Bitcoin Forum

As BitCoin matures, mining will become more and more specialized until nearly all blocks are being mined by sophisticated organizations that build farms of custom ASICs near to where electricity is cheap. Perhaps even constructing their own power plants (eg solar or wind) to take advantage of the fact they can use supplies much more bursty than the grid can tolerate. Miners less efficient and dedicated will be rendered unprofitable.

This consolidation is already happening even in the very early years of BitCoins existence. DeepBit, slush and ArtForz alone probably make up >50% of the network and ArtForz is building miners using structured ASICs.

From time to time governments freeze the assets of people or organizations they believe to be criminal. Sometimes this is rather controversial and does not reflect the true consensus of society. Other times, as with dictators and war criminals, there is little or no controversy and the international community co-operates to get the job done. BitCoins apparent inability to do this will certainly make law enforcement uncomfortable with the concept.

But in reality, by the time BitCoin is large enough for this to be a real issue it will be quite possible to freeze bitcoins by requiring miners to exclude transactions from blacklisted addresses. As miners will likely be spread throughout the world, this would require the co-operation of many different governments and a total freeze is impossible (as anyone can mine), but if enough hash power can be made to co-operate the difference between "your tx might confirm in 20 years" vs "your coins are frozen" is pretty small. Because mining will be concentrated in the hands of a small number of legitimate, regulated companies, once an international framework is put in place the actual freeze orders would be enforceable very quickly or even instantly (eg by requiring miners to poll a signed list of addresses from some web site).

Freezing coins by synchronizing the bulk of hashing power works better than attempting to force co-operation from every economic actor (exchangers, merchants etc). The latter is almost impossible because coins can be split and merged in arbitrary ways making it hard to really blacklist a coin. But once an address is frozen by miners, its value can no longer be merged or split.

Whilst I think it's inevitable, this sort of legal framework would ultimately be self regulating and so should not be feared. BitCoin is a system for agreeing on a global consensus around the ordering of transactions. If that consensus is truly a consensus then there will no be real controversy over the freeze orders and few (or no) miners will ignore them. Consider temporarily freezing the assets of Gadaffi or Mubarak as examples.

However, mining can be done anonymously. If the freeze order system were to be abused a group of miners would emerge that were not motivated by profit but rather by ideals. Whilst they would likely not be able to mine as fast as the big ASIC using companies, even reaching 5% of the total network hash power would be enough to allow the coins to be spent, albiet quite slowly. Somebody whose assets were frozen in this way would certainly try and get them out of BitCoin as quickly as possible, though finding a counterparty who would anonymously accept these "slow coins" might be difficult. Most likely, that counterparty would demand a risk premium based on the chance of the political or legal issues being resolved and the coins being unfrozen (eg because the wallet file was seized and the coins can be sent to their rightful owners).

Smart people will launder their coins before anyone has a chance to freeze them.

So-called 'frozen coins' will attract a higher transaction free.  Those higher fees will create additional demand for blind miners...  Coins will never be frozen unless the majority of the hashing power forces decide to reject block that contain them.

We will see a chain split at that point. Probably moving to a different algorithm that is hard for asic's to compute.  This 'alt' chain will contain all the transactions indistinctly if they are from good coins or not.

Yeah, there is still the problem of figuring out which addresses to put on the list.

As was said fees will have to be higher for coins on the list, how much higher depends on the risk of defying the regulator. Which seems really really unrisky unless the regulator has complete access to all your stuff because you could just not mix payouts of blocks that contain blacklisted tx with your legit mining income and use that money for non-official expenses.

Hmm, I guess it would easy to auto-blacklist the address that the fees are paid too also, but that just means you pay more fees when using that money. Interesting, that means that the blacklist fee will have to be higher than otherwise since the fee coins will also be worth less. I don't think that leads to an explosion, but it seems like some kind of math problem.

Huh, and couldn't you screw the regulators up by sending token amounts from black addresses to random addresses containing lots of coins? If they don't auto blacklist the whole large amount then you can use that to launder black coins. If they do then you jam up corporate balances and such with dirty bit pennies.

If the (de facto) government miners not only refuse to include blacklisted addresses in their blocks but also refuse to mine from others' blocks containing blacklisted addresses then those transactions will not ever be included in the chain.

i don't see much luck for the existing power structure in regulation.

on the IP side, even the deepest packet inspection will only reveal that SHA-256 is being used... for something.  i suppose a huge push could be made to ban effective encryption world-wide - but that's been tried, and didn't work out so well.  open source is a powerful thing.

on the mining pool side, yes - it would be possible to tax the BTC pools using transaction fees:  for those pool operators who caved to those demands rather than ended their operations.  but you could only tax a BTC once.  after it got out into the wild it would become untaxable.

as far as putting enough hashing power into the network to take it over?  i dunno.  governments move slowly.  right now, BTC is a tiny thing that is only beginning to be noticed.  but already a third of all available BTC have been mined: by the time a government coalition - even moving at lightning speed (for them) - got their shit together, block rewards will be down to 25BTC at least.  the hashing power of the private network will be so huge that taking it over for a paltry billion dollars or so (assuming BTC goes up to 10/DollarUS by then) won't look so good to the folks who calculate the expenditure of political capital for the maintenance of government power.

if nothing happens by the time the block reward goes down to 25BTC, i think it's too late to regulate.

Mixer sites like CoinTumblr have limited capacity. If you're a small time crook then sure, but if you're a deposed dictator with a few billion in coins then good luck laundering all of that before the world catches up with you.

This is especially true because of coins did start being frozen, the amount of traffic through the mixers would go into freefall as legitimate users decided not to altruistically support them by mixing their own coins, in case they got back frozen coins that could not be easily spent.

Whilst frozen coins might well attract high TX fees, who is going to claim them? Remember that in this hypothetical future it might not even be worth mining with GPUs, just like CPU mining is kind of pointless today. If you can't pony up a terahash/sec then you aren't even in the game. But any miner that operates at scale has to do so as some kind of legitimate, white market operation. You just wouldn't be able to procure the large quantities of power, floor space and ASICs required through some kind of underground operation.

I think it's worth bearing in mind that in such a future, regulation of BitCoin would be inevitable but the type of regulation is not inevitable. If BitCoin reached the stage of being regulated (but not banned) that would mean there was lots of legitimate business activity taking place, so there would be large organizations capable of lobbying politicians and ensuring whatever results is a reasonable compromise.

Lawmakers would have a menu of options. One would be to prevent inclusion but not require the block acceptance rules to change (ie, blacklist in IsStandard). This would mean no chain splits and that entirely freezing coins is not really possible, just delaying them significantly. Another would be to require chain splits if a blacklisted address was included in a block. The first option has the appealing property of being somewhat self regulating in that miners which don't take part in the scheme for whatever reason (perhaps it's voluntary or perhaps they mine in a jurisdiction which doesn't require it) can still include those transactions, so there is natural back pressure.

It might seem unlikely that governments would choose to deliberately limit the power of the freeze orders that way, but there are many precedents. Governments have passed Freedom of Information acts, replaced direct minting of money with central banks (arguably ineffective but the intent was clear), and routinely pass legislation that limits their own power as well as extends it. It isn't unthinkable that such freeze orders would even be a voluntary system at least to start with.

Personally I would see this type of regulation as a positive thing--if entities who are getting their coins frozen (presumably by court order of some kind) have to buy significant mining power to process their own transactions it is good for everyone.  To prevent forking they would be wise to process regular transactions too, and thus the overall difficulty etc. responds as expected across the board.  If some administration goes overboard and starts freezing so many coins that the regulated miners aren't making a profit anymore and are being out-competed by the underground miners, then the regulation will naturally be pushed out.  So there is a selective force for a regulated-but-not-too-regulated environment to develop.  Having some way to freeze (=make substantially slower, by court order only!) undesirable use of the BitCoin network would be a great way to keep the "non-infringing" uses of BitCoin at the forefront.  As someone looking to build legitimate businesses etc. on this that is a big boon.  If criminals want to use bitcoins, let them pay to amp up security for all the legitimate users!

