Bitcoin Forum

This is very concerning news.

Is there a chance that regulators can force transaction filtering on all of the mining pools to censor unwanted transactions? The skeptical me thinks that this new mining pool is secretly created by the government to encourage other mining pools to do something similar.



All users of Blockseer’s pool are required to pass KYC (Know Your Customer) protocols, and blocks posted to the Bitcoin blockchain by Blockseer’s pool will only contain filtered transactions using Blockseer and Walletscore’s labeling data, along with verified sources such as the United States OFAC blacklist for crypto. Blockseer’s data analytics platform has been used by various law enforcement agencies over the past six years, providing Blockseer’s new pool with credible data relating to fraud, theft, money laundering and various other nefarious dealings which will be filtered out of any block that this pool will post to the Bitcoin blockchain.. Blockseer has a US patent pending novel approach to transaction filtering which examines transactions to and from bitcoin wallets which will exclude high risk wallets from being included in Blockseer’s posted blocks.

Source https://stockhouse.com/news/press-releases/2020/10/29/dmg-s-subsidiary-blockseer-launches-bitcoin-mining-pool-focused-on-good

I mean if you were trying to force other people to do something why would you patent it?

Although they could also be finding a way to become more profitible by selling on their users' IDs and other personal information, doing chain analytics or trying to track people that are against decentralisation (and they could be doing that one indirectly if there security isn't that good then a bunch of other people might be able to gain access to know who their users are that won't confirm their transactions because it's painted gray...

"on all"? no.
any mining pool that starts censoring transactions will abandoned be immediately by the miners that connect to it. the more serious the threats gets the more new mining pools in different places of the world will start for miners to migrate to. the more serious it gets can also lead to a mining protocol change that bricks all their efforts.

i can't even find this pool among the list of bitcoin mining pools!
the smallest listed here (https://btc.com/stats/pool) has 0.22% of the total hashrate.

No rational player will ever join a mining pool that deliberately tends to decrease the revenue of the miners. I mean, bitcoin mining implies certain economic incentives for miners such as block subsidies and transaction fees. If some of the pools start to require KYC from miners, miners can always join other pools that don't. KYCed pools will therefore have fewer miners, less hash power, and less revenue. Moreover, the senders of "suspicious" transactions can always pay more fees to propagate transactions through non-KYC mining pools and thus increase the profit of those. Non-KYC mining pools will always be more profitable, more attractive, faster, and freer.

That's obvious to see  many miners will soon leave it and this mining pool will be abandoned, because forcing people to do KYC is against bitcoin spirit. Bitcoin was made to be decentralized not being controlled by any organization or government with anonymous transactions and requiring to pass KYC and forcing people to do that is completely against it. This will definitely decrease the miners using this mining pool over time.

The censorship aspect has been theorized a long time ago, if you control 51% of mining power, you can refuse to include certain transactions, and then just fork if other miners do include them, forcing them to lose all the block rewards. There is some risk that in the future governments will try to regulate/take over Bitcoin, by forcing miners to do this attack.


They can target not only pools but miners themselves. So miners will have to choose between obeying the regulations by enforcing a blacklist or moving to a different country, which might be not possible. And if Bitcoin market will negatively react to this, some miners will just quit.

They can't do about it if regulators insist because mining pool operator is a business and needs permit to operate. They are force to apply KYC in able to survive. This is the main reason why Satoshi is anonymous, to make bitcoin completely decentralized because once he was caught, Bitcoin might be controlled by implementing a law that will control on it.

This kind of news is very scary because it might destroy the mining industry of bitcoin since many miners on crypto wants a privacy. This might happened on different mining pool too that located on same country.

I also think this is a conspiracy theories about the government's desire to dominate information. mining has never needed KYC, only wallets work with wallets. Remember, people can fake KYC very easily, and it's very difficult to find out true identities.
I think this is just a new game that the sharks create so they can make money selling users' information. So be careful when you provide KYC to any organization.

If the governments won't get into mining, I doubt this pool would turn out successful. I don't think any Bitcoin miner in his/her right mind would join such a pool? Every miner who truly knows and supports Bitcoin won't support such extremely ludicrous idea.


As pointed out by Eric Voskuil more than a year ago:^[1]


We'll see how desperate the government regulators would turn out in the next years.

