Bitcoin Forum

https://twitter.com/0xB10C/status/1390194321127772165

https://mempool.space/block/000000000000000000003f8cb66fe1ecfb38754abc9c4d4a62b71de45fef8777

What does this even mean ?  This mining pool will only include transactions from addresses that are not blacklisted by OFAC. If more pools start doing this in the future isn't this a big problem if fungibility is not improved  ? 

I am interested in the subject. I would say that there will always be pools that include address transactions that are blacklisted, but let's see if someone with more technical knowledge can enlighten us. There are also exchanges that only accept transactions from these addresses and so far it has not been the end of the world for blacklisted addresses.

Perhaps it would be better to move this thread to the Development and Technical Discussion board.

Yeah, this is concerning. While this pool cannot censor transactions at present since other pools will just pick up these transactions, effectively only delaying them by a block or two, it sets a very bad precedent. Should 51% of the hash rate decide to comply with these OFAC regulations, then bitcoin is essentially dead since it can now be censored by the government. If the government decide you belong on their "suspicious person" list, then the 51% of the hashrate which agrees with them could simply refuse to accept any block containing your transaction.

We need other mining pools to speak out strongly against this and implement Stratum V2. We need more people to trade peer to peer, mix, coinjoin, and otherwise use privacy enhancing techniques to render their chain analysis useless. We need more privacy built in to bitcoin at a protocol level.

It is a known limitation with Bitcoin, miners having the say in the kinds of transaction to include would lead to potential problems like this.

OFAC is a US entity which likely has no jurisdiction elsewhere so that isn't really a problem. I'm almost certain that the Chinese pools won't bow down to pressure from US or any other countries. If there comes a point where a good proportion of the pools implement such censorship, those kinds of transaction gets more expensive but miners can still mine them. If it gets included in the block, should the other pools re-org the chain and effectively execute a 51% attack against Bitcoin?

While something like this is dangerous, mining pools do not necessarily have to be regulated by any government. International policies won't be effective as well, if history indicates anything.

Imagine a lot of pools following the OFAC blacklist. Bitcoin would be in shambles since this in itself is an effective form of censorship, and would effectively reduce a lot of transactions in the network since a lot of coins, by now, have been tainted one way or another. Then again, there would be a lot of missed opportunities for miners in the long run if they are to follow the blacklist. That's a lot of fees going into the void and I'm sure that there will still be some miners that would ignore such regulations and/or blacklists and just go straight for profits.

That doesn't matter if they manage to get 51% of the hashrate though.

When it comes to personal freedoms and liberty, it's obvious that we've been the bad guys here for a long time (Land of the Free my ass), but I would never have expected us to be relying on China for what little freedoms we do have.

Who knows, but I wouldn't put it past them to try. If they refuse to mine a transaction which the government tells them not to, then why are they happy building on top of such transactions and giving them more confirmations?

Is that a Bitcoin mining pool?
Well, I think the network could come together and penalize mining pools that are not following protocol/rules if this becomes a problem.
I believe Blacklisting transactions should be done without censoring them. And the reason for the blacklisting should be clearly stated with evidence. Wallets/users can then choose to reject such blacklisted coins depending on the reason given or evidence provided. I believe those with serious reasons will be rejected by many users and the blacklisted coins would end up reducing in price/value.


Edit:  Such blacklisting/exclusion  (coins rejected from getting added to the Blockchain) could be allowed on the condition that the OFAC(& similar orgs) is a transparent and public organization where anyone can participate . This is Bitcoin, a Public Network... It should be run publicly and transparently.

Surely all this will do is the lengthen the confirmation time for some transactions. Are miners going to risk losing their block reward by refusing to build on blocks with a black transaction? Will they be prepared to spend the time to check on the last couple of blocks on the chain before they add their own?

