Announcement Regarding State Rep Mark Warden's Bitcoin Strategy

[etotheipi]

Probably the approach necessary will be to have anyone that wishes to have the funds refunded send to you a signed message proving they truly are the owner of that address.  The bitcoin-qt client suports this -- you simply pick one of the adresses that the transaction was from and do Sign Message.  Anyone can then verify.  And if they do that, you might as well just ask them for identity and just keep the payment if that's provided.

While I think signing messages with a particular address for the purposes of identifying one's self is a great idea in concept, I don't see how it's currently possible (unless everyone was using Armory).  Last I saw, the message-signing interface in Bitcoin-Qt was weak -- it's not easy to communicate exactly what you were signing, and it's not easy to verify a signature.  The person can send you the message they signed, but it won't work if they accidentally added an extra space at the end, or forgot a punctuation mark.  I made progress on this by creating "signature blocks" in Armory, but it isn't compatible with any other program.  I was waiting for Bitcoin-Qt upgrade theirs so I could help design a cross-client implementation.

However, I still believe this is a valid, useful use-case, so I'd love it if the core devs would make this feature easier to use, and then I would make it compatible.  The specific recommendation I was making was that you not only sign a message, but you have a signature block that clearly identifies the signature and the data that was signed.  In Armory, it looks like this:

Code:

-----BEGIN-SIGNATURE-BLOCK-------------------------------------
Address:    1ArmoryXcfq7TnCSuZa9fQjRYwJ4bkRKfv
Message:    "Armory version 0.60-alpha was released 2012-Mar-"
            "19 07:40pm. Windows binaries have been released "
            "in zip files with the following MD5 hashes:  [Wi"
            "n32::7b6e3dd0e9114523e303db304a87c0d6] [Win64::e"
            "930159411483428da40c127f654bf69] Please do not u"
            "se any zip files whose hash values do not match!"
PublicKey:  0411d14f8498d11c33d08b0cd7b312fb2e6fc9aebd479f8e9a
            b62b5333b2c395c5f7437cab5633b5894c4a5c2132716bc36b
            7571cbe492a7222442b75df75b9a84
Signature:  842590674c06b8712bd9aa04ae7e3fd4c09410f6881ec5a361
            fcab55433f1d28f569b3771216754f400a5674e24984943d62
            9079a8d56b3c5285ee533f8f4f16
-----END-SIGNATURE-BLOCK---------------------------------------

You only have to copy that block into the Armory message signing dialog and click "Verify" and it will pop up a window like this.  I pushed for this a long time when I first made it, but there was little interest in it.  Maybe this is an excellent time for bitcoin-qt to implement something like it so that high-profile use cases (like campaign financing) can leverage it.

[etotheipi]

Please post comments&objections to the return-to-sender advice I posted (at the end of the first page of this thread).  I think it is a really important concept to iron out.

But I am not just bumping this thread, I wanted to propose a top-level CONOPs (concept of operations) I proposed to Mark's campaign via email.  Additionally, I have recommended my own program (Armory) for this recommendation, because no other program currently supports deterministic wallets and watching-only wallets and has an intuitive user interface for them (am I wrong?).   I'd appreciate if some other Armory users provided some independent feedback about Armory, so this doesn't look like just a shameless plug for my own software.  In reality, this will become the norm in the far future, but Armory can uniquely enable it right now.

• (1) Arbitrary political campaign creates a deterministic wallet, offline.
• (2) Campaign creates a watching-only copy of the wallet, registers it with an oversight committee
• (3) Potential donor accesses the campaign website, commits their personal details, and gets a donation address
• (4) Donor can put the address into the website of the oversight committee, which will confirm it is one of the officially-registered addresses
• • (4a) If it's not, the donor can report the campaign for shady campaign financing practices
• (5) Donor sends money to received address
• • (5a) Donor sends the final tx ID and amount to the campaign website/email (maybe not necessary, since the donation address was unique)
• (6) Once every X months, oversight committee aggregates the list of donations sent to that wallet, and requests the identifying information for each one (they have the watching-only wallet, so they can see every donation)
• (7) Campaign submits the appropriate documentation for each donor, or issues a return transaction back to the sending address for ones they can't identify

This process seems like it would not only satisfy the spirit of campaign financing laws, but might actually improve transparency.  Donors can verify that the address they are donating to is a monitored address, and the oversight committee can see every donation without actually having spendable access to it.  Even better, donors don't need to use Armory, only the campaign and the oversight committee.