This all makes the bold assumption you can absolutely tie an address and specific Bitcoins with an individual or entity. Even then, I personally believe Bitcoin should serve exclusively as a tool of trade, not vigilant justice. God forbid 50% of the network buys into this scheme and allows itself to blacklist its people according to mere democratic whims and desires. Let's leave justice to the battlefield, not put others property at risk as collateral damage in this scheme. I can imagine innocent and victimless funds getting caught up in this powergrab.

In the end that's what it will become, a contest of power and identical to many ways of real life war.

If you see this as a good thing, you hate freedom.

Anyways, I can hardly imagine miners having incentive to buy into this without government force. Even then, government force can hardly touch Bitcoin. So, really, I am not worried.

You guys are assuming mining power will be centralized. Until there is government rationing over computer hardware, I highly doubt these large mining corporations will come about.

this suddenly appears relevant after recent events.

If "generic", grey-market or ASICs using stolen IP eventually come on to the market, I can imagine backyard operations running on wherever electricity could be had cheap or stolen.

For years the web hosting industry had a problem with cowboys operating out of their mom's basement. The difference here, however, is that such a private venture needs not concern itself with uptime SLAs, multi-tiered bandwidth, power conditioning and backups. Just keep those Alibaba-sourced ASICs running on the smell of an oily rag. UL and FCC approval would not even be in the vocabulary of such miners. VESDA fire suppression? Contract your rigs out to Bangkok.

ASICs are being sold to many different individuals. 3 or more companies are beginning to ship working products, a few are delayed. Eventually, they will all be out, and all those ASICs will account for more than 50%, or maybe even 80% of all hashing power world wide. That they are sold to many different people, in different locations will help secure the bitcoin network from the possibility of governments attempting to freeze coins.

Then of course, later on, these ASIC designs will either go down in price, or be copied, or both. So more people can become miners.

Even if one has a pocket full of ASICs, one is still going to have to have access to a full node (self operated or via a pool operator) and if we can get the transaction volume up enough to make that a technically challenging proposition the dream can be achieved.  With global network providers on-board and doing deep packet inspection and blocking it should be pretty possible to create barriers to non-aligned node operators which could keep them from operating competitively and reliably.

When an ASIC miner is just a matter of Joe six pack buying a box at the store and plugging it in supplying his wifi and Bitcoin address the price will even out with the price and difficulty of the miner and the network will be impossible to hack/regulate.

I actually proposed that I will personally purchase a 1 GH/s mini ASIC miner. The manufacturer of this should make this particular version widely available, or in stock, and distributed to many retailers.

This is more than any single graphics card, but it's a lot less than giant full size farm rack rigs of 100 GH/s or faster.

800Mhash miners are already available in retail stores.. look at the top end GPU.

shortly 4Ghash, 65Ghash to 100Ghash will be standard where the Mhash-1Ghash units will be obsolete.

i know a few manufacturers in developments of this now. it wont be sold retail. it would be more whole sale so that entrepreneurs can the set up their own retail stores to then battle against corporation profits :D

bitcoin is the new economic freedom so why give the profits to the fatcats in boardrooms. thus also avoiding governments from regulating corporations to have firmware that includes blacklists.

But GPUs are expensive. In wattage. In price. In size. In heat. And you have to plug it into a motherboard or something. The ASICs can almost stand alone. Almost. I think you need a computer to interface, but then you can leave the ASIC miner running after that.

I'g get a 1 GH/s asic over a 1 GH/s video card for mining, or for bitcoin purposes. I'd get the video card only for 3D gaming, to enjoy the latest ... games or something.

But a 1 GH/s mini miner the size of a desktop mouse or something like that, that consumes maybe a few watts, that plugs into my router directly (after setting up through my computer of course), or something that only needs your bitcoin address and starts to mine immediately (connecting to p2pool or something like that.) ...

As in, buy the cute miner, plug it, it just works. At 1 GH/s I'd get maybe 0.07 BTC per day.

That, or if the products keep up with the times, make it a "xx GH/s to produce 1 BTC per day" unit (currently about 14 GH/s), updated every few months with a new model.

This would destroy Bitcoin. More control and surveillance. I don't think this is what Satoshi envisioned.

The first thing target miners would do, if threatened, is disconnect. Their hash power is now unavailable to be abused by governments.

The top thing most miners would do to prevent such things from happening, is to hide. No large miner will disclose his farm's location, because that would be dangerous to the miner.

Finally, black lists will have to be updated all the time. It just won't work. Any attempt of trying to black list any single address will be met by multiple spends with higher than minimum transaction fees, and then spent again and again until it's so diluted and all over the place. Or at least that's what I would do if my address ever got on a list.

This technically is possible if someone invent an efficient SHA256 preimage attack.


This statement is false. There will not be any split. Loose miners will still try to prolong longest chain made by dictator.

Could a wallet be created that would automatically send bitcoins to a new public address every (pick a time frame). In this way, unless a deterministic wallet was used, a bitcoin could always outrun the freeze order? I suppose the path the coins take could always be tracked. But wouldn't auto send feature render the freeze order impotent...
like hopefully all forms of regulation against bitcoin.  ;D

That wallet would be some sort of software? Or an online/web wallet? In latter case, you don't really control the coins, yet. In the first case, your wallet can be a target since it is connected to the internet.

Is there a reason you suddenly dug up this thread from 2011, genjix?

Perhaps he just wished to showcase the remarkable degree of prescience and understanding exhibited by some of the more capable persons associated with the project, and from a relatively early date :)

So, miners should be regulated to enforce blacklists, eh? Don't know how that could be achieved in a practical way worldwide. Mike was even more idealistic in his younger days!

Brilliant discussion. Thanks for illuminating me on how dynamic the blockchain can get

The reason is that Mike Hearn is still a dick, and doesn't like his agenda to be exposed.  The dark hates light being shed on it.

Total bullshit.  Mike has been crystal clear all along if anyone was paying attention and could understand the concepts and constructs he's described many of which are technically challenging.  This thread is one of many of the reasons I make this statement.  I personally disagree with some (maybe almost all) of his apparent philosophical constructs and goals, and he himself has said that these have been evolving, but he has been one of the most forthright people around in my opinion.  I do hope this persists.

Mike has also been one of the most prolific and effective in dev-land.  There is a pretty fair chance that Bitcoin would have withered on the vine a year ago but for his spearheading the database re-implementation.  I'm quite confident that we would not be where we are today without this work, and not sure that anyone else would have gotten around to it or pulled it off (even considering the rather embarrassing bdb issue which point up how questionable Bitcoin QA was (is?).  That's my read on things.

As for the 'secrecy' about the blacklisting conversation, I consider it mostly an artifact of the structure of the Bitcoin Foundation.  That's just one in a long list of lamentable features the BF displays.

I am 100% sure Mike Hearn is send from and paid by US agencies to destroy Bitcoin.
Like they send agents to protocols and formats working groups to prohibit secure crypto or unbackdoored software.

Looks like the other leading members of this Bitcoin Faildation either don't care, have no gut to stand up against it or they also are agents or paid for corperation.

In order to make it almost impossible to even attempt to implement coin lists everyone should use coinjoin.

https://bitcointalk.org/index.php?topic=279249.0

I would suggest first viewing Andreas M. Antonopoulos' presentation to the L. A. Bitcoin meetup in its entirety. He explains why blacklists, whitelists etc as is being proposed in this thread will destroy Bitcoin. https://www.youtube.com/watch?v=bTPQKyAq-DM (https://www.youtube.com/watch?v=bTPQKyAq-DM)

This proposed fork together with "Coin Validation" belongs in the trash heap.

Edit: Will Zerocoin work for the large number of coins the US Government holds?

The above is a verbatim copy of my reply to this thread https://bitcointalk.org/index.php?topic=412041.0;all (https://bitcointalk.org/index.php?topic=412041.0;all) It applies equally to this other proposed fork. Regardless of whether it is the state trying to freeze coins or those who hate the state trying to seize the state's coins the answer in both cases has to be NO.