Okay I do think we are overreacting. Let me provide a simple article :-
https://www.google.com/amp/s/www.coindesk.com/us-treasury-department-blacklists-20-bitcoin-addresses-tied-to-alleged-north-korean-hackers%3famp=1 (https://www.google.com/amp/s/www.coindesk.com/us-treasury-department-blacklists-20-bitcoin-addresses-tied-to-alleged-north-korean-hackers%3famp=1)
Apparently they blacklisted the North Korean Hackers which is actually a + point for us , since at the end of the day making this network more safer is also a priority. I do not think they will blindly black list a lot of people for sure. They are doing it slowly and meticulously.
1. If a person did not do anything wrong I do not think that they should be even worried about these regulations.
2. This is something that was going to happen sooner or later, it's also an important part of Bitcoins getting integrated in the economy.
Government will for sure do things like this since they are protecting Bitcoins under the law.
Despite this there will always be miners willing to take the transaction to completion. Ofc the Government will start controlling that too. Giving some sort of certificate to miners. Are we moving way closer to Centralization than we realize ? Who knows..

Provided these pools only have a minority of the hash power, then yes. If they gain a majority, then it becomes a significant problem.

That's not what they are proposing at the moment, but rather simply refusing to mine these "tainted" transactions. If they refused to build on a block with a "tainted" transaction, then they couldn't mine at all unless they forked bitcoin.

Blacklisting an address from compliant exchanges is absolutely not the same as blacklisting addresses from even being able to make transactions. Centralized exchanges are private business and can refuse to serve anyone they please. Preventing certain addresses from even making transactions is an attack against the very fundamentals of bitcoin.

Then you have had zero experience of the US government. They will blindly blacklist anyone and everyone they like. They are very much "Shoot first, maybe ask questions later, maybe not, but even if we do, we'll probably just ignore the answers".

Absolutely incorrect. The US government spy on millions of people who have done nothing wrong. They arrest people who have done nothing wrong. They kill people who have done nothing wrong. Why would you think they wouldn't also censor people who have done nothing wrong? And even if you think that your addresses won't be affected (although you can never be sure and could easily get caught up in this anyway), this is an attack against the very nature of bitcoin. It should concern all of us.

No. Just no. I don't want the government regulating bitcoin, thank you very much. If I wanted money which can be frozen or seized with no evidence and leave me with no recourse, I'll just use fiat.

Blacklisting addresses does absolutely nothing to make the network more safer.


I wouldn't be so sure about that. There are hundreds of people in the U.S. who are not allowed to fly for political reasons.


https://media.tenor.com/images/a507626d1df6245c51cb2387df263c51/tenor.gif

If mining will get regulated in the future, it's likely that miners would only be allowed to join these compliant pools, so if 51% of hashpower will belong to them, it would be possible to establish censorship. But it seems like even now the regulators are ignorant of this and don't consider such option. Hopefully, by the time they will realize it, we'll already have better privacy on a protocol level, so such things will become useless.

The freedom offered by Bitcoin has a price, but I think that such a model may be accepted by governments in an attempt to make Bitcoin more central if the number of mempools that follows international laws increases.
Generally speaking, if you do not like what happened, buy mining equipment. The more decentralized mining pools, the more decentralized the network will be.
Since they do not own 99% of the network, if the person continues to broadcast the transaction, it will end up in one of the blocks and the others will be forced to include it.


I think the reason this MARA Pool is doing this is to attract more attention to it.

The question that I do not see answered is how far back they go in checking for blacklisted addresses.
Just the last transaction or 2 or 3 or 5 or 10 TXs back.

Going back too far is just going to cause problems and I can see some of the other mining pools forming a group that just ignores all blocks from them and then takes their chances that another friendly pool builds on top of their chain.

Not to be an ass about it but if Antpool, Poolin and F2 all get together and say fuck MARA I really don't think the rest of the world would give them any grief. Just because of what they are doing.

If they said lets do it to slush or btc.com I could see people freaking out about it.

Hell, if MARA wants to be 100% safe all they have to do it just mine empty blocks, no risk of bad coins ever....

-Dave

Antpool, Poolin and F2pool will bow down to another Chinese copycat of OFAC.

I have never been so grateful that US and China are rivals and hope they hate each other in the future. Which means China will take US' blacklists as sh*t and vice versa.

