No, that's actually exactly the way it's intended to be interpreted:


This is meant to provide a clear chilling effect for Russians, ie, don't do this, we don't approve - you have been warned.

It is Russia.

OP don't take this directly but Americans/westerners (which I take it you are) are friggin spoiled, myself included. It's all about perspective. When I'm feeling down it's terrible to admit it but something that makes me feel better (human nature), or it's better to say not so bad, is remembering those so much worse off. For Americans there are a lot. There was that man in Greece who suffering from their financial pressure set himself on fire.

In North Korea, where there is no Internet, 80 people were recently executed for infractions like watching porn and western movies. I remember stories before the financial crises of rampant food inflation causing exacerbated starvation globally, with people in some places making mud cakes - trying to get some nutrition from literally eating dirt.

In that context it's hard to feel sympathetic when you say you can't afford to live. Al Jazerra covered Sean's Outpost finding 3 homeless guys that, using bitcoin, began doing online tasks and soon moved into a house. There is so much opportunity with Bitcoin it's unbelievable. The fact that you're an English speaking, I assume male, puts you ahead of so many out the gate. Being Internet savvy and especially involved with Bitcoin puts you in a further minority percent. So you fell down a bit, big deal. Do you know how many would literally die (and sometimes do) to be in your shoes? It's all about perspective.

Yes I would. The integrity of the system, which relies on coins being fungible, is more important than a few thieves.

Even if I knew the victim was my grandmother I would accept the tainted coins. It's that important. There are other ways to catch thieves, even if not for that specific crime.

For the sake of completeness I'd point out users wishing to remain anonymous could run their normal use wallet behind Tor with a node to help the network on a hosted server, paid anonymously with BTC, outside their country if needed. So it's possible to evade govt. detection. I do think the passport proof can be useful in many cases, though. We always prefer more not less options.

That can be referred to as a Sybil attack... In an anonymous network it's possible to suffer Sybil attacks from more than one source at the same time, so no, you wouldn't know separate nodes were controlled by the 'same guy'.


No I didn't.


You can't positively know dummy or "good" nodes in an anonymous network. What you can do however is recognize data proof which is hard to fake which is "good" or helpful; which when seen over thousands of nodes can give confidence that control over those nodes is distributed to more than a few people.

There are something like 200 countries in world. I wouldn't call that centrally issued. As Mike points out wallets can probably also poll different countries. I understand the scariness the scheme has, and that it may not be perfect. That's why I suggest using it in conjunction with other trust schemes. Using multiple schemes together strengthens protection against fraud.  

I don't follow. Do you mean 'same guy' for a Sybil attack, or same guy that identified his node? You do understand it's an anonymous proof in the latter case?


No that alone doesn't, but one machine seeing thousands of such unique pieces of paper can draw a reasonable conclusion about that fact.


Exactly, hence the value in using them to conclude distributed source of ownership.


No, not exactly. The passport verification doesn't submit identity. What is optional is the choice to add some sort of extra data to your node to allow others to make some determination about it, which can be helpful to them. This can be done by regular users in two suggested ways: passport verification, and proof of sacrifice which incurs a small cost. Additionally, high profile non-anonymous nodes (e.g. MgGox) can also be used in helping clients try to identify the authentic network. Using these three things together appears to me to provide great benefit with no apparent downside. That's the substance of my argument.

After thinking this through I believe it's a very, very clever idea.

Let's recap the problem: we want to identify the "good guys" in our network but without centralized authority. This is especially useful for lightweight/SPV clients to trust a transaction has occurred before confirmations.

Before I comment on the passport idea let me put forth my own, which is a sort of distributed trusted node model. As Bitcoin grows we can expect higher profile "good guys" to emerge. Examples might be blockchain.info, MtGox, Bitcoin Foundation, and more recently even Overstock.com (CEO is anti-central bank). This should only increase not decrease and wallets can store/update the IP addresses of such entities once in a while (they shouldn't change often). Now in situations where a connection to the "real network" is questionable direct IP address links to trustworthy nodes are available, probably numerous ones.

I think it's better though to have more than one trust model. I think Mike's other ideas can be added. Start with the proof of sacrifice nodes which incur a cost. While this isn't ideal since we want nodes to be cheap many people may not care about some cost. So I think that can be added into the mix.

