Bitcoin Forum

1) What are the implications of Bitcoin as a protocol as a whole if the seized coins are blacklisted?
2) How does this affect the pending legal status of Bitcoin and its uses?
3) If they were blacklisted how would this be done? Would miners simply refuse transactions from these coins? Or could they be returned to the network in the least disruptive way?

Not actually advocating this, but its just been a thought that has been on my mind.

You and several other people blacklist it and vow to never accept bitcoins from that address.

And the rest of us will accept them and they will propagate out to the whole network.

How can I blacklist all the $20's with traces of cocaine on? A lot of singles end up inside the panty of strippers. I need to find a way to blacklist them too. :)

these coins are perfectly legit

the FBI won them fair and square.

You don't.

That's how cash works.

Bitcoin would essentially be a complicated and inconvenient PayPal competitor.

Bitcoin needs to follow the rules of the Bitcoin network protocol for everyone, without exceptions.  Otherwise it's no different than a centrally controlled currency.

As I said before, it would be interesting to see what happens if the coins were sent TO MTGOX for exchange.  The US Government has taken Bitcoins from MTGOX via seizure. 

If such a blacklisting scheme that worked were implemented, it would be used against us at best and would kill the value of Bitcoin at worst.

Horrible Idea. Bitcoins should be neutral forever and always. No matter how they are ill gained.

Fungibility is an extremely important property for bitcoin, as it is for all kinds of money! Take away fungibility and bitcoin is dead.

And how are you going to blacklist coins?

Call James Spader.

So funny, that I nearly peed

Apart from the fact that it would be a terrible idea for the whole Bitcoin environment, as fully discussed in many other threads on the same topic, I still wonder one thing... WHY one should do that? What's wrong with it? Why you should blacklist those coins?
They have been used in the commission of a crime (as recognised in almost every jurisdiction) and have been consequently seized. Full stop. What's your problem with that?

because, someone might think it delightfully evil to disallow the fedz to spend or exchange the confiscated bitcoin, rendering those coins worthless.  :'( :D

I don't think there are enough dumb guys who would undermine the stability, fungibility and possibilities of success of this currency just because they don't like laws and rules.. or at least I hope so.

This is the important point, in my opinion. How can this even be done?

If we can find no proper way of doing this, discussing the implications is irrelevant.

You have the right to refuse to accept any coins you want, as does everyone else. In order to effectively blacklist these coins, everyone would have to refuse to accept them. How would you get everyone to do that?

One of the most effective disruptive activities I imagine the Feds or banking industry could do, is publish their own white/blacklists of coins, with the implications that as long as businesses accept only whitelisted and/or refuse any blacklisted coins, that they have the blessings of the powers that be.

Of course, this wouldn't really stop anyone from using blacklisted coins, and especially those outside the US could do as they please... those who didn't honor the fed's coloring of coins would not be impeded in any way... but I will bet that if the fed colors the coins, they could successfully force the market to start tracking a different market price for their different colors of coins.

Couldn't the owner of a significant quantity of blackened coins taint everyone else by sending out hundreds or thousands of small or large amounts to "clean" addresses?

how is it even possible, technically speaking?

"Bitcoin needs to follow the rules of the Bitcoin network protocol for everyone, without exceptions.  Otherwise it's no different than a centrally controlled currency."

I'm really sad to read that you guys want to force your values and norms on others.  The opposite is true:  Forced neutrality is almost as bad as centrally controlled currency.  


I'd like to download and use a Bitcoin client that displays blacklisted Coins separately.  Any other wallet that receives blacklisted Bitcoins will also be blacklisted if it spends more blacklisted bitcoins than it receives.  It shouldn't be so hard to code, should it? Am i missing something here?

 I believe no core developer or anyone should tell anyone if Bitcoin should be neutral or anything. The people should decide whether they want to use the Blacklist-Client or the original.  I'm willing to donate BTCs for the first coder to provide a Client with a Blacklist option.  

Maybe he plans to completely monopolize the mining space.*

* Actually, that plan has been floated before to eliminate such bad actors as Persians and their ilk from the economy.  I would not rule it out as a practical mechanism with sufficient consolidation of the network infrastructure.  Just gotta get that fucking block size unlimited.

yeah, if by won you mean stolen and if by fair you mean using violence and coercion

Even if they were blacklisted, couldn't someone mint zerocoins out of them before everyone updates their clients, then withdraw them later?
http://zerocoin.org/
Theoretically, there'd be no way to figure out which coins were the blacklisted ones after the conversion, so the holder would be able to launder them of this blacklisting.  It could either work out well, or kill zerocoin because of association.

