Bitcoin Forum

I understanding why miners not filtering transactions for any reason is a good idea as it would diminish the overall fungiblity of Bitcoin.

However, why not have an app that will tell you how dirty the coins are for a particular address that is the source of your potential exchange. You can decide if the coins are too dirty for your liking.

Example, You want to sell a car, someone offers bitcoin. You ask for his address to confirm funds. He provides an address that is a couple steps removed from the Bitstamp heist and 80% of the value in the address is directly linked to the Bitstamp heist. You tell him no thanks.

How would this impact the fungible aspects of Bitcoin?? and it is certainly easy to do so why hasn't anyone done this yet!!

This has been discussed before after the bitstamp hack to mark the stolen coins. You might want to read it here
https://bitcointalk.org/index.php?topic=929318.0

Isn't this the whole point of colored coins?

Let us say you sell your car.
After that when you try to use your coins to buy something else, people say that the coins are too dirty for their liking. Wouldn't be a comfortable position, would it?

Fungibility has to be absolute.

Bitcoin is not created with such intentions, it would break most of its purpuse.
Anyways, it would be easily avoided by using service like bitcoinmixer..etc ?
Marking coins could also be missused and would confuse allready enough fussed bitcoin comunity.

cheers

It would also in a sense exclude coins from being used freely.

It would also in my opinion add to transaction confirmation times too, if it needs to do check to see if these coins was "Dirty" or not.

We need other alternatives to stop the nature of man to be dishonest, not bind down a technology, that should be fast and freely used. 

While people starts going away from Bitcoin to choose more anonymous coins, you come up with this idea :)

First, it's far from the purpose of Bitcoin.
Second, if somebody would want to hide this, would transfer everything to an exchange an buy altcoins before his address is blacklisted. Then the exchange will have to live with the dirty money, I guess?

Most cash have been involved with some kind of drity transactions at some point. Are they blacklisted or marked as dirty?
Do people refuse to use them? are they destroyed?
No people still accept them, I dont see why it would be any diffrent with bitcoin

Comparing with cash is interesting but not the same. You cannot in 1 second find out how your cash has ever been spent. However, with Bitcoin I can.

I am not saying you would transact any different with all the information about all the cash you came into contact with, but you might. For example, if you found out some of the cash being offered was stolen from your neighbor you might say no thanks.

The point is that this is just simply something that is so easy to do I am not sure why there is not more public interest in it. I would say that i would probably do it this early in the history of Bitcoin. I don't want to buy coins from someone on the street that just stole them from Bitstamp.

No Fungibility does not have to be absolute. I don't have to accept CASH if I don't want to. In real life my neighbor 10 doors down can't buy ANY services from his neighbors... Not from any of the lawn mowing, house cleaning families that offer them, why.... because he is a drug dealer and everyone knows it. Nobody wants his dirty money. But the cash system moves on just fine without him.

This is really a service I want. I want an app on my phone that will tell me that you aren't a crook when I buy my bitcoins from you.

Bitcoins are bitcoins.  With enough time, can't you prove that most coins are dirty or stem from a dirty address?  Just like cash that has trace amounts of drugs on it.  

This is how elitism is born...

Yes, almost all coins will be dirty over time. But I want to decide what that threshold is. Certainly, the capability is available right now to tell me that the coins are 100% dirty. I want to check so I don't enable evil doers directly. Maybe my threshold is 10% dirty. I get to decide.

You want to quantify something that cannot be measured.  You want to measure how dirty a coin is?  What makes a coin dirty?  This will vary from person to person. 

WHO determines what constitutes a dirty coin?  Laws vary country to country... What's right in one place may not be in another.

Finally, if the coins are in your possession, why are they dirty?  The past shouldn't be tied to the present use and application of your coins.

If you accept only coins that are not tainted in any way, then you will find that you can no longer accept any coins because all coins become tainted eventually.

It can be measured, if it is in the blockchain you can measure how much of your coins are indeed dirty and how many generations of transactions back it goes.

The point again is I just want an app to give me an measurement, as long as I understand the basis of the measurement then it is UP TO ME to accept the coins or not.

This is a personal decision that I want to be able to make. I do not care about the global blah blah blah. I am transacting business and I want to know that the coins I am about to purchase are not 1 generation away from a crime. Simple as that.