[1] https://github.com/libbitcoin/libbitcoin-system/wiki/Other-Means-Principle

GOOD! That should emphasize the community's attention to the development of Stratum V2, and that mining pools should start implementing it, once they're ready.

https://bitcoinmagazine.com/articles/with-stratum-v2-braiins-plans-big-overhaul-in-pooled-bitcoin-mining

I believe it should encourage the use of LN too. For more on-chain privacy to mitigate that kind of censorship.

I personally don't think so. If a certain mining pool imposes KYC, then what's stopping miners from hopping to a different pool that doesn't impose KYC? Seems simple enough to me. Or am I missing something here?

And this just opens up a new market for miners that couldn't care less on who they are dealing with and might even set up a premium for the fees if a multitude of mining pools start taking this route. Ultimately this is just dividing the network into two distinct groups, but I'm pretty sure most miners will just continue doing what they're doing and would not implement this preposterous idea of taking over privacy just because a government-led pool is doing it.

It's what government does, censorship is their solution.
Obviously any miner can move to another pool to avoid it but if the government will really see mining as a business and will have to impose law or cease miners all because he had not registered his business, it will be the end. Kind of scary for miners. Maybe miners will be forced to do solo in the hiding.

Well, any platform that wishes to do such thing has to be well decentralized, transparent, censorship resistant, immutable, permissionless/trustless, privacy-friendly, subjected to Bitcoin rules/principles, etc.  Foreign centralized body/platform that lacks this features would only end up violating the ideals/rules and leave Bitcoin vulnerable.
By the way, I think the Bitcoin network could penalize any pool that does that or breaks the censorship resistant rule. Better to have seperate community tag/blacklist coins transparently and the coins can be automatically rejected by miners based on the seriousness/intensity of the crime which could be represented in colours... with the nature of the crime clearly attached to the coin/transaction

I agree - a big yawn here as folks will simply not use said pool. Unless a government is going to force ISP's to filter (whitelist/blacklist) traffic to/from pool nodes there is nothing that could be done to enforce KYC.

The only possible 'good' side to what Blockseer is trying to do is that because a fair amount of Tx validation is involved it could finally eliminate the idiotic practice of mining empty blocks that some pools are so fond of.

yes, in fact, this will actually encourage many fishermen to flock to switching to kumplan which does not enforce KYC. because data and IDs used under the pretext of crime are rampant everywhere. in fact, it is enforced by the government just to avoid data theft. It's really annoying doing KYC, and I'm the one avoiding it a lot :)

Not that serious. There's a lot of mining pool all over the world and those who restrict miners will probably changed into a mining pool that has a decent service so that KYC probably won't be a problem because those who mining pool who comply will lose.

It's not like US is the whole world anyway.


Nope. Pretty stupid if they think that this will work.

How about if the government enacts a law or an order that forces the large miners to use a pool that is compliant under government standards or the licenses of the miners will be revoked?

first of all bitcoin, apart from a short time at the beginning, has never had "black market usage" as its main use case and it will not change in the future either. fiat still dominates all illegal activities with anon coins such as monero trying to take the lead. meanwhile bitcoin is used for everything else.

secondly 51% attack is irrelevant here because with this attack you can only scam people who receive money from you by double spending the money you paid them, otherwise you can not force KYC, censor transactions, etc. which is the discussion here.

That's wrong. Personally, I don't like kyc. I want my online activities to be incognito. And I'm sure there are users in that mining pool who distastes kyc too. Bitcoin supports anonymity so where are they getting their idea from? I'm sure the stats in the back-end would show the number of people they'll lose.

It is important to note that, more often than not, different governments pursue different ends. These goals may or may not contradict the ones of other governments. Never in history, there has been an occasion when all governments have conspired to fight something.

No matter how severe the threat is or advanced the technology is, there will always be some governments that make use of it to outcompete others. Governments that allow bitcoin mining and the bitcoin economy to develop will soon outcompete those who do not.

But imagine the KYC pool offering *negative* pool fee rates. I.e.they will subsidize any miner in their pool.
Then all rational miners, at least those that particularly value their anonymity, will flock to that pool, censorship be damned.

So they may well acquire a majority of hashrate, with an ability to orphan any block from other pools that included a censored transaction. They will just have to pay dearly for this ability...