How much money would you take from the dutch police to help them arrest a buyer of DMT from Silk Road, and so help clear up Bitcoin's image?

Good question genjix, with three possible answers:

- in public we will say: "No money, I won't rat bitcoin users to feds, I SWEAR, please believe me"

- in reality he says: "cool, sure I love to help identifying the target and make up evidence, but the thing is, I am a public person, community is watching me, we have to disguise this money thing, give me a consulting job or I hold some seminars for police offers and write big bill, to obfuscate the real reason for payment"

- if we would be honest we would say: "you don't have to give me money, I am also an LE agent, reach out to my engagement officer at NSA, so he can put me on this case, as part of Dutch Mutual Legal Assistance Agreement with U.S.A."  



:-/

I will explain Bitcoin and how it works to anyone, regardless of whether they're the police or not.

After all, I'm the one who taught you about Merkle trees back when you didn't understand the difference between a branch and a tree, remember? I gave the most popular talk at the conference you organised. Now you attack me for being willing to talk about Bitcoin to people who don't have the same opinions as you. Where's your commitment to spreading knowledge gone?

Amir, these sorts of random personal attacks are getting really old, but I've met you and I don't doubt your good intentions. The war on drugs is terrible and divisive. I would like to see it end. I think the way to end it is through democracy. The moment the majority of Americans started supporting legalisation, the laws started changing (http://www.gallup.com/poll/165539/first-time-americans-favor-legalizing-marijuana.aspx). But even if you think the right way is to support online black markets, you have to make a decision - given that lots of people don't agree with you on that, are you going to focus on the 80% of things where agreement can be found and working together is possible? Or are you just going to continue starting fights for no reason with people who would otherwise be happy to write code and get things done with you?


If your idea of dark is people writing about what ideas they're exploring in public forum posts over a period of many years, then I hate to know what your idea of light would be. Mind-reading machines?

Companys that want to deal with dedicated mining on such large scale, will settle their mining operations in countries that are open to Bitcoin. They are not crazy to loose their investment.
Why loose investment? Well, pretty much same moment they decide to freeze someones assets, BTC is dead. It is no longer free and open. What will happen is that BTC will fork to version that does not allow such actions (probably change of algorithm) which would render all huge miners useless, which would make em loose their invested money.

EDIT: Oh man i just replayed to topic that is 3 years old? Damn....it's like walking dead....zombies!

Are you trolling me? Lets work together says the guy that promoted the angle that I'm not a developer to the community and tried to have my participation censored.

http://www.wired.co.uk/news/archive/2013-09/13/digital-economy-task-force
"Bitcoin, Tor and Gates Foundation join task force to prevent child exploitation"

Don't tell me it's just about talking to the police. I'm sure you can rationalise it however you want. It sure starts that way. That's what people who run education seminars for the NSA or DoD tell themselves when you ask them. But they get paid for something.

Sigh. Seeing as you reopened this long-dead thread from 2011 for apparently no reason, I'm pretty sure you're the one who is trolling me.

You aren't getting my point. Forget it. Go ahead and refuse to talk to anyone who isn't "ideologically pure".

But here's a question to ponder. If the NSA came along and offered to run a few thousand Obelisk servers, what would you tell them?

Would you accept? And why?

I work with all sorts of people. Doesn't mean I need the consent or participation of police, legislators, corporations or other adversaries. That's simply common sense. And you didn't just talk to police, you support their actions. People working against your own users.

Thanks for this... ;D

Would I accept what? Money for ..... ? Explaining how Bitcoin works to a police or a court? Yes I would, as would many other people. Especially if there's going to be a jury that judges some events, I think it's pretty important for them to have accurate explanations of things.

I'd also accept money for explaining it to bankers, the freemasons and anarchists. I don't need the money but there are an endless number of people who would like personalised tutorials about Bitcoin, so charging the going rate is one way to keep the time commitments under control.

Here's a reality check for you: just because someone downloads an application that incorporates some source code, doesn't automatically make them friends of the developers. If the allegations are true, DPR was ordering people to be tortured and killed, which would make him no friend of mine even though he was a "user".

Now I answered your question, you answer mine. If the NSA downloaded and ran 1000 obelisk servers, what would you do?

genjix: This thread, particularly the first post, is very valuable to have in the public eye right now with GHash.IO at strong as they are. It's a short-term fix, but keeping attention on P2Pool and similar things will help. In the medium term the blocksize thing will probably start heating up again before long, and we'll see the same old set of naive arguments to just raise or get rid of those limits without doing the hard work to address the fundamental design flaws in Bitcoin.(*) Either way the OP has a lovely case study of why we have to keep pushing to make Bitcoin more, not less, decentralized.

Cluttering up the thread with off-topic arguments doesn't help that cause, and perversely the way human psych works is such that engaging in arguments like the above with your opponents just validates their social status. Best to ignore them on a personal level, engage them on a technical level, and keep making awesome software. I didn't pull off this (http://www.reddit.com/r/Bitcoin/comments/1v7ayg/revolution_in_bitcoin_privacy_stealth_addresses/) by worrying about who was working for what police forces you know.


e.g. "Because it's relevant." would have sufficed and kept discussion on track. Make a separate post for the above instead if you want to bring it up.


tvbcof: People dislike Mike in for being so prolific, precisely because he creates so much code and writing that's often kinda good, but misses the mark; somehow usually landing towards centralization and away from privacy; often only when examined closely. Some find it just annoying, others in this community see it as a deliberate and malicious attempt to shift the overton window of political acceptability. Either way, there are more interesting things to discuss.


mike: If the above sample of my PR consulting services has interested either you or a colleague, please be in touch and I'm sure we can negotiate an acceptable hourly rate. Referrals by request.


*) Back on topic: an interesting question to ask might be to what extent does the current division between "miners" and "users" make this freezing crap possible from a social point of view. I and others keep on kicking around crypto-currency designs that make per-transaction PoW possible, even to the point where everyone has an incentive to "do their fair share" of PoW mining through demurrage balanced exactly with mining reward. In short, if you do your fair share of the mining effort that is required to keep the system secure, the demurrage and mining rewards balance out with a net gain of zero. If you do more than your fair share, your coins grow, and if you do less, they shrink.

You can pair systems like that with other schemes that make pooled mining much less attractive, and I think you can make PoW algorithms that are designed such that even a high-budget ASIC effort wouldn't have more than a single digit multiplier advantage over a standard computer in terms of electricity/return.

Socially, are people open to such systems if the result is a much more decentralized coin where it's totally infeasible for transactions to even be significantly slowed by miner regulation? Obviously you can just ignore the whole mining business and not do your fair share, but you'd essentially be paying, say, 1% of the value of your coins to the participants in the system who do that important work for you.

lol, tempting offer :-)

Although the scenario I wrote about in 2011 is still theoretically plausible, I don't think it will actually ever happen and that's why I haven't wrote about it much since. Even though pools are highly centralised, it's a very fragile sort of power and the top dog changes all the time. Once it was slush, then it was deepbit, then it was btc guild, now it's ghash.io ..... if ghash.io started refusing to include transactions for political purposes then undoubtably most miners would abandon them.

The problem is not so much how to fix this if it starts - it's detecting it in the first place. Also, defining what an acceptable miner policy is. I think everyone would agree "ignore transactions to wikileaks" would be an unacceptable policy, but for instance Eligius has in the past refused to process dice transactions on the grounds that they are spam. So where do you draw the line and figure out what you, as a miner, are personally comfortable with or not. Also did the no-dice policy hurt or help Eligius as a pool? I think these questions are still interesting to explore.

I think this Satoshi-esque new poster explained it best last week - https://bitcointalk.org/index.php?topic=411099.0


So personally I'm not so sure how 'fragile' their fragile power is. We also don't know who may already control that power.

