The Red List

[datz]

Looking for another developer to take on board bitinsure (peercover) for a vital subproject not only for bitinsure but for the entire crypto-currency community

For more on the bitinsure project visit:
https://ripple.com/forum/viewtopic.php?f=1&t=2382

The Red List

The Red List is an anti-fraud/anti-theft subproject which allows us to identify wallet thieves even after money laundering and mixing.

In the case of private key/wallet loss money will never move out of the wallet. If it does we know it is fraud.

In the case of theft money will move out of the wallet. If the pool trusts the person it will approve the claim. We can track that stolen money across the blockchain or ledger, create a public red list of addresses, and flag that money as it is transferred. Basically a public record of theft. If directly used to buy anything or at an exchange, we can actually catch the thief if legal businesses choose to honor The Red List. If the thief uses a mixing service, we will flag that mixing service as a money launderer and will flag wallets the funds ultimately get mixed to, disincentiving users of mixing services (because you could inadvertently receive stolen funds and actually feel the consequences). Even if we are facing a professional money launderer and cannot directly catch a one-time thief, we can establish patterns which will allow us to prevent offenders from conducting transactions with legitimate businesses, forcing them underground.

Eventually we will get more sophisticated and even provide an API with which to check wallets against The Red List. Legal businesses could perform a simple API query to know if the wallet they choose to accept funds from is associated with stolen goods (first degree, second degree, etc). We could even go so far as to allow the legal merchant to send information such as address and name back to the registry after detecting a first or second degree red flag attempted wallet transaction in order to tie identities to The Red List entries.

To sign on PM me and visit https://c9.io/datz/bitinsure to gain project permissions.

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[Chet]

This sounds interesting but I would really like a better explanation of exactly what a  mixing service would be.
It seems like if you did something as simple as allow donations to your wallet you might get hit with 'tainted money' - then what?
Next time you go to spend some BTC you find your wallet has been contaminated?
Someone with 'red' BTC could go all over the net and drop fractions and contaminate thousands of addresses?
What am I missing here?

[lexxus]

Thanks but we'll have soon KYC, AML and the rest all over us anyway

[datz]

Thanks but we'll have soon KYC, AML and the rest all over us anyway

This is mainly a "don't fuck with bitinsured wallets" measure so we actually know where tainted money is going and have a chance at IDing individuals. Businesses can choose to participate or not - it's not required regulation.

[datz]

This sounds interesting but I would really like a better explanation of exactly what a  mixing service would be.
It seems like if you did something as simple as allow donations to your wallet you might get hit with 'tainted money' - then what?
Next time you go to spend some BTC you find your wallet has been contaminated?
Someone with 'red' BTC could go all over the net and drop fractions and contaminate thousands of addresses?
What am I missing here?

Red list is not definite unless it is first degree. Second degree and beyond has to match a certain repeat theft threshold. You may get a questionnaire pertaining to what business/service/individual you got the money from when buying from a legitimate business or purchasing a legitimate service - that is all. As to donations and some kind of "robin hood" thievery - that is unlikely.

[datz]

Thanks but we'll have soon KYC, AML and the rest all over us anyway

With The Red List service we may worry less about the regulatory bodies and sanctions stepping in because they will not have a perceived "hole to fill" and we can keep our system controlled by the community, not by governments.

[phantastisch]

See here :

https://bitcointalk.org/index.php?topic=85433.0

Eventually everybody will be flagged. Bad Idea.

[Chet]

Red list is not definite unless it is first degree. Second degree and beyond has to match a certain repeat theft threshold. You may get a questionnaire pertaining to what business/service/individual you got the money from when buying from a legitimate business or purchasing a legitimate service - that is all. As to donations and some kind of "robin hood" thievery - that is unlikely.

I don't see what I described as 'robin hood' at all. I put on my 'pretend I am a thief hat' and cover my tracks by confusing the issue as much as possible.
I spam thousands of addresses with tiny fractions and make a huge mess ...
I am not a thief so I am sure practiced scammers have lots more ideas.
Anyway what is a 'mixing service'? Would something takes btc for things and pays btc for other things wind up 'mixing' by default?
So to avoid getting 'contaminated' you would need more processing and questioning of depositors?  Starting to sound like dealing with paypal.

[lexxus]

Thanks but we'll have soon KYC, AML and the rest all over us anyway

This is mainly a "don't fuck with bitinsured wallets" measure so we actually know where tainted money is going and have a chance at IDing individuals. Businesses can choose to participate or not - it's not required regulation.

I see. Seems like a good project then. Good luck with this.

[datz]

See here :

https://bitcointalk.org/index.php?topic=85433.0

Eventually everybody will be flagged. Bad Idea.

No, the algorithm is based on averages, so not everyone will be flagged - only those closely associated with fraud or theft with repeat offenses. It is an indefinite algorithm. Even if you are flagged, you are put under suspicion or investigation not fully blackballed.  

[datz]

Red list is not definite unless it is first degree. Second degree and beyond has to match a certain repeat theft threshold. You may get a questionnaire pertaining to what business/service/individual you got the money from when buying from a legitimate business or purchasing a legitimate service - that is all. As to donations and some kind of "robin hood" thievery - that is unlikely.

I don't see what I described as 'robin hood' at all. I put on my 'pretend I am a thief hat' and cover my tracks by confusing the issue as much as possible.
I spam thousands of addresses with tiny fractions and make a huge mess ...
I am not a thief so I am sure practiced scammers have lots more ideas.
Anyway what is a 'mixing service'? Would something takes btc for things and pays btc for other things wind up 'mixing' by default?
So to avoid getting 'contaminated' you would need more processing and questioning of depositors?  Starting to sound like dealing with paypal.

