Does the UTXO you have belong to you, or could the protocol be changed so that a central controlling authority could decide your UTXO should be burned?
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In other words, if tomorrow, there's a soft fork in bitcoin that doesn't allow blocks to accept transactions with *your* UTXO, and a majority of miners accepts that, your UTXO are dead, and there cannot even be a fork of bitcoin where this is not true.
In theory, miners can blacklist your individual UTXOs now, without any fork.
It is easier for them to blacklist your UTXOs now, than to get a mechanism of such in the protocol later.
(As long as the network is still decentralized at this later point.)
Well, what does that mean, blacklisting ? Does it mean: (1)"not including your transaction" or does it mean (2) "not building on a previous block including your transaction" ?
Because (1) is not effective. It would need perfect collusion of ALL miners. If your transaction is waiting in the mem pool, sooner or later, a miner that didn't blacklist your transaction will include it in a successful block. And as long as it isn't included in a block, it stays on the mem pool. So the only thing that blacklisting by a FRACTION of the miners implies, is a very long delay for your transaction.
However, (2) is an effective soft fork. If a majority of miners applies it, your transaction will never be included, because those miners that include it, will get orphaned blocks because of it. So it is sufficient that 51% of the miners applies this effective soft fork, and you're censored.
Note that this doesn't need to be officially in the node software to be effective. It is sufficient that a majority of miners applies it in one way or another, when picking their mining strategy. The non-mining nodes don't care. They can run "non-soft-forked" code. They won't even notice that your transaction doesn't get included. It will live forever in the mem pool. This IS a soft fork.
A softfork or hardfork change to the protocol to "blacklist" coins will not be very
easy to do with the current system and how Consensus works. It would be extremely
hard if not impossible, which is why I stated what I stated specifically.
One way of blacklisting would be by the miners not allowing certain inputs to make
their way into a valid block. The miners could by collusion or governmental regulation,
be incentivized to not, or penalized by, including a TX with the "blacklisted" inputs.
The only miner who would then be able to help you, would be random, anon, miner,
who is likely not to pick up your "blacklisted" TX unless you pay a very sizable fee.
It would not need perfect collusion based on todays centralized mining, and it could be
implemented with governmental penalization as the node network becomes more centralized.
My point was that miners could do such now, without need for a code mechanism to prevent
inclusions. TX inclusions within a block, by nature, is a voluntary thing. So, if miners are afraid
of going to jail or whatever, then they will likely not even take your TX with a 1,000 BTC fee.
Edit: In addition, I would like to add that if there happened to be an actual "blacklist" list of
UTXOs that was maintained by Interpol or other such agency, and was public on their website
for example, do you think the receiver of those "blacklisted inputs" would be willing to accept
those coins as a proper compensation? I would say no, since now their new coins will be the
next "banned UTXO" in the chain. Those "banned coins" will forever need to be used only for
"illegal use" and can never go to exchanges or regulated businesses.
This is why I support some form of protocol enforced mix-mining system.
So that all inputs will be more resistant and fungible.