They now control the private key to those coins.  Does anything else matter?



*I still would love to know how they obtained them.

AES-256 ASIC hardware i would imagine... or god forbid a 10 dollar wrench :(

...as leet as DPR was, he used some pretty shitty judgement along the way, i'd be willing to bet his passphrase was less than stellar -and by stellar i mean 20+ char (special/num/upper).

I vote for neutrality, but adding a blacklist to a client would not be difficult at all. Keep in mind that a blacklist would be mostly ineffective because it would be relatively easy to circumvent.
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How would you circumvent that?  The Blacklist will be handed over as parameter to the Client when it starts  and only the original Address is needed while all others can be calculated.   If the FBI sends 100 BTC to a wallet that already contains 100 BTC and that wallet spends a total of 110 BTC, I would automatically mark the last 10 BTC spent as black Coins.  

The blacklist could be left empty or automatically updated via open market strict or less strict "central" address lists, whatever the user prefers.  It would only make sense to add addresses  which still contain the Bitoins and which are about to stay there for a while untill most clients have updated their black list.

In the end it only works out, when enough people participate. Not sure that will be the case...

No, I bet he gave up the passwords as part of a plea agreement. They definitely did not bother to go crack it themselves. He was intimidated into giving it up.

According to reality, that's called fair and square.

People use Bitcoin because cryptography controls there money. The advantage of Bitcoin is that nobody can take away your properly secured money except through coercion. Getting rid of this fundamental part of Bitcoin has devastating effects on what Bitcoin stands for.

If it is proven that Ulbright attempted hire the torture and execution someone to preclude them from turning states' evidence, then turned around and tried to get a hit on another person who hacked his enterprise, I would actually value the FBI coins *higher* than 'normal' ones.  Catching the guy is one of the relatively few instances where the government is actually doing what I pay them to do.

Again, who are you to force your fundamentals upon others.  There should be a client with blacklist option and the people are the only ones to decide whether they want to leave their black list blank or not.  I would add the FBI and noone else....

Another important point:
Ross Ulbricht was one of the good guys.  Sooner or Later the really bad guys will discover Bitcoin: blackmailer, hitmen, trafficker, "real" terrorists. Only a few of these guys could pose a serious threat towards Bitcoin. A working blacklist system could prevent certain problems that the current cash money system inherits.

What do you intend to do if bad guys starting kidnapping children from rich guys to extort huge amouts of bitcoin?

Output scripts are contracts. The contracts precisely specify what conditions are both necessary and sufficient for an output to be spent.

If the Bitcoin network ever stops honouring these contracts, then the currency and the network have a value of zero.

 ::)

I'm not saying this is a good idea, but from an economic perspective we wouldn't even have to "block" the coins indefinitely or even for very long.  Just slowing their re-entry into the Bitcoin economy would be enough.

Politicization of the reference bitcoin client would inevitably kill it. Don't politicize bitcoin.

Just whatever you do, don't put money in your mouth. Lord. I have seen some of these women. Probably washing your hands after handling money (especially ones) is a good idea, too.

I don't think the government will end up giving them up or even selling them

Any good or decent mixer is going to either dislocate the original seized coins, or will effectively taint everything else.

See CoinJoin too.

A blacklist simply can not work. Unless it is implemented now while the coins have not yet left that particular address, and used by all miners in the world.

It would be trivial for someone to send coins to shared wallets, to exchanges, to gambling sites, let it sit there for a few days or weeks, then withdraw it. Or they send to an exchange or trade it for an alt-coin. Use the alt-coin to buy bitcoins later from someone else.

And how do you decentralize a blacklist?

In a general way that is pretty straightforward.  Publish it.  If it is reliable and respected by the community, and if it is trivial to use, this would probably be fairly effective.  White-list similarly.  Furthermore, different groups could produce different [white|black]lists which either compete for credibility or augment one another.

For addresses or transactions this would be unworkable for latency reasons.  And a disastrous conceptually as well of course.  For blocks, however, it would be a quick-n-dirty way to handle superior resource attacks (aka 51%) which is one of the reasons I never worried to much about them.

Wrong, go rob some fresh bills from the bank and see if you can deposit it at another bank.

If all exchanges join up and block list the coins, it would be enough to make them rather useless.

But i think MtGox will just "seize" them for themselves.... remember bitcoinia?

At that point aren't they better off simply launching an "officially authorized" bitcoin clone?