A mining pool that censors transactions is going to shoot itself in the foot. Miners will never connect to such a pool when there are other pools that aren't so "malicious" and aren't attacking bitcoin.
This will always be true since if a pool turns malicious new ones would be created to absorb the migrating mining power.
If you want to see "shooting in the foot" just look at their stock price (Marathon Digital Holdings) that has been dumping over the past month and got dumped about 10% after they mined this block.

Bump.

I've seen something interesting in twitter about this:

https://twitter.com/DocumentingBTC/status/1390423695009669125

https://i.postimg.cc/0NzGthrX/documenting-btc.jpg (https://postimages.org/)

https://i.postimg.cc/gjWv2Js1/1.jpg (https://postimages.org/)

https://i.postimg.cc/x83LJ2F8/2.jpg (https://postimages.org/)

i heard the news about government controlling bitcoin transaction, that using blacklisted address

This is actually saying "thanks for supporting our reason" not "cause" which makes no sense. Someone used google translate to turn an English phrase to Farsi and pushed it there which is funny :D
I wonder if the Department of Treasury is going to look into their business or maybe we see a million dollar fine for sanction violations lol. It would be funnier if their business went under because of mining this block and a good lesson for other centralized entities in bitcoin world who bend the knee so easily.

Their stock dropped another $1.25 (3.8%) in the past 24 hours. Maybe bitcoiners should start shorting their stock on NASDAQ to teach them a lesson? Their volume is definitely low enough to be able to crash it from $31 to $0.1 easily in a day or two.

Nah, that's not good enough. If I have an address which has some completely clean coins on it, and also has some coins which some blockchain analysis firm have decided are "tainted", then the whole address is tainted as far as they are concerned. If you have a coinbase transaction and also coins linked to a terrorist group on the same address, then good luck trying to send the coinbase transaction to a centralized exchange like Coinbase without having your account frozen.

Don't see why financial regulators should apply any different criteria here. Marathon's block reward is now tainted and therefore they can't spend it without breaking their own ridiculous rules.

China would have a different set of addresses that they would want blocked.

All it would take is a few lost blocks and some publicity about the fact that because of what they do they are loosing money doing it to kill any more attempts (at least public attempts) at doing it.

Picking on kano.is and btc.com if they both started not mining OFAC transactions. But did not tell everyone about it. One of the smallest and one of the largest pools could probably do it for YEARS before someone ever noticed. Yeah, there might be some people scratching their heads as to why this transaction was mined and not that one. But 10 minutes or so later another pool that does not care would mine it and life goes on.

Telling everyone / bragging about it, that is what is going to get people against you.

-Dave

Heh, if I was still in Sudan I'd assemble a bunch of addresses and taint all their block rewards lol On a more serious note, random bitcoiners can't be fined for spending "illegal addresses" which means Marathon will be taking all the regulatory burnt and fines.

     I honestly thik that this will pose as a huge problem for us because with this the governments can monitor every transaction if this really gets adopted by most of the miners. Bitcoin will surely die with the full implementation of this since a lot would gkadly transfer their funds on the second best altcoin that isnt governed by the government with the use of these tyoe of miners. I just hope that miners would speak up about this and not accept it since it is very unfair for the people who transferred to this industry to escaoe the traditional system in the first place.

They don't have to publicly announce it and it is not that hard to figure out.
If a centralized business such as a mining pool is operating inside a certain jurisdiction that demands a license then you can simply look at the terms in that license and know what that business is doing.

Interesting topic. I never heard this side of the bitcoin ever. So clean block is more or less the controlled one and for example observed by the OFAC? And why would they do that and how would they do that in the first place. I mean when the pool is mining how do they even know that the transactions are done for the blacklisted addresses?

Also can't they just use the services like coin mixing to hid their stuff?


The only part that I was able to understand here was OFAC: The Office of Foreign Assets Control ("OFAC") For those who might be wondering what it is.  ;D

I got confused when I read the full form. When it says foreign assets, how are they defining bitcoin as foreign asset?
Isn't it is more or less Public Asset and they should not be interfering?

I doubt they will be able to obtain a proportion that high under their purview, but yeah never really know.