I realize that I will likely be using coins that have some degree of dirt embedded into them, again it is my choice how much dirt I am willing to take into my wallet.

Just curious, how do you think the social protocol would work before you do a transaction?   

"Excuse me, before I give you a bitcoin address to send your payment to, I would like to examine all the addresses in your wallet that the payment may be sent from?"

That is a good point. That is basically how it must work.

Bitcoin was created for the purpose of being a currency. Why do you want it to be a judiciary?

It's the police's job to follow the connections between transactions and arrest the person who wants to buy a car with stolen money... or does he? What if he is innocent but happened to receive a payment from other person (and this one was related to the crime)? Finding who's to blame can't be just programmed in a protocol.

isnt the purposes of bitcoin is to be a decentralized currency?
in fact you are saying that you will only accept coins that is untainted makes me wonder that it is the same as our cash money . which i believe we dont know if our cash have been through some drug dealer operation or or smuggler

A lot of people here talking about drugs, as money used for drugs are dirty but probably a great part of bitcoins was already used for drugs in black markets, stolen by scams or anything else dirty. For now I see bitcoin much more dirty than clean and most people dont care about the past.

Again, WHO determines which coins are dirty?  A 3rd party?

How do they PROVE coins are dirty?  I.E., I don't like my neighbor - I think he's up to no good... don't accept his BTC.

I've never witnessed anybody turn down cash because it was previously involved in a drug deal. 

Again, this leads to ELITISM and CONTROL.

Indeed. It would make people paranoid about accepting btc because it may come from illegal origin. It's not innocent people's fault. Just let the coins circulate freely.

This is just fear and noise because you are afraid of the ramifications. Any service could be as customizeable as you want. You want to only check relationship to famous addresses: Bitstamp address for example, then you could do it.

I see cash transactions all the time that do not happen because the person with the cash is a drug dealer. It happens.

Sure but the information is there. I want the service, sooner or later someone will provide an app that does what I want. Maybe I will do it, just to bug everyone on this thread.

Do it, and see how many really want a non fungible Bitcoin.

Why only famous services? For this to work, you would need everyone to agree with this.

Also, how do you know that person is a drug dealer? Did you check the banknote serial numbers in a database?

Scammers and launderers choose bitcoin as a medium of money transfer because they deem it "safe" to use because of its anonymity. We cannot deny the fact that bitcoin is being actively used as a currency in the deep web, and seeing those seized coins sure does taint the great name of bitcoin.

I am talking about a service for one person not everyone. I ask for someone's originating address, i type it into my dirty coin checker. I can choose to do business or not based on the results.

Just FUD

Just do it already, then.

It's not that easy. The person can't be forced to send from a particular address. They could show you a clean address and send from a tainted address instead, and now all your coins are tainted (if you aren't careful).

There might be ways to mitigate or prevent this, but not with a simple blacklist service.

If the sender is sending from a shared walled (like an account on an exchange) it would be difficult to comply with such a request.   If I were asked for my originating address(es) before sending a payment, I would take a pass for turning the transaction into a hassle.   As bitcoin starts being adopted by the masses, I really doubt that the average non-technical bitcoin user could even figure out how to find the originating addresses about to be used in a transaction.

When case law eventually determines if bitcoin is fungible or not, in the case of "not fungible", bitcoin will likely fail as a convenient method of exchange, since it can be legally seized if it was ever used as part of criminal activity.   If the law considers bitcoin fungible, your only legal obligation will be to prove that you acquired it in good faith and not as part of some criminal activity. 

But WHAT constitutes 'dirty'?  What's 'dirty' for one individual may not be for the next (think global transfer).  Boycott the vendor not the coins.

The only one that's gonna create such an app for you is the gov't... 

Do you not realize that the right to freely trade is a basic human right?

I already said as a global mining or payment option checking for dirty coins is fraught with issues. However, for me it would be a nice service I would want, especially when buying on localbitcoins. Before i meet with the guy I will ask for an address for proof of funds. I will check his address to see what the dirty factor is, I can choose to skip meeting him if i want.

Will also be a nice way to avoid getting shot and killed by the Bitstamp thief.

The right to freely trade is a basic right, as is the right to refuse!!!  It is a fact of life that some people cannot do basic transactions in life because they have violated the trust of people or society, it is just the way it is.

I think it would also be a cool app to see how dirty your own coins are.