Then we should blacklist every coin that's ever been stolen via keystroke logger, Trojan, account hack, or anything else nefarious. Except that could do away with far more coins than the FBI got.

Or, you don't like a world with violence and cohersion? What are you options when you buy coins from me (or I otherwise find out your address) and send you an email - give me 10% of your total BTC holdings or else me and my entire syndicate will add your coins to the blacklist? What can you possibly do?  Sure, I dint have a syndicate currently, but if you allow for blacklisting, you'd better believe syndicates will pop up all over.

Think things through. To the logical final conclusion. It's not as cut and dried as you'd like.

That sounds more and more like a private Bitcoin police. It might sound strange, but I like the idea because unlike in the real world people can and will easily opt out if they become corrupt.
The thing with the syndicate dominating everything is a myth. Monopolies only work with physical force or the threat of the same.

No need for physical force, if i'm able to corrupt the system based on the rules of the system.

How do people get added to the blacklist? I assume someone has to do so manually? And how is a consensus reached? Votes? Do people have to register their real life identities in order to vote? Or do they just vote by registering?

It's way too easy to game this system. No need for physical violence or threat thereof. You simply threaten to make someones coin horde unspendable. Either by having lots of people register to vote you onto the blacklist (i assume that it would be done via email address or, worst, cell phone number), both are very easy to come by.

Explain precisely how do you stop this?

I guess there will be very few security agencies, who people will report crimes to and who will look into the cases. People can subscribe to one of these agencies if they trust their judgement. Maybe there will be only one really big agency. But I don't see any room for corruption as blacklisting is not permanent and people can easily switch agencies.

Quite simply, adding blacklisting to the protocol will eventually cripple bitcoin, probably kill it. Human nature will guarantee that.

And that's why government(s) will almost certainly insist upon blacklisting in the protocol as a condition of acceptance as legal tender - whether it's by central authority or a decentralized system.

And when someone decides to force your assets onto the blacklist in retaliation, or some other perceived slight? Who will be the one providing oversight? And how will we trust them? Will it be a cabal of the 1% of Bitcoin owners? A coalition of government organizations? And what recourse will you have once someone declares your wallet full of fraudulent funds? What happens if the judgment of whatever "authority" deems your appeal invalid and your funds remain forever black-marked?

Do you really want to continue down this road? Sounds like there's more 'force' involved here than in neutrality.

Also, we'll have to have a look in your pocketbook.  Some of these notes might need to be blackmarked.

Seriously, though, feel free to create a whole new coin that integrates your ideas into it and let the market decide. I'm quite sure that "Confis-Coin" will be a huge success.  ;)

It would go against the whole your coins can't be "frozen" line.

Like i said, i guess there will be very few independent agencies who will take care of the blacklist.  Trust and reputation has to grow over the years I'm afraid. And yes if a member of this agency decides to screw you over, you can do nothing about it.  

But it will be very unlikely that you will be affected by such a corruption. As soon as the corruption spreads and public becomes aware of it, people will start using another agency.

You basically can ask all the same questions about the legal system in the real world. And like in all societies, also libertarian ones, it holds true:

Most people are willing to pay that small price (of possible corruption) to have a working legal system (forced right now in the real world  or unforced in libertarian & Bitcoin society) that takes care of the bad guys.  

Another thought:   We now have market participants, we have a currency, we have goods being traded  and we now need a legal system around it, because the current real world legal system is unable to cope with problems that may occur.  As market participants are unable to track down  and bitcoins can be easily laundered  the only way for the real world legal system to cope with bitcoin-criminals is to shut down Bitcoin completely.  I'm really afraid, what will happen, if first criminals discover Bitcoin and all the possibilites around it we can't even think of right now...

The first criminal, who stole 144K coins and will probably use parts of it to kill civilians in  just another innocent country,  just recently entered the market :-)

Coins weren't frozen, coins were stolen.

You cannot call that stealing. If violence or threat of violence is used, it is a robbery. The FBI is a bunch of armed gangsters who robs their victims  :o

Unless nearly all Bitcoiners blacklist them (and I doubt this is possible), they would spread more and more among the people who accept them.
Then you have two versions of Bitcoins that aren't able to trade with each other...

So yeah, awful idea.

Right, robbed is what I meant.  ;)

I hope all the people here advocating a blacklist are trolling. Its probably telling how ineffective a blacklist will be because none of the core developers have bothered to post a serious reply.

Bitcoin works because we trust the math and the network, once we add a blacklist we now have to trust people again.  Angelamerkel, you keep saying we should not push our ideals onto you, however it is really you pushing your ideals onto us. We got involved with Bitcoin based on Satoshi's principles and the core feature is a network based on math and not having to trust people.