51% attacks would definitely have far more repercussions than simple censorship. Reorganizing and opting out blocks that they don't like probably won't sit well with most people, more so than censorship within their blocks. If they're smart, they would either choose another pool or just sell their ASICs right away.

Yes, censorship and yes.
Yes. If there ever comes a day where the entire network is under regulatory control (if I may add, IMO highly implausible), you can't mix your coins if it doesn't get confirmed in the first place.

The thing with this is if it will get 51% of the hash rate.  Most miners are not from US so their law and jurisdiction are automatically shut down unless the country with the most mining power will yield to the US authority which is highly unlikely.  It would be more threatening if China implements such a law wherein they force the Bitcoin mining company to implement the blacklisting since as of this day, China is the country with the most Bitcoin mining hashrate.

The government can already monitor every transaction and link them to real people via blockchain analysis. This is about censorship, not just surveillance.

If they can censor bitcoin, they can censor almost all altcoins too. At least we have Monero.

Sure, until the government decide that every coin which has been conjoined or mixed is deemed "tainted". If only everyone used these services by default, then there would be no transactions they could mine at all and this wouldn't be an issue. The more people who take their privacy seriously, the better it is for all of us.

I don't see how monero is immune to this attack? The censor pool can mine empty monero blocks.

Because they lose their incentive to do so. If an attacker can control 51% of the hash rate of bitcoin and only mine "approved" transactions, bitcoin still exists, is still traded on exchanges, still has value, and the attacker can still sell their block rewards. If an attacker can control 51% of Monero's hash rate, their options are to mine every transaction or none since they cannot differentiate between "approved" and "tainted". If they only mine empty blocks, then Monero dies and has zero value. Not to say it can't be done, but there would be no profit in doing so.

There are other ways Monero could be censored though, such as people having to submit their KYC details to a miner to be allowed to submit their transactions, but no coin is safe from a big enough attacker.

Mara pool will have about 10EH (https://www.coindesk.com/marathon-patent-agrees-to-buy-70k-asic-miners-from-bitmain-for-170m) by the end of the year, and it's not public, it is owned by Marathon Digital Holdings who are obligated to follow the U.S rules especially since they have their stock in the market under NASDAQ, they wouldn't want to risk anything that would get the U.S government to go after them, while they did not have to announce the censorship publicly, my guess is that they are sending a message to everyone who wants to get involved in crypto within the U.S.

We all know that more 'serious' regulations will come someday, Marathon just wants to be ahead of the game, and want to operate freely and hopefully attract more U.S investors/clients who want to be on the safe side of the crypto world,  Mara did some arse-licking for the U.S government, a very risky move IMO since their survival depends greatly on the price of bitcoin, the only reason they raised 250M in their Direct Sale was the fact that investors were bullish on Bitmain and this was their legal, easy and reuglated way to bet on the price of bitcoin, the slightest shake in bitcoin and Mara will be in deep shit.

It would be great to see what Bitmain has to say about this since they are their main and only supplier.

So what does OFAC really do? They publish a list of bitcoin addresses ... Then, if your address is there, just stop using it. Use another address.

How often does OFAC update their list?

You really only get on that list if you reuse addresses. If you never reuse addresses or publicly give them out to everyone, then it will never get on that list.

This list really targets perhaps those addresses posted on forums or photos or something, where they can easily link it to someone's identity, such as public donation addresses.

If one has the ability to use bitcoin, then they can step up and upgrade and have the ability to set up some website that gives new addresses every time. Of course, blockchain analysis companies may still track them, but this makes it more difficult.

Don't publish a master public key ... or do? Imagine if some known entity decides to publish a massive list of bitcoin addresses known all of them would get included in such a black list.

Like how big is the current OFAC list right now? Here, pastebin, 1 million addresses ... can sweep any of them, but if you really want to donate, send a private message and we'll give you your own donation address to send to.

And do what with the coins already on that address? Move them to another address? Either your transaction is censored and your coins never move, or if you do squeeze it through then your new address is simply added to their blacklist. What if you have 1 BTC on an address, and someone dust attacks you with coins which have come from darknet markets? If your address is blacklisted, then your coins are frozen despite you doing nothing wrong.