I'm not sure about the “right to refuse”. If you refuse to give service to someone, for example, because they're black, that's discrimination and a crime in certain jurisdictions (it should be everywhere).

Haha I don't think anybody is convinced with this app...

I still don't know what constitutes a 'dirty' coin... it's open to interpretation.  DieJohnny wants to impose his morals on everybody.

And who proves these coins are 'dirty?'   A 3rd party?  And who's to say those coins aren't ALREADY in your possession and this 3rd party deems them 'dirty' later? 

Your localbitcoins scenario won't work because the bitcoins are sent from a wallet owned by localbitcoins and the seller does not know where they will come from.

Blockchain.info has a "taint" feature that will give the sources of the bitcoins at an address. You can check to see what percentage are from specific addresses.

I believe in organization. Miners' duty is to mine, to process transactions. If someone, acting like a police force, wants to follow illegal transactions, that's fine, but we should not give that role to miners.

If you knew how cash was used, you wouldn't be using cash anymore. As well as the bank money, where do you think the drug money goes to? To Banks like HSBC

You have an easy solution, stop using money, sell  your cows and pigs in exchange for water and food.

Bad idea, coins should all be treated the same. Once I see Bitcoin develop towards a path where I might run the risk of my coins being less valuable because they're more or less tainted I will sell all my coins and find a better coin that doesn't have this problem. Fungibility is too important.

...

Bitcoin = Bitcoin = Bitcoin

For almost everyone.  If somebody does not want "dirty coins", they have the option to not accept them.  It's a free country (smile,,,).

*   *   *

I have read that getting "newly generated coins" from a miner (when they win a block) is desired by some.  Anyone who really wants "clean coins" might be able to buy direct from an Eligius, GHash.IO, BTC Guild, etc.

OP!  Let us know if you take that route!  I would be curious to know how hard/easy it would be to buy "Brand New Coins" * from a miner!




* Also let us know if there would be any "numismatic value" to any mintages...    :)

That sounds like fun. Coins never spent before landing in my wallet :) look at my shiny virgin coins!

Are you serious??

Can you imagine.....

excuse me sir, are you refusing to take my money/coins??, I will see you in jail sir because holy hell you not buying from me after you met me is down right illegal!!!

Not in jail, but in court.

It would be just as easy to supplant bitcoin with a better coin.  But that would be really bad for crypto as a whole so I think it's more likely that your suggestion would be implemented as a fork to the many forks already deployed.

If I go to a shop and I want to buy something, and they refuse to take my money because my skin is black or my cash looks too 'dirty' to them I would definitely make a case of this. This is a crime where I live and in most places I know, for good reason. It's a slippery slope once merchants start to do this and discriminate coins based on the history linked to it. What if my coins are linked to something controversial like wikileaks or piratebay, or other things that governments or the people with big money don't like? Won't Bitcoin become the same then as VISA/Mastercard as they can just block me from using my coins in most places when my coins are linked to any of these things? No thanks. Messing with fungibility is messing with freedom, period.

Nothing is gonna happen, and if you are paranoid just use a mixer (hint, the one on my sig for example).

If you think coins should be coloured you are probably a regulator or have their D in your butt.

I am not and do not. I am actually not proposing a stamp on coins. I am just proposing a simple app that will tell me how connected an address is to nasty historical addresses like Bitstamp, or maybe even Gox if there is one.

There's nothing simple about this.

Yep.  Fractions of clean coins mixed with fractions of 'dirty' coins = grey area.

Use a bitcoin mixer and further remove yourself from the transactions.

Brings me back to this topic, now we have even more dirty coins after the bter hack. We just have to accept it. Can't go on marking and identifying coins

Bitcoin wasnt created so that certain coins would be marked and what not, this is a part of bitcoin idea,anonimity, so you either accept it or go away.
It is on regulations to rise security needed for people to own and run exchange, even tho i believe theyre lying about getting hacked, and they claimed coins themselves.
cheers

Agreed.

Money is money. Even $ is used to buy drugs, weapons and who knows what else.
The solution should not be to mark these coins, so that the 100th person who received it somehow legitimately can't use them. "Simply" the wrongdoers should be caught and dealt with.

If I was a rich BTC early investor I would hire a sexy maid to know my dirty coins, gnome saying?

Let me simplify the discussion for you because I think you and other want to jump into the macro way of thinking about this.