[giszmo]

Actually this kind of features of bitcoin scares me a bit. Some here see it as a mean for tax evasion but with monitoring committees it can lead to only monitored funds to count as bitcoin.

How does a politician proof he is not accepting illegal donations? You showed it. Watching only wallet at the authorities.
How does a company proof it is paying its taxes? Just the same way. Watching only wallet at the authorities.
How is a private person proofing to pay taxes? Just the same way. Watching only wallet at the authorities.
Next step would be to accept donations to the US politicians only from wallets registered with the US authorities because only these are clean coins?
…

Yes I like it for the political campaigns but you see what I'm scared of.

[interlagos]

Actually this kind of features of bitcoin scares me a bit. Some here see it as a mean for tax evasion but with monitoring committees it can lead to only monitored funds to count as bitcoin.

How does a politician proof he is not accepting illegal donations? You showed it. Watching only wallet at the authorities.
How does a company proof it is paying its taxes? Just the same way. Watching only wallet at the authorities.
How is a private person proofing to pay taxes? Just the same way. Watching only wallet at the authorities.
Next step would be to accept donations to the US politicians only from wallets registered with the US authorities because only these are clean coins?
…

Yes I like it for the political campaigns but you see what I'm scared of.

My guess is that it's going to be prohibitively difficult cost-wise for any government to do that.
By the time they recognize Bitcoin as a currency (they have to do it if they want to regulate it) the authorities won't have enough coins to hire needed amount of people to monitor everything.
Right now they can print nice green papers out of their a$$ and pay CIA, FBI, NSA and others to spy on you.
With Bitcoin they will have to come up with a better way to spend their precious coins.
Libertarians will be the ultimate financial power in the world due to Bitcoin early adoption, so no worries here.
Fasten your seat belt and enjoy the ride!

//Inspired by: http://www.youtube.com/watch?v=0XxWGBjGMco

[proudhon]

Please post comments&objections to the return-to-sender advice I posted (at the end of the first page of this thread).  I think it is a really important concept to iron out.

But I am not just bumping this thread, I wanted to propose a top-level CONOPs (concept of operations) I proposed to Mark's campaign via email.  Additionally, I have recommended my own program (Armory) for this recommendation, because no other program currently supports deterministic wallets and watching-only wallets and has an intuitive user interface for them (am I wrong?).   I'd appreciate if some other Armory users provided some independent feedback about Armory, so this doesn't look like just a shameless plug for my own software.  In reality, this will become the norm in the far future, but Armory can uniquely enable it right now.

• (1) Arbitrary political campaign creates a deterministic wallet, offline.
• (2) Campaign creates a watching-only copy of the wallet, registers it with an oversight committee
• (3) Potential donor accesses the campaign website, commits their personal details, and gets a donation address
• (4) Donor can put the address into the website of the oversight committee, which will confirm it is one of the officially-registered addresses
• • (4a) If it's not, the donor can report the campaign for shady campaign financing practices
• (5) Donor sends money to received address
• • (5a) Donor sends the final tx ID and amount to the campaign website/email (maybe not necessary, since the donation address was unique)
• (6) Once every X months, oversight committee aggregates the list of donations sent to that wallet, and requests the identifying information for each one (they have the watching-only wallet, so they can see every donation)
• (7) Campaign submits the appropriate documentation for each donor, or issues a return transaction back to the sending address for ones they can't identify

This process seems like it would not only satisfy the spirit of campaign financing laws, but might actually improve transparency.  Donors can verify that the address they are donating to is a monitored address, and the oversight committee can see every donation without actually having spendable access to it.  Even better, donors don't need to use Armory, only the campaign and the oversight committee.