Last is the controversial passport idea. I can understand the knee-jerk reaction to anything allying itself with government (I recoiled initially too), but people should look deeper. There was a US senator who was dismayed many American youths saw Edward Snowden as "some kind of Jason Bourne". I had to smile at his consternation that high-tech defiance of the state could be seen as cool. This reminds me of that. If people see themselves as Bourne maybe they'll warm to this idea better. Remember, this isn't anything to do with transaction verification power and the integrity of miners. It's only a hand wave to say hey I'm okay if you want to listen to me. If some users opt to add passport verification to their node, and this happens in different countries, and clients see thousands of such nodes then I don't see a risk of granting govts any undue weapon/advantage; especially when merged with the two other ideas mentioned. These things taken together can give wallets a great resource for determining network authenticity.

Since this is a Mike-gripe thread I may as well briefly weigh in on his other proposals:

Re: CAs for the payment protocol - I think it's fine. Remember it's only a tool to help users decide if what's on their screen is  trustworthy. If in doubt they can pick up a phone or use PGP etc. in addition before sending the transaction.

Re: red/black lists for coins - No. Sorry, Mike, I think you're wrong on that one. While I understand the motivation to thwart bad guys external crime fighting methods must suffice. Coins remaining fungible is paramount.

I don't think you need a huge price spike to make money. Often people on localbitcoins buy at a much lower price and sell at a higher price than what is on exchanges. Many people would opt for localbitcoins because they can trade in/out for cash instantly, and anonymously. Those are two things exchanges are not best for, so charging a premium is definitely workable. I imagine if you work hard at it you can do pretty well.

Somewhere Saddam Hussein is saying ain't it the truth.

Unfortunately most people don't understand how money works, or the reason to put trust (or not) into a particular currency; many people believe dollars are backed by gold in Fort Knox.

What people would understand is the man behind the counter saying they need to pay in something called "bitcoin" or gold or receive no groceries. Then it becomes an effort to obtain the form of money the grocer wants regardless how it works.

I agree. While I don't think all alt-coins will be successful a few select ones will do quite well.


That and legal tender laws, so I agree it may not disappear entirely. However with trillions of units in existence if the primary use is limited to govt debt settlement it may take a wheelbarrow full of them to buy a loaf of bread.


No it's not. Why do you think the value of Bitcoin is dependent on dollars? You may be confusing the exchange rate, which is often in dollars, with the underlying value. The two are not the same.

OP: consider the people in Argentina are very familiar with currency collapse. This last time in 2001 I heard people tried in desperation to create trade alternatives, resorting to local exchange systems including home computer printed "currency". Of course this didn't last. Now imagine they had access to bitcoins in that situation. It paints quite a different picture.

Well selfish mining only starts to make much sense at around 1/3 of the network's hashing power. That means you could only have 3 competing pools behave that way where it might make sense for them. The assumption is miners would gravitate to whatever pool amassed an advantage in order to make the most profit on the winning most team, with the process leading to one pool having a large majority.

This idea is okay on paper but not I feel in practice. It's for the same reason pools have, in reality, made decisions not for their immediate bottom line, but for the longer term implications for the network. We see this with pools who have somehow fallen shy of 51% hashing; we see it with pools on the wrong side of the version 8 fork ditching their blocks.

Bitcoin is strongest and more importantly most valuable when all its participants act in a manner which supports a viable healthy system. That's at direct odds with the reasoning given for expecting selfish mining.

If that's possible I completely agree.


Unfortunately suitable course of action isn't necessarily a black and white call. If we were in a lab under controlled conditions then of course we could use pure logic for system optimization. This is not the case. Bitcoin is made up of independent actors all of which to some degree influence the whole. It's similar to how economics as a science is the one field where experts can agree upon a set of data yet come up with opposing views.

With Bitcoin protocol changes therefore can't ever be taken lightly. The larger the system grows the more difficult it is to come to consensus on any change. At some point I imagine it becomes impossible (one reason I believe alt-coins have a role). So I'm very glad people like you are raising these ideas sooner than later.

Bitcoin as money relies on shared confidence in its value. Confidence in Bitcoin's value naturally rests upon many things including the viability of the system, which includes withstanding attacks. It's unclear what would be the result of a pushed for yet unsuccessful protocol change. That's why we need to be careful about what things are viewed as critical.