Lets say that today someone approaches you and says I have a great deal on 7,000 Bitcoins, I will sell them all to you for $100 right now.

Lets say you have the money to pay him.

Would you want to know if those 7000 coins were coming from the addresses that are part of the BTER heist before you made the purchase or not???

If you say you don't care, then I think you are not being a responsible member of society. You should care and you it is easy to check, so why not do it.

No, it's not. After the thief uses a coin mixing service, there's no way to tell where those coins come from.

It is not easy.

Even without a mixing service, there is no way to prevent somebody from sending you tainted coins.

Furthermore, what level of taint are you willing to accept? All coins other than newly mined ones will eventually have 100% taint as coins are stolen over time.

Yes, this is also an important point.

Just picture the following scenario:

—Hey, I want to pay you
—No way, your coins are related to the recent hack!
—I already sent them to your address. U MAD BRO?

It might be ridiculous, but it's totally possible. What will you do then, now that you yourself are tainted too?

WoW, nice. I mean evil.
Just send a few coins to some reputable exchanges/services and done.
Pure evil.

Not entirely true, as that unspent output need never be touched.  I can move my other coins which I had in this address to another which is now clean, without touching the dirty dust that you sent me. 

It's not necessarily dust. Also, I thought we were marking addresses and not individual outputs.

I didn't say he used a mixing service.

This is a great scenario because if you had my little app you could let bitstamp know you confiscated some of their coins and will be returning them immediately!! great example

But I say he does. We need to take into account all scenarios.

WHAT?

I spend cash money at the grocery store all the time.   Never have they asked for the source of the cash, nor my identity, for buying groceries.     

Legally in the USA, you are not required to report a cash transaction to the government unless it exceeds $10,000.

So in your scenario my app to check address history wouldn't be useful because of the mixer. Yep great.

You seem to disregard this reason, when it's actually one of the strongest. Do you actually understand how mixers work?

I am not disregarding your reason, it is valid. But me rejecting an unmixed coin is just as valid.

I just read this article about a billioinaire says "So if someone offers you one of two bitcoin, you should choose the one that has never been attached to Silk Road or that has some dubious history."

http://venturebeat.com/2015/02/16/heres-why-bitcoin-will-be-bigger-than-the-internet/

I think my little app that tells me how dirty your address is would be pretty useful, more confident than ever.

EDIT: seems billionaire didn't say the above

For your solution to work, it must be able to work in all scenarios. I just showed an scenario where it's invalid. That scenario is enough to prove the failure of coin filtering, because then all criminals will mix their coins and circumvent your system entirely. And surely they are already doing this.

I have often thought about so called 'dirty coins' and what happens once they are tagged with 'bitstamp hack' or similar.
What may be considered a dirty coin to one person may not be dirty to the next.

Person A may consider any coin that has been passed though a porn site a 'dirty coin', where as i would not.
Person B may be happy to accept any coins from porn or silk road but won't take coins marked 'hacked'.
Person C may only want clean coins, not possible in the long run just like cash.

I am not fully aware of how mixing services work so if someone could explain or link me to a site that explains this it would be a big help.

Uhh no you would be completely wrong. I only need one scenario where it is useful. You have it backwards.

Either you merge your coins with others in a single output and then split it differently, or use a reserve of unrelated outputs to redistribute them.

This comes from BitMixer's page (https://bitmixer.io/how.html):

https://bitmixer.io/img/how1.png

If I'm a criminal and I find a flaw in the legal system, do you think I would still go the obvious way and get caught? Once there's a flaw, everyone will start to use it and the system is just a big curtain. Unless the flaw can be fixed (and there's no way to “fix” coin mixing as far as I'm aware), then all effort is futile.

Thanks for the link, it confirmed the basic knowledge i already had of coin mixing, i will look into this further when not at work.
1 question, if the coins going into the mixing service are already marked won't they have to pass on the coins in the future?
Just say i want to mix my non marked coins for whatever reason then get back coins marked 'bitstamp hack' or similar i would not be very happy.
 

I didn't say what i want is a solution, it is simply a way to do some basic due dilligence.

If I send it to a cold wallet address of an exchange where another 7000 BTC are stored, is it still simple to sort it out?

Of course, if received to a fresh address it as manageable.