I think we still have safe spot against such events, because Bitcoin is open to change. It was changing, it is changing and it will change in future. Blockchain & Bitcoin protocol will be safe till we will lose ability to adapt.

We (community) just need to grow and promote Bitcoin ideals.

With growth we will be safe against any government or institutional efforts to break Bitcoin.
With promotion we will spread goals that crypto currencies wan't to achieve. Its a bit philosophic, but tell me that I'm wrong.

I'm totally ok with creating some kind of soft rules that will somehow mitigate problem of black market activity across cypto currencies. We all know that such security will not be too effective, but it will somehow remove mark that Bitcoin is safe bay for any Criminal Actions, at this point I would even work closely with governments to make it more efficient.

I think its up to any user to decide whether they wan't to be part of crime flavoured transaction.

genjix your attitude here is bad, don't make such personal accusations - its just odd. I don't care if thats true or not, you don't have any evidence of malicious and/or harming actions that Mike took against Bitcoin community. If you have any concerns please leave it in less public place. We are here to discuss not to point fingers at someone.

Yeah, ghash.io is a concern. One problem is that we lack any kind of organised form of communication for miners. There's the miner subforum here but I bet a lot of people don't check it, and the p2p alert message but a lot of miners don't run a full node. We need a carefully controlled (so it's not noisy) miner announcement system.

No the ability to adapt is not enough, Bitcoin needs the ability to 'pre-emptively adapt.' There are Make/Break moments in history. If you have a vulnerability, a good adversary will wait patiently and only exploit it at that Make/Break moment.
_____________________________________________________________________

Banks are completely insolvent on a global scale. Both the IMF and BIS have released reports in the last year for dealing with Bank Bail-ins.
Every major country has passed new laws in the last two years for dealing with them.

Just last week, 7th January - http://bambooinnovator.com/2014/01/08/hong-kong-banking-watchdog-seeks-bail-in-powers/

_________________________________________________________________________

Bitcoin has the potential to be free from this confiscation and to offer a functioning global payments system that can operate even in the event that the current financial system completely seizes up.

If Bitcoin can address the mining centralization vulnerability before then, Bitcoin can literally help save the world and BTC will be worth 50x+ more virtually overnight. (I'm being conservative.)  Otherwise just prior/post the bail-in announcement, that vulnerability will be exploited and and a nefarious entity will use it to decimate the price and trust in Bitcoin at that critical moment.  (It won't destroy but it will crush Bitcoin and make whatever other alternative TPTB have lined up the winner.)

So the question IMO, is whether Bitcoin can muster the resolve, urgency and focus to address this NOW.

Not a huge Eminem fan but...

http://bighdwallpapers.com/walls/eminem-you-only-get-one-shot-facebook-cover-other.jpg

Yeah that would be a good idea. I know you guys are doing your best to solve this.  Sorry that I keep bringing it up, but the 'centralisation of mining' is the only thing I've come across that really concerns me about Bitcoin. I wish I was smarter/more technical and that I could help more. 

It's not just mining. The general trend over time is centralisation of everything. That's because professionalism is important but takes a lot of work, and the most obvious way to fund it is through offering services and charging a fee. Right now for a lot of Bitcoin users, their experience is like:

- Buy some coins on coinbase (essentially a bitcoin bank)
- Send them to a friend who uses blockchain.info
- Mine on a big pool like BTC Guild or GHash.io
- From time to time, buy things from a merchant who is using BitPay

It varies by region of course. Here in Europe I see a lot of people using the Android SPV wallet, so that's at least fairly decentralised. But it takes huge and constant effort to keep the decentralised solutions competitive with the more centralised forms. Cracking that problem is something I've spent a lot of time thinking about.

I have also spent a long time thinking about this very problem - the conclusion that I have come to is "the home server".

The idea being to have a server at everyone's home that acts as their own "social network" hub as well as acting as a P2P participant in a system that provides both social and financial services.

blacklisted addresses
co-operation of many different governments
Because mining will be concentrated in the hands of a small number of legitimate, regulated companies
international framework

you have got to be kidding me.  Let me sum this up for you:

lets turn Bitcoin into Paypal, ok? except it burns electricity like crazy and uses incredible amounts of computing resources.

has anyone even discussed the threat of mining centralization to ALT COINS?

while we may or may not see a block chain fork event take place on the main block chain, these consolidated mining pools could easily fork one of the minor ALT COINS.  also the way checkpoints work with the altcoins is never made clear.  The question of who is setting the checkpoints for BTC is a serious concern, what about the checkpoint for the Altcoins?

Perhaps combine it with D-Central that John McAfee is supposedly going to provide to protect against surveillance from the NSA and other governments.

Hopefully he or someone is successful from the anti-surveillance standpoint and if it is open source, tweaking it to include bit coin services would be cool.

http://www.futuretensecentral.com

- Buy some coins on coinbase (essentially a bitcoin bank)

Personally, I feel the exchanges are becoming more decentralised over time, - last year MTGox was all powerful, now there are 4/5 with a big market share.  - I think cheap and mobile Bitcoin vending machines will also explode this year.  - I also think China & India are also inadvertently helping Bitcoin to become more decentralised by encouraging P2P exchange methods.  


- Send them to a friend using blockchain.info

I guess a wallet/address can be moved anywhere if blockchain.info is compromised? As long as some smart guys are being vigilant of blockchain.info code changes. Maybe a document that explains clearly to non tech people (like me) how to move their wallet and gain control and security of their coins after a blockchain.info attack as quickly and simply as possible could be good though.

- From time to time, buy things from a merchant who is using BitPay

Yes this is centralised for the moment. But it is attracting thousands of new merchants to Bitcoin and thereby decentralising Bitcoin even more.
So whenever Bitpay is shut down, they will leave a legacy of hundreds of thousands of merchants who now have Bitcoin experience & the ability to transact in Bitcoin without them.  

So IMO, though there are 'targets' for the nefarious in each of those areas you mentioned, only the ability to control large amounts of hashing power for an extended period has the ability to destroy the security & trust in Bitcoin itself.  



 

I first discovered Bitcoin about the time this thread was made (as CornedBeefHash). It was exciting to ponder the possibility of taking the control of money away from governments. Since the Roman Empire, governments have used money to control the minds of the people and secure power. Bitcoin users were excited about the potential of Bitcoin and the libertarian ideal was strong here. In three short years that ideal has been crushed by business involvement, the formation of trade organizations like TBF, self serving power players lining their own pockets and a growing collection of new users that could care less about the political ramifications of Bitcoin. I don't live in a cave. I'm well aware that individuals act in their personal self interest. I believed, at that time, I had found something that could be used to balance out oppressive governmental restrictions and swing control back to the people. Clearly I was wrong. Bitcoin can and will be the foremost tool of worldwide governments to monitor the transfer of wealth between individuals. While not as convenient, paper fiat remains the anonymous transfer system that I wanted Bitcoin to be. Hopefully, some day, someone will devise a system to take the production and control of wealth away from governments and return it to the people.

I created this thread (https://bitcointalk.org/index.php?topic=408254.0) to see how many new users are actually here for Bitcoin. The results might surprise you. People are no longer mainly here for Bitcoin.

Interestingly right now GHash.IO has over 50% of the namecoin hashing power: http://www.reddit.com/r/Namecoin/comments/1v7ypd/namecoin_is_51_vulnerable_right_now_wont_this/

Easily possible since Namecoin is merge-mined.

I believe the ones that aren't merged mined are even more susceptible.  You could take any one of the coins here: https://www.cryptsy.com/

as long as it's not Scrypt, you can use the same mining power to fork the block chain.  If you could set up some kind of short sell, you could make good money just shorting these coins then forking the block chain. 

Just a thought :)

What I see happening is that Bitcoin is scaling by organically supporting a multi-tiered or 'off-chain' series of solution while remaining within the grasp of small and independent entities to operate the infrastructure and thus they remain difficult to manipulate.  We are already at pretty impressive 'market cap' and I still use native global/persistent transactions to buy trinkets, and we are not yet really pushing into the supposedly absurdly low transaction rate.  I see this as a really good thing, and there is a lot of room to grow in this direction.