I don't have the data to back this up, but I'm pretty sure it's because of government regulations. No sane business would require AML/KYC just because they want to(especially in the cryptocurrency industry), because obviously AML/KYC would cause the business to lose customers. It's the same reason people have shat on ShapeShift in the past even though they were just forced require AML/KYC.

I remember similar discussions when exchanges around the globe started rolling out KYC/AML procedures. Most of the people here said, yeah no problem, we will keep on buying on localbitcoins and keep using no-kyc exchanges. Then we ended up having most of the trades/volumes on KYC exchanges.
All this to say that the menace is real and I agree with what Fluffypony wrote on Twitter: "It’s only a matter of time till most Bitcoin mining pools are forced to do this transaction filtering. Might be time to dust off p2pool + focus on Stratum v2 support for pools. Also worth noting that adding more privacy to Bitcoin would prevent this."
It's never too late, until it is.

any "rational miner" knows that something this malicious has the potential to crash the bitcoin market which means the block rewards they receive + any additional money they may receive is going to be worth a lot less at a lower bitcoin price.
not to mention that as i said before such malicious acts will force the bitcoin network to switch to another algorithm specially if a 51% attack became possible. that means all their investment would worth 0.

you see, the incentive will always force miners to remain honest and makes it so that there are always more honest miners (more hashrate) than dishonest ones.

Hmm,,, so next time if ever anyone wants to get into the mining business then they are going to have to identify themselves. I guess it does not really matter in the end since they will only be joining a pool and not actually doing their own nodes. Or can you still make your own validating node and join a pool?

That is not good for miners. It is obviously want to break the anonymity imposed by cryptocurrency. I am pretty sure that miners will no longer join to their pool since there are also mining pool that neglects kyc and censorship. Mining business is what I want to join someday, I just save my money in buying rigs but if it this will happen, I am no longer interested to it.

I believe OP is right. Although it's not "immediately concerning", it's still an attack vector against the network, because it's open to the possbility that KYC-pools could get more than 50% of the hashing power.

In other words, what would happen if the majority of miners would be bribed by a dishonest pool to undermine the network? In this case, miners will lose their potential income and get nothing in return. A malicious mining pool, by its nature, is a hostile entity; people who will be joining such a pool are either also malicious actors or maybe don't care about the future of the network.

It's not like this specific mining pool is the only pool that has a theoretical chance of reaching 50%. Heck, this Blockseer thing is apparently just a new mining pool that's not even named on Coin.Dance as it's most likely a really really small minority pool, and I see it staying that way as it's quite safe to assume that miners wouldn't want to unnecessarily submit KYC.

Similar to my speculation, your argument is also only a speculation. I respect all the replies that have disagreed with me, however, as @exstaise would say, let us agree to disagree. But let us leave this an open argument because the situation might come and become more serious than our small arguments.

Interesting discussion here and it seems to me that what BlockSeer is trying to achieve is to push the boundaries as far as they possibly can. In other words, they're stretching their comfort zone to understand how far they can go with this KYC/censored mining pool. Whatever you think of it this is already an attack on the network. Some of you argued that due to the force of game theory and economic incentives miners will stay honest and avoid such pools which would be anti-economic. This doesn't eliminate the fact that these pools could be easily subsidized by agencies, governments for doing this work. There's more than meets the eye here.

Shower thought. If miners are incentivized/coerced, and/or threatened to start mining for KYC-pools, and get more than 50% of the hashing power, the KYC-pools-cartel would have the power to CENSOR non-KYC-pool blocks. It would be a consensus rule.

Then Bitcoin has truly failed.

The skeptical me is thinking that this might be another attempt by the government to threaten bitcoin by pressuring those who are behind in processing the transactions.

Wait for news about the government taking down a mining pool's domain. That would be the first sign.

It is my skeptical to think types of miners will join he censored mining pool and do KYC?

If they are investors of that pool by investment ticket (PONZI) it can be understandable and they accept all risks to take the profit that they hope they will receive.
If they are professional miners, they don't join the ugly pool.
Small mining pool with not enough hashrate will not bring block rewards to miner and less rewards for their works than big mining pools.

Are you that sure people care? If exchanges thrive using KYC, why would mining pools not do so if the gov wants KYC with pools as well?