Given that we know that the FBI, CIA, IRS, DEA, CFTC, ICE, and others all employ the use of various blockchain analysis companies, I would wager a large amount of bitcoin that OFAC are doing the same.

Yes, move them. It's still going to move right now. Even if OFAC controls a large percentage of the mining hashpower and tries to get your tx blocked, it will eventually move.

It will take some time for the new address to get blacklisted. During that time, you can move it again a few more hops, then probably send it to some exchange if needed, or traded, or mixed, or coinjoined, or gambled or whatever. Then you move it again.

Then again, if you are already a target, you have other problems to deal with but on technical level, yeah, I don't see how they can keep up, unless they have a system updated in real time and require their OFAC compliant miners to keep updated every 10 minutes. I think it will be a headache for them, all of them, whoever they are.

They are trying to force permissions on a permissionless system. They can't even keep up with just plain physical cold cash.

We also have taproot in the future. Good luck to them analyzer companies.

If the amount of bitcoin or value is small enough, depending on the entity involved, they can probably ignore it, like if it's just dust. For at least 1 BTC, I'd be willing to pay a higher than normal tx fee (but not that much higher, can just monitor mempools now, looks like currently 3 sats will get through today.)

Well, sure. If these OFAC miners never get more than 51% of the hashrate, then they can never actually censor bitcoin. But they might, and if they do, then it is a serious issue.

I'm not sure it will. Blockchain analysis companies are watching the blockchain constantly. It is trivially easy to set up a command that says if a tainted address sends some coins, then the new address is also tainted.

Taproot doesn't instantly solve this issue. A taproot transaction still clearly shows the inputs and outputs. If your address is blacklisted and you move coins to another address, taproot or no taproot and the receiving address can also be blacklisted.

I think that for now it's a potentially dangerous thing that we should keep an eye on, but it's also something that probably won't get particularly popular in the mining community. I don't fully trust agencies like OFAC because of course their decisions can be politically motivated and addresses can get on that list for dubious reasons. But I agree with those who say that miners in China aren't likely to be interested in complying with whatever the US authorities claim to be illegal, so the issue seems minor for now. That being said, China could totally introduce a similar thing and enforce it upon mining farms, so the risks can get very real very fast.

This is really a serious concern. Considering bitcoin difficulty to increase every year it will be very difficult for an individual miner to mine bitcoin transactions on his own.
Thus only big pools will be doing the mining job and this will become a big problem if more number of pools lies in the same jurisdiction.
The government will be easily able to regulate those mining companies since they will have obey the orders from their own governments.
Even if mining pools are from different countries, few mining pools can join hands and decline any transactions they to want to be included in the blocks.

We will have to find a decentralized way to get the mining process done. Is there any decentralized mining service already?
If so individual miners will have to join the decentralized mining services to keep the bitcoin network actually decentralized otherwise things will only lead to more centralization in future considering governments have already started to regulate cryptocurrencies.

No single mining entity or pool is going to go above 51% hash rate, simply because the participants of that pool will just switch elsewhere, not unless the pool also controls the miners themselves.

In theory, a single entity can just have a bunch of different "accounts" or "pools", and one pool might have 25% and another has 26%, they will just be under different names, but that kind of pool won't care about OFAC.

Before it becomes an issue, you'll see the other miners go ahead and do something and most likely most won't care about MARA as they can just build on top of whatever "clean" block they mine.

Like someone else said, just mine an empty block, it will be clean. But the miner won't get an tx fees from the clean block, just the base reward, which may be enough for now, but not in the distant future when plenty of tx will reward more than the base reward.

Pools are actually "centralized" because ... that's how pools work.. There are some "decentralized" pools I think, something p2p pool or what. I've not kept updated. The whole reason for pools to exist is because no single miner has enough hashpower to consistently mine blocks. One would need a relatively large percentage to "solo mine".

In this case, I believe MARA is their own miner, so maybe it can be an issue if they get too big. However, I think they won't get very far. Who knows ... they begin accepting other miners to the pool starting June, so we'll see what happens then.