The mining centralization is starting to bother me, but only slightly.  It is clear to me that the current primitive form of mining is really the Achilles heal of the solution.  But how to correct the deficiency given that the miners are likely to be highly uncooperative?  I'll posit that the only way to do so would be a when a pool takes advantage of this weakness.  At that point the value store could/would be rolled back and locked and an entirely new method of mining implanted.  It would be all kinds of scary and disruptive, but in the end Bitcoin will come out stronger since none will be lost and this design deficiency will be addresses.  I just hope that some good options are ready to go.


Not to be to glib, but I would expect you to be putting some thought into that problem.  Just in such a way that banishes the small fry as quickly and completely as possible since they are not inclined to freeze the assets of the Butcher of [insert capital of country with coverted energy corridors here.]  And similarly disturbing (to me) reasons.

I'm still waiting for an explanation of how SPV clients do anything of any significance toward strengthening the network.  I guess you mean that simply the body-count of end-users is somehow to be taken as 'decentralization'?

---

retep:  Whether one is bored by Mike or not, I don't think that it is a stretch to consider him THE most critical individual in the Bitcoin universe at this point.  My arguments:

From back when I was following commits I considered sipa to be effectively the principle architect of Bitcoin.  Mike at least is familiar with his priorities enough to comment authoritatively on them though it is, of course, not clear if what influence he has on them.

In the interview with Mike from a few months ago (when the Yifu Guo, Mellon ID+blacklisting authority effort was in the news) it sounded pretty much like Mike has a pretty close relationship with Gavin and is exerting influence to really opening up the transaction rate when that occurs.

A high position in the Bitcoin Foundation focused regulatory efforts which seemed to be associated with an exploration of blacklisting.  To be fair, that's his job, but one cannot help but conclude that he's flirted with the concept from an early time.  It's hard (but not impossible) to conclude anything but that he favors some form of them.

---

I would again like to point out that there is nothing illogical about the various theoretical methods of controlling Bitcoin.  It would solve a lot of problems that a lot of people (including myself) see.

It is highly critical, however, to note that a very large number of grandmothers and Joe Sixpacks are going to agree vigorously with the need to dispense with a lot of the freedoms that Bitcoin users currently enjoy, and I'll bet that ideas like blacklisting are going to be pretty popular.  I might remind everyone that these folks are exactly the people that nearly everyone here wants to suck into the ecosystem as quickly as possible.

Bitcoin Foundation isn't my job actually. It's just something I volunteer with.

It's easy to assume that if someone explores an idea, they must ipso-facto believe in it. I guess in our society it's rare for people to talk about ideas they understand but haven't got a strong opinion on. But, I do it a lot.

Remember the context here. I wrote this post in April 2011. Slush formed the first mining pool just a few months before, in I think December 2010. So at the time pooled mining was a brand new thing and ASICs were theoretical.

It was in this world that I pondered the future of mining centralisation, and how governments might exploit that to achieve their goals. I also wrote about how effective that would be, and to what extent it would have to rely on coercion vs democratic agreement.

So that was the start of me thinking about how group consensus algorithms could interact with existing social policies. Bitcoin is the granddaddy of this idea, with its 21 million coin limit. Obviously governments have their own ideas about monetary inflation. In theory the cap could be changed of course and in future perhaps it will (i.e. if a satoshi becomes too valuable), but it relies on the consent of the economic majority. So these ideas then went on to evolve into the notion of decentralised crime fighting using private set interaction algorithms (https://bitcointalk.org/index.php?topic=157130.0), but at that point I was still talking about blacklisting of coins. Later on I decided that this notion didn't really fit what I wanted, and so most recently I've been talking about "marking" of coins with the idea that there'd be a kind of group Sherlock Holmes system in which people independently decide what they believe constitutes morally good or bad, and co-operate with each other to investigate things they agree are bad. But the flow of coins would be unimpeded.

Basically, I'm interested in how group consensus algorithms, democracy and social problems can interact. And I'm not going to stop thinking about these topics, sorry ....

Agreed.

Some people just fail to observe the universe and verify that centralization of forces is a natural phenomenon.

The idea was to have solo "mining" (decentralized), but it became pooled "mining" (centralized).

The idea was to every end user have a client (decentralized), but in reality it is more feasible use blockchain.info (centralized).

The idea was to each user trade directly with another user (decentralized), but it turn out that exchange platforms are more reliable (centralized).

I have to disagree.

The Exchange of Bitcoins is becoming more and more decentralised. From the all powerful MTGox, to 4/5+ main exchanges in just 12 months. Last year saw the introduction of the first Bitcoin ATM's and this year mobile bitcoin vending machines costing less than $1000 will erupt onto the scene, all of this in less than 12 months too.This year we will also see 'decentralised exchanges' for the first time ever. It is literally an EXPLOSION OF DECENTRALISATION.

Bitpay exists not because of centralisation but because of slow bitcoin confirmation times and volatility. Both of which will ultimately be addressed in this or another crypto-currency making those centralised intermediaries obsolete.

The internet itself is a manifestation of the decentralisation evolution of man. After information the next steps are money and power.

The fact that BC was even an idea, was created and has rapidly grown shows that the decentralisation of money is taking place.
Furthermore the most valuable crypto-currencies after Bitcoin are the ones that have evolved the decentralisation model even further.
(LC and faster confirm times and more ASIC resistant mining and other coins have POW etc.)

In fact the easiest thing to do would be to create a coin that was more centralised and had all the features the current centralised bases of power would like. But why out of the hundreds of crypto-currencies that have been made since Bitcoin has none been created yet? Generation Y would never use it.

No doubt the current institiutions of power made up of Gen X and Baby-Boomers will try to bring crypto-currencies into their centralised model, but they will fail. I only wish the community could effectively pre-emptively respond to the centralisation of mining threat rather than waiting for it to be attacked and set Bitcoin back a few years or have it replaced by something more centralised mining resistant.

The future is decentralised.  

From one exchange to five exchanges is not a change which could be used to establish your argument. Moreover, the tendency is more and more exchanges complying with government policies. Since such policies are similar across different jurisdictions the exchanges dealing with BTC will adopt practices defined by a central body of governance.


Bitpay exist because they want to obtain marginal profit from the BTC/fiat currency exchange markets. Period.


This sounds idiotic, sorry. No, it is not.


What the other electronic medium of exchanges had evolved was the capacity of man to speculate with money.

Um yes it is it's a huge difference! You are completely wrong.

Having 5 major exchanges in 5 different jurisdictions vs. 1 main exchange a year ago, a 500% increase, does establish my argument.

Last year China virtually shut down the biggest exchange BTC China but because Bitcoin had 5 other exchanges in 5 other Jurisdictions, Bitcoin was able to absorb even that blow.

What about the open source < $1000 mobile Bitcoin vending machines? The equivalent of thousands of mini-exchanges in hundreds of countries? Will all of them have to comply with your 'similar across different jurisdictions, government policies?'

What about the new decentralised exchanges, will they have to comply with your 'similar across different jurisdictions, government policies?'

Also you only have to look at gold to see that BTC will never 'adopt practices defined by a central body of governance.' 

They are trying to ban and tax certain gold imports into India, though they can limit it to an extent it has just resulted in a 1000% increase in smuggling and decentralised the market.  (http://www.youtube.com/watch?v=IpdoRUMeshw Some Indians are even willing to sift and swim through literally miles of faeces to mine/bring gold into the country, if they can't stop gold they can't stop a crypto-currency that's dealt with the centralisation of mining issue.)

More and more secure decentralised solutions are being developed everyday.

Decentralisation is the future.

I would guess that this five exchange markets are in jurisdictions where they have to follow AML polices defined by a central body of governance.


They will have to follow the local legislation of the place where the machine will operate, which is defined by a central body of governance.


If they operate with fiat currency they will have to comply with polices defined by a central body of governance.