Well, you're missing the fact that a lot of people actually prefer to be law-abiding rather than rebel and risk something, and the gov including all mining pools in the KYC bucket is just a very small step away. Miners make money, and if US does that, it'd get to the point where this activity would be a risk if you don't provide your identity.

The question is should we care about the people who don't care about bitcoin, who don't know how bitcoin works, who failed to comprehend its significance, who sold privacy for safety, who are seeking only for profits and nothing else?


You are missing the fact that there is a big difference between being a law-abiding person and being a blind follower of everything governments coerce you to do. It goes without saying that governments will never allow you to have your own money, to freely transact with anyone in the world, to escape surveillance, to claim your privacy rights, to use open-source software and encryption. You are a rebel if you want all these things, are you not? Or you are a rational law-abiding person who knows his rights, who wants to defend them, who don't want to be enslaved by all these immoral procedures and inhumane laws? Personally, I see no difference between a rebel and a rational law-abiding person. Both abide by only those laws which don't contradict human nature.

Concerning mining in the US, it is by no means right to demand performing KYC procedures from those who pay for electricity to solve math problems. I thought the US was a free country... Okay. How can we resist governments and prove that bitcoin is actually censorship-resistant? You claim that US pools are seeking only for profits, and their tendency to being compliant will help them to achieve their goal. The only thing we can do is to show that the model of compliant pools and miners doesn't work: it is unprofitable and irrelevant. As long as such pools have less than 51% hash rate, other miners, who are still honest, should decline their blocks.

Does anyone know the IP address of the node(s) they use? It would be nice to add this to the default banlist in bitcoin core.

https://twitter.com/dmgblockchain/status/1327037069340774400

They are indeed insignificant compared to all the other pools but there is a little tiny difference, they own the gear they have.
Blockseer is DMG solutions, the ones that partnered (and failed) to create that huge mining farm in texas with Bitmain but they did keep about 15k miners and purchased two batches of newer 1000 pieces, possible s17 lately.

Anyhow, till now there is no real danger, unless some morons decide to go Venezuela's way, KYC the miners, and forcing them to mine at a specified pool. Then things might get complicated, but I don't see anything like this happening, at least not in the US or Canada.


There is one little problem.
Even if compliment pools have less than that, they will still be mining blocks, if they refuse transactions that are not "insert stupid term here" we will have a  dramatic decrease in the capacity of the network, and this will lead to a lot of bigger problems.
Let's say that Coinbase will be whitelisted, they will take advantage of this since a few mining pools won't have enough law-abiding transaction to fill their blocks, the fee Coinbases changes will be lower while the competition will have to fight for space in the other blocks, rising fees and making the customers unhappy, at which point more will migrate to Coinbase...and you can picture the outcome.

But it's just a scenario, I give it as many chances of happening as CSW has to guess Satoshi's keys.

Great scenario, but let us stop here. The compliant pools won't be mining any blocks; they will be wasting a lot of energy and money for nothing. Honest miners, which in our case means "non-compliant" miners, will know that the previous block was mined by a "compliant" pool and they may well decide to ignore that block and instead build a chain upon a "non-compliant, censorship-resistant block." How many blocks should they decline and ignore to drive out dishonest miners?

That's the most practical simplest solution! Hahaha.

All full nodes BLOCK Blockseer for ALL transactions. Let bad-actors bow to the network, and work with it.

You realize you're just opening another can of worms with this, right?
So from miners that do not accept unknown transactions we're creating a cartel that will censor miners that censor..
What will be the obvious outcome? Once you have a cartel emerging that denies blocks from the other miners you will have also ignore blocks from the competition, accusing them of using uranium enriched mining gear or some other "shady" stuff and killing their business.

Things that have been done for the greater good have managed a lot of times to become the greatest pain in the ass two steps further down the road..

I don't understand the logic here, are they going to entice miners to use the pool, by rewarding them somehow (maybe include in the blocks transactions with crazy fees ?).

Does this means that cryptocurrency will going to undergo modification like being mixed up with centralization? Well, there is a good result when two system will be mixed up. There is no really effective system if it is an absolute centralization or absolute decentralization. But if this two system will mixed up then definitely we can see a good and effective system not only to cryptocurrency but I guess to other platform too.