I think this is brilliant.  I'm an Armory user, but I don't know what feedback to offer other than that I've created several offline wallets with watching-only properties on other systems and I absolutely love the functionality of it.

[niko]

Actually this kind of features of bitcoin scares me a bit. Some here see it as a mean for tax evasion but with monitoring committees it can lead to only monitored funds to count as bitcoin.

How does a politician proof he is not accepting illegal donations? You showed it. Watching only wallet at the authorities.
How does a company proof it is paying its taxes? Just the same way. Watching only wallet at the authorities.
How is a private person proofing to pay taxes? Just the same way. Watching only wallet at the authorities.
Next step would be to accept donations to the US politicians only from wallets registered with the US authorities because only these are clean coins?
…

Yes I like it for the political campaigns but you see what I'm scared of.

Don't let the fear interfere with clear thinking. Things you are describing are pretty much already a norm with usd transactions. The awesomeness of Bitcoin is in its openness and symmetry of power: anyone can read and write the blockchain. You could vote for those who will instate watching-only wallets for government accounts. The public could then keep representatives accountable for how public funds are managed. Things that scare you could easily be turned around and used as a weapon against corruption and abuse of power. Transparency is already there today, but only as a one-way mirror, a mass-surveillance Panopticon. I see Bitcoin, Wikileaks, and similar phenomena as tools of restoring the balance of power, making transparency work both ways.

[FreeMoney]

I'm surprised to see MikeHearn and etotheipi saying to send back to sending addresses.

I would be really upset if I used my bitcoins to donate to Mark and they ended up in MtGox or instawallet's slush fund.

There isn't a way to safely return bitcoins and I don't think Mark blasting off what people gave him to who knows where in order to maybe satisfy potential bureaucrats complaints is terrible. Worse than never accepting them at all by long shot.

How about this:

Bureaucrat says: Mark we see what you did, pretending to return all of those coins by sending them to the sending address recorded in the blockchain, now you need to prove to us that you don't own any accounts which are attached to those receiving addresses. For all we know you made deposits to 1000 instawallets and 5000 MtGox deposit addresses before announcing that you were accepting bitcoin donations. You fully knew that some people would be paying from those popular wallet services and chances are that some of the coins would be paid from accounts with addresses associated to your accounts. So you 'returned' the coins to some of your own addresses. It's clever Mark, but not clever enough. The possibility that you retained any of those coins invalidates your campaign for breach of XXXX regulation.

Mark: .......

[etotheipi]

I'm surprised to see MikeHearn and etotheipi saying to send back to sending addresses.

I would be really upset if I used my bitcoins to donate to Mark and they ended up in MtGox or instawallet's slush fund.

There isn't a way to safely return bitcoins and I don't think Mark blasting off what people gave him to who knows where in order to maybe satisfy potential bureaucrats complaints is terrible. Worse than never accepting them at all by long shot.

How about this:

Bureaucrat says: Mark we see what you did, pretending to return all of those coins by sending them to the sending address recorded in the blockchain, now you need to prove to us that you don't own any accounts which are attached to those receiving addresses. For all we know you made deposits to 1000 instawallets and 5000 MtGox deposit addresses before announcing that you were accepting bitcoin donations. You fully knew that some people would be paying from those popular wallet services and chances are that some of the coins would be paid from accounts with addresses associated to your accounts. So you 'returned' the coins to some of your own addresses. It's clever Mark, but not clever enough. The possibility that you retained any of those coins invalidates your campaign for breach of XXXX regulation.

Mark: .......

I don't understand.  Those sending addresses are not black holes.  The coins are not lost.  It just has to be sorted out with Gox customer support, etc.  Having a transaction ID and a signed message from Mark should be enough.

Plus, this is a condition that shouldn't happen -- there should be a huge warning on the donation page about it.  If donors don't pay attention to the warning, then their punishment is dealing with Mt Gox support to recover the funds.

Perhaps for donations that happened so far, before people realized this, they can be returned via user-supplied address.  That would be justifiable as "growing pains" of figuring out this process -- especially because it's not a ton of money Mark has received so far.  However, future donations should follow this policy, and there should be some explicit warnings about it on the donation page.