Gold ≠ BTC

Even so, trade of precious metal can be regulated by a central body of governance.


You mean the "decentralized" exchanges markets which not operate with fiat currency.

I think you are confusing 'required to' with 'have to'...

They don't 'have to' do anything and the smaller the exchanges become (E.g. BTC vending machines) the harder it will be for a central body to enforce 'requirements.' 

By 'job' I simply meant your duties and responsibilities at your post.  Whether you are paid is of no consequence here.  And...

I am extremely sympathetic to the method of exploring concepts from as many different angles as possible, especially ones which one is naturally opposed to.  I try to do this, and find it invaluable in understanding a complex situation.

What I and I think retep and probably a great many others find troubling is that your concrete actions in terms of coding and project direction are objectionable insofar as they foster evolution toward an end point that we disagree with and detract from some of the properties of Bitcoin that we value.  They also often map pretty well to your 'flights of fancy' into theoretical solutions we find troubling.

I don't want to make this a personal attack, and I'm sure that none of my statements are especially surprising to you.  I respect your work immensely...even a lot of it which I disagree with.  More than anything I appreciate that you will, at least on occasion, argue your case(s) and explore concepts in public.  Again, I hope this persists.  As I say, I think that a backlash against lack of transparency could have significant and rapid consequences in a project such as Bitcoin.  We'll see.  Getting beat up over unpopular views/actions would be preferable to finding out the hard way that secrecy has led to a collapse in trust since the latter would likely be irrecoverable.

Do you have any code in mind? I don't think I've actually programmed anything of relevance to any of the decentralised investigation/crime fighting ideas. Actually in the past few weeks I've been focusing on HD wallets (privacy) and exploring activating Tor for bitcoinj wallets by default (privacy).

That you wind up writing such code is something I keep pointing out to the less sympathetic members of the community - even if you are on the NSA payroll engaging with you technically means Bitcoin comes out ahead and has some decent libraries that at worst can be fixed up relatively easily to fit our privacy goals. Any sane NSA subversion project would realize that you have to at least write stuff that looks like it aligns with community goals to have any plausibility, which helpfully means the ways it doesn't can be fixed relatively easily and we all get a bunch of free high-quality code.

What you write on so many topics may be considered harmful, but without leaked slides of a crappy powerpoint presentation about the HOUSEHIPPO Mike/Gavin subversion project, personal accusations aren't going to work outside of scoring brownie points in a tiny group. So disengage and get some work done instead. Notably saying crap like:


is incredibly counter-productive. Even if it were true you wouldn't put that out publicly, and since it's not it just makes you (tvbconf) look like a crank that doesn't understand how the politics of Bitcoin work (hint: no-one is that important) while creating a silly flamewar about a guy that just tells outsiders "Gee, this Mike person must be important!"


Mental note: at my meeting in Maryland next week suggest the idea of creating a sock puppet army of ostensibly pro-privacy cranks obsessed with Mike and Gavin. We could haze the junior agents by forcing them to write fan-fic about the relationship...

Peter Todd: Very good, we support you. Keep standing up against him, the majority of users is behind you.

I should think that the suggestion that open-source efforts consist of some individuals who are more likely to shape the direction of the project than others is one of the more obvious and less contentious concepts.  Saying 'the' is a relative statement which doesn't describe magnitude (and one that I continue to stand by.)

(Remembering that most of my contemplation are forward looking...)  To comment on the magnitude of Mikes influence, I'll bet that it will be very high.  He'll be seen as the 'good boy' of Bitcoin.  Popular with the Bitcoin Foundation-centric types who are in it to get rich (which, I'm looking forward to myself) and trusted by the authoritarian types who will want methods of controlling the solution...and make laws, BTW...

I put forth my take on this stuff mostly because it is a natural reaction of readers to consider than anyone who is actually doing anything with Bitcoin must be doings something 'good'.  Most people are going to go with an instinct if the option is to expend the effort otherwise necessary to develop a unique perspective.  By calling out some of the concerns that I have I hope mainly to deaden this undesirable gut reaction on the part of readers.  And I do believe that it has been somewhat effective, and I don't believe that it has been or will be 'incredibly counter-productive.'  The more capable devs are not likely to unduly impacted by such petty things.


Good to see you throw your hat into the ring in the competition to come of with the 'best' conspiracy.  Actually, the wild conspiracy about sock puppet armies was converted into a fact with the HB Gary Federal hack long before Snowden.  Whether the strategy and the software (purchased with my tax dollars) to facilitate it is employed within the Bitcoin project, I have no idea.  Certainly I would not rule it out, and sowing discontent and hard feelings within the dev community would probably have some utility.  Or might be seen by some as having value.

Don't get into the mindset of this being a personal fight. If I'm "standing up" to anything, it's an idea, not a person. Among other things, people change their ideas.

edit: Incidentally, don't read too much into that statement: my advice applies in the context of the politics of Bitcoin and I'd suggest completely different strategies in other situations.

Like I say, you're missing the psychology of it: you saying he's important is a self-fulfilling prophecy. Hell, it's nearly as self-fufilling as the way people are starting to call me a core developer now.

Incidentally, this (https://bitcointalk.org/index.php?topic=421608.msg4584913#msg4584913) is the kind of thing when I say that many see his efforts at maddeningly, yet subtlety, wrong. Note how I've got nothing against X.509 technology and think it should be integrated into the OpenPGP WoT using whatever hacks are required, while Mike's taking the usual top-down approach. But that's the kind of thing where malice is indistinguishable from stupidity, so until you've got that smoking gun you look like a crank pushing that angle. (heh, I'm pushing my luck with gmaxwell's quote there!)


Oh I can do better than that: http://www.mail-archive.com/bitcoin-development@lists.sourceforge.net/msg03705.html

A bit technical, but gmaxwell is criticizing my approach to stealth addresses and blockchain data query privacy on the grounds that I'm making life easier for an attacker, under certain assumptions. I justify it elsewhere (http://www.mail-archive.com/bitcoin-development@lists.sourceforge.net/msg03612.html) for nice simple-sounding but maybe fundamentally wrong reasons... just the sort of thing a NSA agent would do wouldn't they? Like I say, sometimes malice is indistinguishable from stupidity.

Do you believe that the only professional solutions to Bitcoin's problems are centralized solutions? Do you believe "offering services and charging a fee" cannot be done in a decentralized way?

No, I do not believe that. But alternatives require some creativity.

If I might be so presumptuous to get back to blacklisting... WHAT ARE YOU FRICKING NUTS!???? You want to destroy Bitcoin? If we blacklist some coins then how can anyone trust that their's won't be next?! If someone (gov) can come along and say "these coin were once used in a crime, maybe not by you (but maybe you) so now you have to give them up even though you earned them legitimately more recently" then that would MURDER any hope of this being a circulating currency. If there can be such thing as dirty coin no one takes the risk of transacting. I sure as sh't hope everyone starts using dark wallets and blacklisting dies a horrible death as an idea.

Unwilling coercion: http://www.youtube.com/watch?v=ne8-mUibhc4

Willful compliance:


You sound compromised.

What kind of man avoids his moral duty to save himself from prison. This isn't even in your own self interest unless you're paid well.

I bet you think Satoshi was misguided.

Yo, Pete:

Who's the guy who is making a credible threat to subsume Bitcoin under his personal project and is for all intents and purposes the acting 'benevolent dictator' of Bitcoin at this point?  Oh right...Mike Hearn.  Who could have predicted that and assigned status as appropriate???

Credible? We'll see. :)

Re: benevolent dictator, nah, we don't have one of those - maybe Wladimir.

that's a provocative question.  Seems the ideal answer might be "who cares as long as we have many Bitcoin implementations, of which XT is only one."

They were talking about a proposed blacklist but it applied to "tainted" coins themselves, not addresses. Any coin that has been proven to changed hands illegally, through theft or scam, could be tagged and refused by miners. Problem is user one could send blacklisted coin to another in exchange for w/ever but user two would never receive the coin as it would be rejected. Also the holders of the blacklist could use it or exploit it to their gain.