I prefer to call it differently: resistance to censorship and self-defense against an act of aggression. After all, bitcoin was built on libertarian principles, so why not follow them when it comes to aggressors against bitcoin's network? Bitcoin is your private property, and some malicious actors want to restrain you from interacting with your money; they want to prevent you from transacting freely. They are aggressors against honest miners and all users, so miners/users should have a right to fight back, to defend their rights and property.

Why do you think evil miners haven't still conspired, created a cartel and started to drive out other miners?

It's also against the Bitcoin ethos, and its social contract to fight censorship. Plus what user would be stupid enough to accept this obviously hostile act.

But I'm only a pleb. gmax? Your opinion?

Playing the devil's advocate here, based on the same libertarian principles they are allowed to deny service to you, isn't it?
This is the kind of bias that I find funny sometimes when it comes to our own interests blacklisting services is good, censorship is good, blocking transactions to certain addresses (like coinbase did with those Twitter scams ) is good, blocking satoshidice transactions as they spammed the network is good, but god forbid if the same would apply to something that hits close home.  ;D

This is the problem with the free system, everyone is free to do anything, of course, you are also free to take action against someone but as pessimistic as I am about this just imagine them filling lawsuits left and right against other pools and winning them, a can of worms will sound like a delicacy compared to what will happen.


Oh, but they have and they have already managed to do so with a lot of them.

The whole drama of mining with asicboost, f2pool mining empty blocks, pools not confirming transactions with lower fees even if the block was half empty, the whole saga of bitmain mining with their newer gear in their own pols and when finally selling to the public coming with better gear gaming one whole batch of gear obsolete and never able to ROI, and so many more and so many more to come.
And...nobody did anything, because, there is not much the users can do, and no matter how bad this sounds is the reality.


Repeat after me:
One million bitcoins, or lets call them "be your own bank coins" held by coinbase.
And from there you can imagine the services who will be delighted by such a whitelist.
Should I mention the binance vs wasabi event?  ;D

these rules are great for preventing fraud, theft and money laundering. if a crime occurs, it will be filtered and through transaction filtering, the bitcoin wallet used by criminals will be blocked, I think with this regulation the crime in the crypto world will decrease.

As far as I'm concerned, I have always been consistent. Since my introduction to cryptocurrencies, I have always been an outspoken advocate for the "censorship-resistant side" of bitcoin. It is arguably the most crucial advantage of bitcoin. If bitcoin were to be deprived of that ability to resist censorship, I would immediately sell it for good and never regret it. You unwittingly made me search for my old post regarding scammers and Coinbase:


As you can see, I don't respect censorship of any kind, even if its goal is to prevent people from losing their money.


Another shower thought about Blockseer pool. According to libertarian doctrine, if "compliant" pools pay for electricity, do some work, and prove that the work was done (in case of bitcoin mining), in other words, "mix their labor with soil", they have every right to include whatever transactions they wish, they have a right to censor them, to ignore them. They are rightful owners of the block; they first managed to find it, they made an effort to create it.

Why don't they do all these things silently? Why would they announce that will filter transactions in bitcoin?

Don't take it personally, it was rather directed at the entire user mass not pointing exactly at your person, and that quote from the Coinbase discussion (in which I also have a post) is quite proof that a lot of people like this censoring if it helps them. The same is going to be applied here, which brings us to your question:


Because they have a product, and when you have a product to sell you might want to try to make some real money from it by marketing it to the right persons. You know people pay some extra % to get freshly minted coins with no history, don't you think some investors and even some individual citizens would like to have another letter of guarantee when it comes to their coins that those have been filtered by a system and that what they have received is clean money not involved in anything "bad"?
You're going to be amazed by how many would show interest in such a thing  ;)

Bottom line, I'm not a fan of fighting fire with fire when you are not sure if you're going to win the battle, rather than trying to block them for contributing to the chain which will turn into a whole mess as you not only need the whole other front to be united but also to identify their blocks every single time, which is worse than a whack a mole game. Rather than trying to censor them, it's way better to find a way that their censorship would be rendered useless. 

I am somewhat of the same opinion that they have chosen their own, a relatively new, and, to a certain extent effective approach, to advertising their product. Their motives are understandable and unquestionable: they are trying to offer unique services, they want to take market share, they want to feed their children and pay their bills. Their motives are no different from those of other people. However, the methods they employed to achieve their goal are questionable.