Your blacklist is actually against what Satoshi wanted and thus it is anti-bitcoin. I understand you want lots of power to block payments similar to paypal, so I suggest you create a clone of Bitcoin and set it up so that you can satisfy your ideals.

This is DPR's fault for giving over his coins or having a stupid weak password or allowing a keylogger onto his machine. Lets face the facts, DPR screwed up big time, he is so screwed. I wonder what his wallet password to $28 million was? Couldn't have been too difficult.

Also Bitcoins are not actually coins, did you know via taint analysis 98% of all Bitcoin users have a trace of the 10,000 bitcoin pizza transaction? Bitcoins are just numbers and if you blacklist a set amount of coins eventually they will spread all over the network (see via taint analysis how coins dilute into one another)

The blacklist would only work if 51% of the network agreed, and then we have paypalcoin.

Angelamerkel, we are forcing our views because the ideals you are against are the reason most of us got into Bitcoin, you don't want Bitcoin, you want paypalcoin.

Grab the Bitcoin source, add the blacklist system and announce it over in the alt-coin section. Cheers.

And why should we do anything? DPR either gave them up to law enforcement for a "deal" or he allowed the theft because of his crap security. My guess is he felt invincible and was super cocky, why does he need a strong password? He is the BOSS! No one is getting to the great world famous DPR!

I think he just screwed up completely, posting on Stackoverflow, probably some <12 letter password securing 144,000 Bitcoins.

Nah, government thuggery is so yesteryear.  Today's enlightened FBI agents are well versed in social contract renegotiations.  They dropped in on DPR & offered him free room & board for life in a guarded secure community, in exchange for his coins.  Once they sweetened the deal by offering complimentary surprise buttsecs, Enlightened Self-Interest kicked in, and DPR handed over his private keys in exchange for the life of government-sponsored leisure and romance.
Who wouldn't?

1.  I don't WANT any of this.  I'm saying, Bitcoin might fail to become widely accepted without some kind of supervision. As I pointed out, there might be criminals who will use the power of Bitcoin to bring harm upon others.  Until now Bitcoin does just fine - and also the DPR case doesnt change that as you pointed out  and there is no reason to use any kind of black/whitelists so far. We will see how it develops. I'm just afraid criminals could do perfect crimes with Bitcoin.  I hope I'll be proven wrong...


2. Anyway a blacklist / whitelist can be quickly implemented when it is really needed  some point in the future (I hope never).  If the private Key & pw was extracted by torture for example  I would def. argue that this is the right time to start with a blacklisting...

Angelamerkel, a system like Bitcoin will eventually be the defacto currency for most crime and tax evasion. This we cannot help, as the reason criminals will flock to Bitcoin is the same reason we all flocked to Bitcoin. Power over our own money.

Similar to how nuclear research opened up doors in medicine and energy, it also allowed for the bomb. Any sufficiently powerful technology will be used for bad and good. If you want a Bitcoin that is only suited to the good, allowed activities then I am afraid Bitcoin is not for you. Satoshi gave us power, and power will be missused.

Eventually a GovCoin will emerge that satisfies the good guys ideals, and maybe that will be the right coin for you?

If Bitcoin takes off, tax, crime, freedom from the Government nanny managing your money, these things are going to be huge. Bitcoin cannot be so powerful without enabling all peoples, good and bad.

Bitcoin will eventually be used for terrorism, for tax evasion, money laundering. Eventually people will be tortured for their passwords, however Bitcoin will also be used for good, for sending money to friends and family, for conducting business.

Do I want criminals using Bitcoin? No, but its not my place to say they can't use Bitcoin. Thats what people mean when they say Bitcoin is neutral, it's power is derived from the fact all people can use it.

If you limit this power of freedom and try to turn Bitcoin into PaypalCoin, another coin will emerge in the power vaccum and your investment will hit zero.

If Bitcoin has a use for all people, good or bad, it will eventually come to change the world. For better or worse.

Correct. This idea of blacklisting bitcoin addresses is the most stupid idea ever, including even the stupidest ideas in the stupid film Dumb and Dumber.

The $2,200 million valuation of Bitcoin would be flushed down the toilet if the stupid idea of blacklisting ever got any traction.

If this ever happened, I think I would lose faith in the human race for all eternity.  Words cannot express how fucking retarded this idea is.

I'm sensing certain level of trepidation among some in the community when it comes to the general concept of BTC taint.