Check page 13 of this pdf for more info (middle of pg 13)

http://www.hbs.edu/faculty/Publication%20Files/15-015_2ef1a2dd-633d-494e-b47c-86cdc1dcad04.pdf (http://www.hbs.edu/faculty/Publication%20Files/15-015_2ef1a2dd-633d-494e-b47c-86cdc1dcad04.pdf)

There's a entire white paper about blacklisting coins but I can't find it.

Anyway, the idea seems to have too many holes. I don't think it's viable to blacklist addys because crooks will just use new wallets every time...

FWIW I've run into a lot of regulatory people who have pretty clear views that Bitcoin mining should be regulated such that addresses are blacklisted or even whitelisted. Obviously that's a goal, not necessarily what they'll succeed in making happen, but that's what the long-term intent is. For instance, one regulator I talked to a few months ago at a conference was *very* clear in her view that the Bitcoin protocol simply must be changed to add verified digital identities to the protocol itself, and mining blocks with transactions without valid identities and/or extending blockchains with non-compliant transactions should be an illegal activity that's prosecuted.

This assumes that bitcoin would fall under a country's legal jurisdiction... but the blockchain is global.

So how could this ever possibly be enforced let alone have any legal precedence?

Very sad but not altogether unexpected. We need to resist allowing Bitcoin to become just another surveillance tool for big brother or decide to abandon the project and let corporate America have it to use as just another payment system. Giving up is easy, people need to fight very hard to keep their civil rights. I would never use it again if they passed that law.

The U.S. government is stepping on personal freedom and civil rights so much now that we are quickly becoming the very thing we fought against in WWII.

Most likely their would end up being two versions. A legal one for the USA and the real one for the rest of the world.

This push toward tainting and increased control is entirely predictable.  It is one of the driving forces behind my wishing to have one layer of abstraction sliced horizontally vs. vertically (sidechains vs. treechains.)

A PoliceStateCoin sidechain could have all of the identity and tracking stuff that big brother wants.  I would use it day in and day out just as I do Visa, PayPal, etc today.  The big difference is that if it could possibly maintain a peg to a free backing store (such as Bitcoin if it remained free) I could have some hope of swaping out of it as needed.

Of course it is true that a totalitarian regime such as the one Mike Hearn and Peter's friend in the mainstream financial system long for, sidecoins could be outlawed on simply the basis of being backed by a free reserve.  It would, however, be one more hurdle for the fascists to jump through both legally and operationally.  It would also make chain analysis to the individual level highly impractical.

From a system design point of view, a solution involving subordinate chains which can come and go creates a 'whack-a-mole' problem that can evolve quickly to take advantage of niches and adapt readily to threats.  The one thing that needs serious focus is keeping the backing store itself as well defended as possible.  Even then there is are some significant advantages:

 - If the backing store came under attack and was damaged for periods of time, the subordinate chain systems would keep right on functioning in probably a degraded capability form to serve daily needs (depending on implementation.)

 - If the backing store completely failed it is likely that it would be replaced by something else with something less than a full loss realized by the subordinate chain users.

Freezing a number of bitcoins and using that freeze to activate a set number of coins on an alternate blockchain isn't enough to solve this problem. Any governing body that passes a tracking and identification law is going to make it broad enough to encompass any and all types of crypto transaction ledgers. Nothing using a blockchain type ledger will be legislation proof.

I think it fair to say that in a totalitarian environment nothing is legislation-proof period.  For that reason, and since I feel a significant risk that we'll see such an environment at some point, my favored course at this point is to work toward a system which is as cumbersome to regulate as possible and plan on a (hopefully limited) period of time when various cracks and fissures are able to be exploited in order to remain viable.

To say the truth, one of the biggest hopes I have for distributed crypto-currencies is to provide a tool to help escape from a more global and totalitarian environment that has not yet occurred but which very well could under a range of plausible scenarios.  A sober analysis of the world indicates that there is a lot of effort and money working being put toward a scenario that many people visualize as a utopia but I suspect will quickly become a total nightmare for most of us.

More and more I see it likely that Bitcoin is going to become "the worst nightmare we could have ever imagined".

Mike Hearn is one of those that will be remembered as a person that "paved the way to hell with good intentions".

As a person I actually have found him to be okay so it is disappointing that he just doesn't seem to see what it is that he has decided to support (which is complete totalitarian control over everyone's finances).

In the future I predict we'll miss when we had "cash".

.


What constitutes jurisdiction over bitcoin?

Let's say for example there was a country that has given bitcoin complete autonomy, with no government interference, no taxation,
etc. Let's say this is country A that advertises itself as a bitcoin haven, and you can "store" your btc  via hosted wallets in that country. If you define bitcoin ownership as the geographical location of the btc wallet, then other countries have to defacto honor country A's btc regulations. However if another country which is not very btc friendly, country B, (for which example btc owner resides in), does not legally believe that btc haven Country A does have jurisdiction over your bitcoin, because the blockchain is a global entity, then Country B has paradoxically lost its argument over jurisdiction. Add to the fact that your bitcoin is anonymous to the extent that your identity is not revealed. There is no clear way to define ownership of btc other than a btc address and it only takes a millisecond to create another address. In its current form, I just don't see how bitcoin can ever be financially regulated. Maybe at the point of exchange for fiat you can regulate it..but then only in a regulated exchange...versus free unregulated exchanges like localbitcoin.

If bitcoin is ever altered to accommodate a certain government's regulatory oversight, there are plenty of alt coins in the wings ready to carry on btc's original vision.

In Mike Hearn's world it doesn't matter about what is "fair or reasonable" it only matters that the *state* can dictate what they want to.

So in his view no one can be innocent unless the *state* says so (this is actually the modern political dynamic that we live in - guilty until you can prove you are not and we'll prevent you from trying to even prove you are not - just follow what is going on in Australia in regards to "boat people" to get a taste).

Hopefully we'll be smart enough as a community to publicly discredit people like Hearn
who don't respect Liberty.

If regulators feel like ignoring Bitcoin's basic principles, then they are free to use cash only, and we are free to circumvent having anything to do with them. No reason to regulate something one doesn't even care about, just because.

As for blacklisting measures, they will never work. It's a rough job tracking down all addresses associated with an ill-intentioned party, there might be addresses that are unknown to be linked with those types of people and they can simply tumble/mix their coins, or use a huge quantity of addresses.

Doing so will primarily just get you tagged.  More people love big brother at a fairly deep level than don't, and much effort and research is put into making that be the case.  It's easy-ish at this point to accomplish this reality, and especially in rich countries which can provide a good quality of life for their people or at least the pools of people who matter very much.  The engineering task of leadership is to adjust these pools to maximum effect with the resources available.  Your run-of-the-mill software engineer has every reason to prefer the status quo and support those who would preserve it.  For now.

Another nail in Bitcoin XT coffin.

I hear you. However, the longterm trend in mankind's history is toward greater awareness and freedom, and that is accelerating exponentially thanks to the WWW.  So I am quite hopeful.

I'm somewhat hopeful as well, but I see it as almost inevitable that people will need to be jarred out of their slumber by something pretty ugly and we so-called 'freedom loving people' (for lack of a better term) are destined to have a rough patch.  Whether it is permanent or not is hard to say, but breaking out of it will require a good set of sharp tools.  I have a bunch of personal goals for Bitcoin some of which are mutually exclusive and one of them is to get rich.  I think it really is the case, however, that an important role I see for distributed crypto-currencies would be to provide a tool for two-moves or so in the future and a way to dampen and complicate certain power grab operations on the part of our adversaries.

You can't freeze adress when P2Pool exist ... only slowdown the freezed adress until P2Pool find a block to do the transactions of the freezed adress.

Bitcoin network is open.

freeze or restrict single adress is useless ... and not on the way of the Bitcoin users that it has start to mine in this way.