[FreeMoney]

I'm surprised to see MikeHearn and etotheipi saying to send back to sending addresses.

I would be really upset if I used my bitcoins to donate to Mark and they ended up in MtGox or instawallet's slush fund.

There isn't a way to safely return bitcoins and I don't think Mark blasting off what people gave him to who knows where in order to maybe satisfy potential bureaucrats complaints is terrible. Worse than never accepting them at all by long shot.

How about this:

Bureaucrat says: Mark we see what you did, pretending to return all of those coins by sending them to the sending address recorded in the blockchain, now you need to prove to us that you don't own any accounts which are attached to those receiving addresses. For all we know you made deposits to 1000 instawallets and 5000 MtGox deposit addresses before announcing that you were accepting bitcoin donations. You fully knew that some people would be paying from those popular wallet services and chances are that some of the coins would be paid from accounts with addresses associated to your accounts. So you 'returned' the coins to some of your own addresses. It's clever Mark, but not clever enough. The possibility that you retained any of those coins invalidates your campaign for breach of XXXX regulation.

Mark: .......

I don't understand.  Those sending addresses are not black holes.  The coins are not lost.  It just has to be sorted out with Gox customer support, etc.  Having a transaction ID and a signed message from Mark should be enough.

Plus, this is a condition that shouldn't happen -- there should be a huge warning on the donation page about it.  If donors don't pay attention to the warning, then their punishment is dealing with Mt Gox support to recover the funds.

Perhaps for donations that happened so far, before people realized this, they can be returned via user-supplied address.  That would be justifiable as "growing pains" of figuring out this process -- especially because it's not a ton of money Mark has received so far.  However, future donations should follow this policy, and there should be some explicit warnings about it on the donation page.

Oh, I think I misunderstood you. You mean after he puts up a warning it is ok, I agree. Same as satoshi dice etc.

I was thinking about the situation where they didn't do that and want to get rid of the coins.

I know they aren't black holes, it could be an address assigned to another user (or Mark! as in my hypothetical) or an intermediate/cold storage address of the wallet provider.

Slightly different point also, you cannot in general assume that paying to an address is equal to paying a person unless they explicitly agree it will count as payment because they may have lost the private key or not be looking there anymore or sold it to someone in a foolhardy firtsbits collecting scheme.

Given the situation Mark is in it is impossible to return the coins to the senders, he's not accomplishing the desired undonating. But since he's only trying to convince bureaucrats who won't understand anything that comes with a sentiment of "I'm sorry I did something strange regarding money and I tried my best to undo it" will probably work unless they hate him.

[finkleshnorts]

sent 0.25 BTC and an email.

Good luck!

[ben-abuya]

Update here:

New Hampshire Deputy Secretary of State Recognizes Bitcoin Contributions

[etotheipi]

Slightly different point also, you cannot in general assume that paying to an address is equal to paying a person unless they explicitly agree it will count as payment because they may have lost the private key or not be looking there anymore or sold it to someone in a foolhardy firtsbits collecting scheme.

Given the situation Mark is in it is impossible to return the coins to the senders, he's not accomplishing the desired undonating. But since he's only trying to convince bureaucrats who won't understand anything that comes with a sentiment of "I'm sorry I did something strange regarding money and I tried my best to undo it" will probably work unless they hate him.

Everything you mentioned is crazy corner cases.  It would be extremely rare that someone would lose their private key or somehow lose it in a scam.  Even things like Casascius physical BTC are usually swept to your wallet (or imported) before you can send it on.  

That's not to say that it doesn't happen, but we shouldn't let extreme corner cases dominate what is otherwise a perfect solution.  Put up the appropriate warnings, and if the donor absoloutely insists that the sending coins back to the addresses would result in permanent loss or theft, Mark can donate them to charity.

[SgtSpike]

Slightly different point also, you cannot in general assume that paying to an address is equal to paying a person unless they explicitly agree it will count as payment because they may have lost the private key or not be looking there anymore or sold it to someone in a foolhardy firtsbits collecting scheme.