Well if you spammed thousands of addresses small transactions to addresses you do not own you will be giving away money pointlessly and will defeat the purpose of the theft. If you own the addresses we will catch you when you spend at a legitimate business by looking at the patterns in the block chain. We can include a transaction threshold if you choose to attempt to intentionally taint many wallets.

A mixing service is a way to launder money which involves mixing BTC up among many wallets. The only reason to use such a service is for anonymity purposes. If we can prove that stolen first degree money enters such a service we can gather evidence to shut them down as money launderers.

There are no regulations or blocked/frozen accounts so it is nothing like PayPal. Solely at legitimate businesses discretion.

[phantastisch]

See here :

https://bitcointalk.org/index.php?topic=85433.0

Eventually everybody will be flagged. Bad Idea.

No, the algorithm is based on averages, so not everyone will be flagged - only those closely associated with fraud or theft with repeat offenses. It is an indefinite algorithm. Even if you are flagged, you are put under suspicion or investigation not fully blackballed.  

Besides that you are practically discouraging my anonymity. May I discourage yours and ask for a passport ? Provide it so i know that you are not a scammer or selling my data to a private company. If you don't you are under suspicion now.

[datz]

See here :

https://bitcointalk.org/index.php?topic=85433.0

Eventually everybody will be flagged. Bad Idea.

No, the algorithm is based on averages, so not everyone will be flagged - only those closely associated with fraud or theft with repeat offenses. It is an indefinite algorithm. Even if you are flagged, you are put under suspicion or investigation not fully blackballed.  

Besides that you are practically discouraging my anonymity. May I discourage yours and ask for a passport ? Provide it so i know that you are not a scammer or selling my data to a private company. If you don't you are under suspicion now.

The Red List in no way asks for personal information or requires that personal information is verified. It simply checks your wallet public address against our database. If your wallet is directly associated with theft, the business or service may report your address or any other information you gave to that service or business. That is all.

[datz]

See here :

https://bitcointalk.org/index.php?topic=85433.0

Eventually everybody will be flagged. Bad Idea.

No, the algorithm is based on averages, so not everyone will be flagged - only those closely associated with fraud or theft with repeat offenses. It is an indefinite algorithm. Even if you are flagged, you are put under suspicion or investigation not fully blackballed.  

Besides that you are practically discouraging my anonymity. May I discourage yours and ask for a passport ? Provide it so i know that you are not a scammer or selling my data to a private company. If you don't you are under suspicion now.

The Red List in no way asks for personal information or requires that personal information is verified. It simply checks your wallet public address against our database. If your wallet is directly associated with theft, the business or service may report your address or any other information you gave to that service or business. That is all.

In this way The Red List retains perfect anonymity - unless your wallet meets the Red List threshold in which case the verifying business may deny you service, issue you a questionnaire as to where you got the money, or in extreme, definite cases send a delivery address or identifying information to Red List servers.

[phantastisch]

See here :

https://bitcointalk.org/index.php?topic=85433.0

Eventually everybody will be flagged. Bad Idea.

No, the algorithm is based on averages, so not everyone will be flagged - only those closely associated with fraud or theft with repeat offenses. It is an indefinite algorithm. Even if you are flagged, you are put under suspicion or investigation not fully blackballed.  

Besides that you are practically discouraging my anonymity. May I discourage yours and ask for a passport ? Provide it so i know that you are not a scammer or selling my data to a private company. If you don't you are under suspicion now.

The Red List in no way asks for personal information or requires that personal information is verified. It simply checks your wallet public address against our database. If your wallet is directly associated with theft, the business or service may report your address or any other information you gave to that service or business. That is all.

In this way The Red List retains perfect anonymity - unless your wallet meets the Red List threshold in which case the verifying business may deny you service, issue you a questionnaire as to where you got the money, or in extreme, definite cases send a delivery address or identifying information to Red List servers.

You introducing a system that imposes a form of taint does nothing to prevent theft but does make using Bitcoin a hassle for those who are innocent.

Therefore I do not support this and will vigorously reject any movement towards this initiative and any like it.

[Chet]

So we are creating our own cops ...
Who watches the watchers?

[datz]

You introducing a system that imposes a form of taint does nothing to prevent theft but does make using Bitcoin a hassle for those who are innocent.

Therefore I do not support this and will vigorously reject any movement towards this initiative and any like it.

It prevents theft by creating a psychological knowledge of accountability on some level and making thieves work harder to launder and spend bitcoin. The innocent might as well not know this system exists because they will never experience it, will never be affected by it, and will never threaten their anonymity.

[nwbitcoin]

This is a nice idea that will possibly serve better as a suggestion that bitcoin is regulated against fraud, rather than be a tool to prevent it.

There are far too many ways that fraud can take place, that I can't see this project being much more than the equivalent to Spamhaus for the Bitcoin community.

However, if it wasn't for the likes of Spamhaus, would email be used as much as it is today?  Would email be subject to far more regulation?

I like the Red List project, but please try to explain to some of the hard of thinking on this forum that its not a way to prevent crime!

[datz]

You introducing a system that imposes a form of taint does nothing to prevent theft but does make using Bitcoin a hassle for those who are innocent.

Therefore I do not support this and will vigorously reject any movement towards this initiative and any like it.

It prevents theft by creating a psychological knowledge of accountability on some level and making thieves work harder to launder and spend bitcoin. The innocent might as well not know this system exists because they will never experience it, will never be affected by it, and will never threaten their anonymity.

The Red List will also hinder more invasive regulation that could come to Bitcoin via governments by filling a perceived gap in fraud/theft prevention.

[datz]

So we are creating our own cops ...
Who watches the watchers?

The algorithms will be open sourced and the database completely open *except for identifying information businesses may submit.