Anyone cheked this discussion regarding Hearn's statement ?

http://www.reddit.com/r/Bitcoin/comments/39r03i/mike_hearn_is_saying_fork_might_ignore_the/

Salient point... It is our duty than to insure that a decent percentage(20-30% min) of the hash rate is in control of individuals or groups who respect the fungibility of the currency and will ignore any blacklists.  Perhaps 21 or bitfury will allow us to point their IoT items to our own pools or P2Pool. I am not holding my breath and am making plans to combat this otherwise.

AFAIK, 21 has no such plan. They want their IoT to mine at their pool and offere a % of revenue to the miner.

Source? While I am not hopeful, there exists a small chance that they can see the larger picture and allow for decentralized mining where it benefits the whole ecosystem and thus themselves in the long term. If not they can prepare for us to treat them with a more critical eye instead of embracing them and becoming advocates. It is there choice still.

Any other data you have please provide.

Wow, what a massive slippery slope to go down, and one I think the Bitcoin community should avoid at all costs.  How or why is the community as a whole responsible for deciding who is and isn't allowed to own Bitcoin?  You actually used Gadaffi as an example, which proves my point perfectly, because there's 10s or even 100s of millions of people out there who would happily argue against you on that.  It's pretty tough to make the argument that Libya is better off now versus under Gadaffi, when everyone had free education, electricity, house upon marriage, etc.

Who decides what addresses should be blacklisted?

Who's in charge of the processes and regulations required to blacklist an address?

Is there an appeals process of any kind?

How can we be sure the ownership of said address hasn't changed hands during investigation process?

What happens when the Russian mafia gets $80mm worth of Bitcoin frozen, and proceeds to send some people over to the mining farm(s) to handle the blacklisting issue?  Or even worse, a militant group like ISIS?

Will owners of DNMs have their coins frozen?  If so, why?  I don't personally do drugs, but don't have a problem with someone purchasing a little cocaine off the internet.

How about the FBI?  Do we get to freeze the coins they confiscated, as it could easily be argued the FBI stole them from their rightful owners.

How about the US Department of Defence?  After all, they're the largest arms dealer on the planet, and indirectly kill more humans than any other organization in existence, so are they allowed to own Bitcoin?

How about the Chinese government?  They're well known for silencing free speech, so should we allow them to have Bitcoin?

Who gets control over the frozen Bitcoins?  Where do they go, and who decides that?  Just permanently lock them, give them to the Red Cross, or?

Why would the Bitcoin community open its door to the massive amount of possible corruption this would include?

This whole idea of freezing / blacklisting coins is horrible, and filled with holes.

well said.  /threadwon.

Pretty much all of your concerns go out the window if you just let Big Brother worry about it.  It's his job, and those of us who count live under a Democracy so obviously nothing bad will happen, or at least not for very long, right?

This OP screed about tainting by controlling miners was written some time ago.  With time for analysis it seems (to me) to be pretty obsolete.  Let the 'invisible hand' do the grunt work.  Here's how:

 + Popularize Bitcoin for the masses so that a as many people as possible use it for buying the morning coffee and what-not.

 + The govt, in a valiant and self-sacrificing effort to protect us all from ISIS and such charters outfits like CoinValidation (http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/) to work their technical magic and declares that they love Bitcoin but they just want it to be 'safe and effective' for everyone so such a service needs to be utilized by all transaction providers (Coinbase, TigerDirect, etc.)  All it would take is a quick API call to check spends (and de-value accordingly.)

 + Fairly easy to list unregistered UTXO's (Bitcoins) categorically differently from registered ones.  If one has tainted coins, they can solve the problem by registering and accounting for their holdings.

 + Nobody no matter what their disposition is going to welcome tainted coins which cannot be used as broadly at retailers.  Blustering claims to the contrary will be 99% bullshit when the rubber meets the road (and the other 1% will be creamed.)  Fungibiity attack.  I can almost promise that if the ecosystem is sufficiently heavy with Joe Coffeedrinker class users the attack will be successful.  Note that it requires no code changes, no leaning on devs, no trying to track down nodes and miners all over the world, no consolidating of mining or other infrastructure required.

The prerequisite for setting up this attack is to get Bitcoin broadly used among the masses and accepted by retailers and the like.  Unfortunately Bitcoin actually sucks for this (as evidenced by half a decade of experience now with favorable media and favorable regulations here in the U.S. even!)  It is a batch system.  Back in the day it was considered dumb to assume transactions solid without confirmations.  History is being re-written by those who need Bitcoin to be a real-time system for the reasons I mentioned (much like the global warming hoaxers have tried to memory-hole the medieval warming period which is an embarrassment and detracts from their goals.) 

Well thought out and developed off-chain solutions are one solution which offers the benefits of Bitcoin for the masses while not making it brittle and as prone to the above mentioned fungibility attack.  One level of abstraction making Bitcoin used primarily as a settlement layer and backing store would throw a giant stick into the works.  Anyone could start a sidechain with mainly open-source technology...the only real criteria for success would be attracting enough of the Bitcoin circulation to peg.  Sidechains can adapt to attack by adapting to draconian requirements or simply closing up shop (whereupon users get their money back.)  The hope would be that those primarily active at the settlement layer would be generally more able and willing to ignore the pain-points where tainting could be applied (e.g., Coinbase which they have little use for.)

Ok, so who's determine the regulations as to which coins are considered "tainted" and which aren't?  Are we going off the laws of a certain country?  If so, which country?  Or is the Bitcoin community going to write its own law book, and hire it's own police force to govern such laws at to who can and can not own Bitcoin?  If so, who's the regulating body to this group to ensure they don't get out of control, and what measures does the regulating body have to stop any corruption?

CoinValidation (for instance) has the govt charter.  They make the rules as long as they have it.  If they wrong you, go ahead and take them to court if you have $50k to burn.

You could probably bitch the the comptroller of the currency (suggested by my legislator) as I did when Wells Fargo shut down my bank account which was only used to interact with Coinbase.  Lemme tell you how much that achieved: nothing.

Great, so a centralized bank / authority.  Sorry, but that defeats the entire purpose of Bitcoin.

I hate it. I hate it all.

long live bitcoin.

May the idea of a blacklist leave Bitcoin along with Mr. Hearn.

you cannot freeze the bitcoin address unless you have majority of the private keys. you need to generate a lot of tries in order to get a chance of finding that address and "freeze" it by sending the money out from their address, this is practically impossible. there are no possibility of regulating miners, and miners doesn't have ability to control the transaction process.

You do not know what you are talking about at all.  You could learn something by actually reading this thread but I expect that is too much to ask as you just post crap like that to up your post count for your paid signature.

This thread exists and yet no one saw back then that Mike Hearn was a loon. There have been fungibility discussions on this forum ever since 2011 but Hearn never understood the concept I suppose. Good riddance.

Mike Hearn was dead wrong on fungibility.

And because of that, people have had a huge bias
against him and thought "he must be wrong about the blocksize too"

IMO Hearn was and is anything but a loon.  For whatever set of reasons, he seems to feel that it is dangerous to allow individuals be free to operate outside carefully controlled monetary structures.  Gavin is similar in this respect.  I've long felt that Andresen probably simply 'loved big brother' while Hearn 'was big brother' in, at the very least, active spirit.  The trouble is that a large majority of people who matter on this planet 'love big brother'.  Thus, trying to achieve some of the goals I would like to see with a distributed crypto-currencies will be chronically under conflict with the 'collective.'

Also, don't count Hearn or Andresen out.  Both had a very active interest in Bitcoin which is unlikely to wear off, and both are situated to be useful in continued campaigns against it.

And that's why Hearn and Andresen both need to go work for MasterCard and leave Bitcoin alone. They don't understand or don't care about the idea behind Bitcoin. It's loony to me to make a decentralized system for the people to use freely and then centralize a blacklisting system. Either they don't believe Satoshi is right or they have their own agenda that doesn't mesh with Bitcoin. Either way they can GTFO.

The white paper