This is what I was trying to say, said with fewer words.

The value of that Bitcoin in your wallet, you all want to know where that comes from? It comes from the ideals and foundations Satoshi laid down and that is the reason we all got into Bitcoin.

To come along and try to change Bitcoin to something else, a paypalcoin of sorts, will forever erode and destroy all value in Bitcoin.

Sounds like a terrific plan.  ::) 


What if that agency - which will have a lot of money at that point, and with money comes power - decides you don't get to break the contract? What if that agency decides that you're not worth the potential negative publicity that may result in additional customer attrition? What if that agency decides you might sleep best at the bottom of the river? A little corruption after all. Nothing big.  ;D


You realize that what you're describing here is essentially a protection racket, right? Replacing one large corrupt Federal mafia for smaller mafias for hire.


You mean like the record industry managed to cope with copyright infringment by shutting down Bit Torrent completely? Your faith in cryptocurrency is weak, young Jedi.


It's just a little corruption, you know. As soon as the corruption spreads and the public becomes aware of it, they'll vote it out of offic- ... oh wait, that doesn't really work.

(Cheers!)

If Bitcoin fails to become widely accepted because some centralized agency doesn't exist to slam down the iron fist ... then it deserves to fail on its own merits.

I don't think it will.  Which is why I don't think it needs anything like this.  AT ALL.

I would first like to see how the trial plays out. If the evidence they presented all is backed up without a reasonable doubt, then there would be no right to the coins. If it turns into a kangaroo court, I say why wouldnt we? Would this not be a perfect opportunity to tell the government no. Tell them enough of this bull shit. If they are not going to play fair then we have too.

The case is not going to go in DPR's favor. Dealing drugs or facilitating such transfers are illegal in the USA. I know many of us disagree with the law but we are too tame to actually do anything about it. We elected our leaders and as such must reap what we sow.

Anyway, DPR decided to stay in the United States whilst being a drug lord and made all his money from drugs. If you think there was a moment he was acting legally please tell.

He will never get those coins back.

He knew the law and decided to run the site anyway (whilst making various huge mistakes).


You are mistaken, the FBI worked within the legal framework that DPR was fully aware of. They both played the game and the FBI won.

If they invented a law just to catch DPR then perhaps you have a point.

Send your coins to me. I will keep them safe. Offshore. Cold storage. Paper wallets. My so called "virtual" physical bitcoins. If you are being tortured, you can't reveal what you don't know. Your bitcoins will be safe.

Right. But could you name a political system that is not a protection racket? We should compare not with a dreamland, but with the real world. And the read world is ruled by mafias. The only real choice we have is between competing mafias and monopolistic mafia.

And why exactly that doesn't really work? Because there is no competing mafia you can switch to.

But IRL there are competing mafias, they're called "nations."  Sometimes the competition is peaceful (politics), sometimes not so peaceful (wars).  Just like any protection racket, it's not always convenient to take your business to the competition when your local thugs charge too much (immigrate).  This really is the best of all worlds :)

And in this world
The best of all worlds
Why I'm the best of all short-order fry cooks --Killdozer

Yes, this is not binary (one mafia or many). It is gradual and could be measured in cost of switching. The current world is not the best, since the cost of switching is pretty high, but it is not the worst, since it is not prohibitively high. Snowden have paid a lot, but he have found a place to go. What we should strive for is to reduce the cost of switching mafias. To the world where swithcing thugs should be as easy as swithcing your ISP. Then the competition would force thugs to actually serve and protect.

As for bitcoin, monopoly is bad. Do we want to become the hostages of one single cryptocurrency? There should be many, so if one will get rough, we would have a chance to flee/switch to other one.

And here ladies and gentlemen is why this little monetary experiment called Bitcoin is doomed to fail.

Outstanding points both!

Basic market forces can serve as a powerful impulse to provoke evolution in governance, cyrpto-currencies, and practically everything else.

This is the main reason lock-in and mechanism that promote and prolong monopolies are so popular.  Evolution is the last thing that someone who has found power (e.g., a politician, a corporate leader, or a large BTC holder (like me in the interest of full disclosure)) wants or needs.

Wrong.

>50% of the mining network will always accept transactions from all utxo, ignoring any attempt at blacklisting because >50% of the miners will accept fee payments and want to retain as high a valuation as possible for their own btc holdings.

Blacklisting has already been attempted by a mining pool for SatoshiDice addresses, and yet this site continues to stay in business just fine.

my wag those dudes are playing dice trap games with the coins as we speak? lol  8) anyone wanna bet?haaa