perhaps should have used a word other than censored.

My conclusion from this discussion is that my Bitcoin can always be spent via the Bitcoin protocol layer.  However, if I interact with a centralized institution they may not accept "tainted" Bitcoin.

This pretty much sums it up.

The only change I would make to this is your use of the word "accept". There is no way for centralized exchanges to stop you depositing tainted coins to a deposit address they have provided you with. In that way, there is no way for them not to "accept" your deposit. However, once you have made your deposit, if they do not like where your coins have come from they may do any number of things. Only the minority will return your coins to you with no further issues. The vast majority will freeze your account and demand that you complete KYC in order to have your coins returned. You can avoid this issue with centralized exchanges by simply not using them and using DEXs instead, which is also far better for your privacy.

 litecoin is just an ordinary crypto and i guess that it was also involved on illicit acts before but those acts were only minor that it didnt end up on the news or being talked about on the forum  .

 litecoin team have may not heard of that or they heard of that but they dont take that seriously so litecoin is still not censored  but bitcoin ? the coin was known for that use . why they dont make bitcoin transactions censored ? 

I don't think that exchanges would like to know where this Bitcoins coming from, and this is not important. Everything that made a transfer will not be filtered anymore just to know the origin for this unless it was questionable or suspicious transactions. But since it doesn't look like that, exchangers will allow it until it confirmed by the miners.

Litecoin didn't make this thing to happen, Bitcoin transaction is traceable and that could be enough, ain't that we need to clarify and must know where it comes.

Shower thought, if enough Bitcoins are held in 3rd-party custodians' wallets, will it be less censorship-resistant, and therefore considered not fulfilling its purpose?

I don't think so.

Those bitcoins (the ones being held by third parties) are never censorship resistant from the user's point of view, since the third party holding the coins can choose to refuse to sign any transaction they want (not to mention simply make off with your bitcoin at any time). Bitcoin itself as an entity is no less censorship resistant, as the owner of the coins in the third party wallet (which is the third party) can still broadcast any valid transaction they like and the network will broadcast and mine it.

If users choose to give up their censorship resistance, their privacy, their security, and all the other benefits bitcoin brings by giving their bitcoin to someone else to have ownership of, then that's their decision and their loss. But it doesn't change the bitcoin protocol, and the person or entity they give their bitcoin to still has the same censorship resistance, privacy, security, etc. as any other user.