While I agree with many of your conclusions I'm not yet sold on the fork punishment countermeasure.


Even you yourself say "probably" not cause the total destruction of the system. Nobody can say what the effect would be. Something less than completely healthy seems assured, and that in all likelihood means lower value for coins.
 

But that matters in practice. The security of the system relies on the assumption an attacker's resources will be low compared to the honest network. There are real costs (including other than financial) to prepare and execute the attack. If an attacker can't use pooled resources from the network their challenge is great. Governments might be the only viable candidate but governments are subject to political repercussion. Any attacker building out the server farms, power centers, etc. would probably not go undetected.

There is a problem with Selfish Mining I haven't seen addressed: incentive.

It's strange to me Cornell University researchers would publish a paper proposing profitable incentive to act "selfishly" and immediately predict the demise of Bitcoin. Why would a selfish miner execute a profit seeking attack knowing a successful attack could decrease the value of all held coins?

Recently Ghash.io went from near 51% of network hashing to under 30% in less than 48 hours as community reaction set in.

The design of Bitcoin and its future success was never guaranteed. The reason for optimism is it solves an important enough problem that whatever challenges arise resourceful people will put in the effort necessary to find a solution. As Bitcoin approaches global saturation 51% attacks or even 30% ones become exceedingly unlikely.

They can benefit from it the way anyone else can. Bitcoin is user neutral.

Cool. I think this is exactly the right approach. Unlike many central banks Bitcoin, its operating policy, and records etc. are completely open and available for discussion. The Bitcoin community has nothing to hide or fear from such high profile government discussions.

Yes you can do it because blockchain.info provides a transfer API. All you have to do is include the blockchain.info account credentials, pay amount, and destination address in an encrypted URL.

So for example you can set up a PHP server somewhere with a cron job scheduled to run once a week, once a day, whatever. When it runs it tells  blockchain.info to send the desired amount to the desired address. The receiving address can be anywhere and that process would happen without humans (until the blockchain.info account balance was depleted).

No, they couldn't easily destroy Bitcoin.

What they could attempt to do is manipulate the bitcoin to fiat price point. They have no bitcoins now so they first need to buy them. They would have to buy from bitcoins available for sale, and new ones being found by miners as scheduled in the inflation rate. They couldn't acquire any I have, for example, since they're not for sale.

So they could begin trying to acquire as many as possible which would drive up the price. Right now the price is about 1K each, and as I note above there are a limited number available, so their buying if they were seriously engaged could drive up the price quickly say to 10K each or beyond. At this point the multitudes of bitcoin owners would be greatly enriched (fiat wise).

The sharp uptick in price might slow down purchases as people hoarded bitcoins. At the same time the high price would create a larger news cycle, causing more people to learn about and probably be interested in Bitcoin. Now you have a lot of wealthy bitcoin holders who probably begin to sell a few, the central bank that now owns a number and looks to crash the market, and a lot of new people saying what the heck is going on.

So the price probably crashes from 10K back down to maybe as low as 1K, but I doubt it would get that far. Now people are taking bitcoin very seriously with such high prices, the new interest in it would fuel sales, and older holders still won't sell all their coins cheaply.

Now the central bank needs to buy coins again to try the cycle over. All they have successfully done is enrich a lot of bitcoiners, add in volatility which otherwise wouldn't have been there, and generate more interest and awareness for it. If you look at bitcoin's history you'll see tons of volatility, which hasn't killed it. Next.

Your premise is flawed. You imagine you can stop crime by regulating a tool. You can't.

Money is a tool. Guns are a tool. Neither of them commit crimes. People do.

Criminals intent on some action will find a way to carry it out, whether or not guns are banned, or whether or not there is KYC/AML in place. You can't completely protect yourself from terrorists and criminals unless you give away all your freedom to those that will protect you. Then it becomes pretty easy for protectors to fight terrorists (any real or made up). The problem is it also becomes easy for them to fight and limit you to keep/increase their power.

If you want to stop/limit crime look at the economic conditions, psychological conditions etc. that lead to it and work from there, while also taking steps to protect yourself. Same for terrorism. Look at which political ideologies aggravate it. You don't go after the tools and freedom and crack down on everyone with one gigantic suffocating dragnet. It's a bit like killing a flea with a sledge hammer. You'll get collateral damage.