Given the situation Mark is in it is impossible to return the coins to the senders, he's not accomplishing the desired undonating. But since he's only trying to convince bureaucrats who won't understand anything that comes with a sentiment of "I'm sorry I did something strange regarding money and I tried my best to undo it" will probably work unless they hate him.

Everything you mentioned is crazy corner cases.  It would be extremely rare that someone would lose their private key or somehow lose it in a scam.  Even things like Casascius physical BTC are usually swept to your wallet (or imported) before you can send it on.  

That's not to say that it doesn't happen, but we shouldn't let extreme corner cases dominate what is otherwise a perfect solution.  Put up the appropriate warnings, and if the donor absoloutely insists that the sending coins back to the addresses would result in permanent loss or theft, Mark can donate them to charity.

Agreed 100%.

[ben-abuya]

UPDATE:

Mark Warden's new, totally-compliant, Bitcoin contributions page just launched:

http://www.markwarden.com/page/bitcoin-donation

[BitPay Business Solutions]

Great job!  This is a model that other candidates can follow.  If you support alternative currencies, and you are running for office, you can accept bitcoin and be compliant with campaign finance laws!

[Technomage]

This is great. Bitcoin IS suitable for just about anything, for some cases it just requires a service to help make it happen in the right way.

[giszmo]

Mark Warden's new, totally-compliant, Bitcoin contributions page just launched:

If it needs intermediaries like bitpay to be "totally-compliant", then bitcoin failed. Bitpay deserves honor for all they are doing for bitcoin and there are many businesses that I guess are better off using their service for now but if you really need this middle man to do a donation (hey, here there is no danger of double-spends or volatility to eliminate.) then I can't cheer for joy.

Edit: I get an "internal server error" when i middle-mouse-click aka open in new window the "Bitcoin order now" buttons.

Also it's slightly confusing that the shopping cart accumulates my several clicks. When I clicked the $10 button and it said "approximately $150" I checked at mtgloxlive if BTC just exploded before I realized my shopping cart was full with other donations. The cart content is color:#666; font-size:.9em;. Why? Why not show the customer what he's buying with #0 and 1.3em?

[SgtSpike]

UPDATE:

Mark Warden's new, totally-compliant, Bitcoin contributions page just launched:

http://www.markwarden.com/page/bitcoin-donation

If it needs intermediaries like bitpay to be "totally-compliant", then bitcoin failed. Bitpay deserves honor for all they are doing for bitcoin and there are many businesses that I guess are better off using their service for now but if you really need this middle man to do a donation (hey, here there is no danger of double-spends or volatility to eliminate.) then I can't cheer for joy.

Baby steps...

[Technomage]

He could certainly do it without Bitpay but it would require setting up a form and setting up a Bitcoin wallet etc etc.

Some people don't understand that Bitpay will be here, and it will be big, even if Bitcoin becomes a universal currency. It's a service industry that will have demand even if exchanging bitcoins to fiat no longer has! Exchanges will experience less demand than Bitpay in the very long term if Bitcoin really succeeds.

Currency risk is not the main reason to use Bitpay, I'd say convenience is the bigger reason. That will continue to be the case because sometimes outsourcing simply is better even if it could be done in a do-it-yourself way.

[etotheipi]

UPDATE:

Mark Warden's new, totally-compliant, Bitcoin contributions page just launched:

http://www.markwarden.com/page/bitcoin-donation

If it needs intermediaries like bitpay to be "totally-compliant", then bitcoin failed. Bitpay deserves honor for all they are doing for bitcoin and there are many businesses that I guess are better off using their service for now but if you really need this middle man to do a donation (hey, here there is no danger of double-spends or volatility to eliminate.) then I can't cheer for joy.

Bitcoin doesn't require that people forgo third-parties to be successful, it only enables it.  If Bitcoin users, especially ones with high legal liabilities (such as political candidates that can be ruined by the appearance of shady financing practices) want to pay third parties to help them do it right, then let them do it!  The important part is that they have a choice to do it without third parties.  And other candidates can do it.  Don't call it a failure just because someone was willing to pay a fee to simplify their own operations.