It makes no difference.  Bitcoins at an address are not automatically mixed together.  As aantonopoulis says, you can just ignore the attackers output.  Some wallets include the feature "coin control" which makes this much easier to do.

ok, I see. Thanks!

Yes, but your proposal will help filter exactly zero criminals in the long run, because everyone will be using mixing services before spending their stolen coins.

That doesn't happen, because outputs are merged and split, losing track of their original addresses.

zero says you, more than zero says me

How many more than zero? That's the important issue here.

wasn't this the whole point of btc?
at some point all coins become tainted, don't they?

why couldnt you just use a mixer?

I believe this will likely be the case

if you use a mixer all of your coins will look tainted...
a mixer doesnt wash them: it just distributes the taint more equally

i dont think there is an alternative to monero of you want to be anon (transactions and balances are anon btw)

what is so special with monero? :)

no public ledger (but i dont want to advertise it here... please just search for their ann thread ;) )

bitcoin is great but it wont ever be anon - imho even sidechains cant fix this

I don't understand why tainted BTC would/should be a problem.

This article is a few years old now (and from the Daily Mail --near tabloid quality), but it illustrates my point. Dirty BTC should not deter anyone from spending it/accepting it. Every day fiat is used to buy numerous illegal things and then can be used to by toothpaste the next day. Why should this be a BTC user's problem or even a problem at all?


http://www.dailymail.co.uk/news/article-1241775/Every-British-bank-note-contaminated-cocaine-weeks-entering-circulation.html


I could see taint analysis as a great forensic technique with regards to criminal investigations. Imagine if someone invented software or a fast computing way to unravel the blockchain to uncover past transactions... Eventually all coins will most likely be linked to a real individual and will have a transaction history attached to a known entity (bank account for instance).

I agree with you.
If someone wanted completely traceable money that cannot be used for shady purposes, go for credit cards. As you said, people do bad things with cash, but it still exists.

Black markets will all accept monero in the future, give it time.

If I put my dirty coins in a usb wallet and clean the usb wallet with soap, do they become clean coins?

yes, because they are gone then ;)

Actually, I don't think the USB would be damaged at all.

The general user of bitcoin will be rather pissed off, if his rightly obtained coins were not accepted somewhere because of taint. So in the aggregate, I think it will not be possible for the enemies of bitcoin to use that as a weapon. Tainting will only work as long as a great majority of users accept the taint and that their coins will at random be declared valueless. And that is not going to happen.

not true. i'd starting looking for taint as soon as courts state that they will confiscate coins which origins from a theft - i am already curious what happens to coinbase customer who have "tainted coins" (i really hate that word) AFAIK they already have lists (for someone who knows better than me: do they acept coins from a mixer without questions?.

They can't enslave you if you don't want to be enslaved.

...i prefer a technical solution like monero for that cases which has true fungibility (which means it is not possible to see if a percentage of my coins are tainted.

sometimes i need something to eat you now? and i'd hate it if my money would get confiscated. dont see a way to dont give it to them when the alternative is to go to prison (maybe you would go for me? you seem altrusitic)

I wouldn't put it pass them but why would Coinbase have any right to confiscate "tainted coins", unless they are going to do all the work and hand the coins back to the exchange or wherever the coins were stolen from in the first place, i very much doubt that will happen.

For a court to rule that Coinbase can confiscate their customers coins they would have to prove that the coins will be returned to the rightful owner.

i did not say coinbase would confiscate.
i'd say courts do.

if you have a stolen car you have to give it back to the rightful owner. if you where paid with stolen money thats not the case.

is bitcoin a car or money ;)

(the coinbase question is unrelated to my point about courts. just curious to hear what they do if someone has experienced it - i'd heard before that hey have lists, but dont know how they use them (or even if)) - i am in germany btw. so i dont use coinbase

There's no way to "mark" an address on the block chain, other than by sending it coin, that is, creating an unspent output to that address.  The owner of the address however never has to touch that output. 

In some sense the address is marked, but the owner hasn't spent the "dirty" money there and doesn't have to.  He can just leave it and never touch it if he/she so chooses, and still have normal access to the rest of his/her funds.   

But I still have control of that dirty output. How can I prove everyone that I won't spend it?

It sits there unspent.  That's the best you can do. 
All your payments to others are untainted. 

But the receiver doesn't know that. The most they can do is trust, but the whole point of Bitcoin is not needing to trust.