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Author Topic: Ostracism of certain bitcoins.  (Read 2601 times)
bitanarchy
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January 16, 2011, 02:08:41 PM
 #1

In principle it is possible to find out whether certain bitcoins have been used for immoral transactions, like buying of stolen goods, assassinations, etc. When such bitcoins are identified, will this result in the refusal to accept them later on? Even if they were already spend multiple times, people may refuse to accept them for services or goods.
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freetx
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January 16, 2011, 02:43:30 PM
 #2

The problem would be that such refusal may itself be immoral.

As with all things the devil is in the details: Who is going to decide to issue the directive that "bitcoins ABC" are not-spendable? What is the process of appeal? (sounds suspiciously like you are advocating a central authority to control how BTC are spent).

Moreover, simple laundering would render enough plausible deniability to defeat the purpose.

theymos
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January 16, 2011, 02:54:01 PM
 #3

That's pointless. The owner could just deposit the coins into a MyBitcoin account, which would "infect" random MyBitcoin accounts while also giving the original owner clean coins.

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ribuck
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January 16, 2011, 02:55:59 PM
 #4

That's pointless. The owner could just deposit the coins into a MyBitcoin account, which would "infect" random MyBitcoin accounts while also giving the original owner clean coins.

Indeed. But it might work for MyBitcoin, MtGox etc to get together and agree to ostracise any coins that have been stolen. This might be perceived as a useful service by customers of those sites.

As freetx says, the devil is in the details.
theymos
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January 16, 2011, 03:00:43 PM
 #5

Indeed. But it might work for MyBitcoin, MtGox etc to get together and agree to ostracise any coins that have been stolen. This might be perceived as a useful service by customers of those sites.

MtGox has actually considered locking an account because it used coins gotten from some scam. I think he decided that there was too much ambiguity, though, since there was one transaction between the two events. In this case, the scammer could have just sent coins to himself, but it protected him enough to avoid consequences.

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Mahkul
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January 16, 2011, 03:16:41 PM
 #6

In principle it is possible to find out whether certain bitcoins have been used for immoral transactions, like buying of stolen goods, assassinations, etc. When such bitcoins are identified, will this result in the refusal to accept them later on? Even if they were already spend multiple times, people may refuse to accept them for services or goods.

It is pointless and to me it sounds like marking notes by the government or whoever. Just like cash, Bitcoins will be used for the good and the bad, and that's natural. If I pay an assassin to kill someone, that cash doesn't get "polluted" and at some stage it could even be donated to some charity.

Of course I don't condone scams or murders, but I don't think banning some bitcoins from circulation is a good idea.

Bitalo.com coming soon!

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Hal
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January 16, 2011, 06:14:53 PM
 #7

By the time an accusation of fraud could be credibly verified, likely there would have been plenty of time for the funds to be thoroughly laundered. Criminals would be well aware of the need to clean hot bitcoins quickly.

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January 16, 2011, 06:59:53 PM
 #8

It is pointless and to me it sounds like marking notes by the government or whoever. Just like cash, Bitcoins will be used for the good and the bad, and that's natural. If I pay an assassin to kill someone, that cash doesn't get "polluted" and at some stage it could even be donated to some charity.

Of course I don't condone scams or murders, but I don't think banning some bitcoins from circulation is a good idea.

If I rob a bank and a dye pack goes off, that cash does get polluted... just something to reconcile.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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January 16, 2011, 07:51:31 PM
 #9


for every dye polluted paper money the central bank issues new bills

how would you like to introduce new bitcoins without patching all clients and specs and definitions to allow > 21 M BTC?

For every time the sun comes out and shines, a central bank issues new bills.

No seriously though.  If this idea were accepted (I'm not promoting it), it's far more likely that one would implement it by unmarking the coins as polluted, rather than tampering with the 21M limit.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
Vinnie
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January 17, 2011, 04:28:35 AM
 #10

I am willing to buy your immoral BTC at a discount. Say.... 5% below market price?

Let the bidding commence!

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Gavin Andresen
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January 17, 2011, 05:00:47 PM
 #11

As the owner of the Faucet, and having seen how far some people will go to get more than their fair share of bit-pennies from the Faucet, I've thought about this subject.

My conclusion is that instead of creating tools to try to become "the Bitcoin Police", there are probably better things you can do with your time.  Because as soon as you create the tools, the bad guys will find ways to work around them.


How often do you get the chance to work on a potentially world-changing project?
caveden
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January 17, 2011, 05:28:08 PM
 #12

It's not "pointless". Trying to ostracize criminals is important. But this idea in particular is not practical for the described here:

By the time an accusation of fraud could be credibly verified, likely there would have been plenty of time for the funds to be thoroughly laundered. Criminals would be well aware of the need to clean hot bitcoins quickly.

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QuantumMechanic
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January 21, 2011, 02:27:19 AM
 #13

Could governments maintain blacklists of addresses, while offering patches for Bitcoin clients to recognize them, so that people receiving them in exchanges might not have a valid plausible deniability defense against money laundering charges?  Is this how anti-money laundering laws work?
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January 21, 2011, 09:02:08 AM
 #14

I don't if that's what you meant, but I think that if bitcoins adoption grows faster than governments reaction capacity (like the Internet did), I think they'd eventually create something like a "whitelist" of addresses, which they would control as they do with bank accounts - no anonymity, taxes etc.
No business would be authorized to use an undeclared address, and transfers from declared addresses to undeclared ones would be illegal. Foreigners would be given a way to convert their undeclared addresses to declared ones, probably by paying fees.

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January 21, 2011, 05:23:39 PM
 #15

Could governments maintain blacklists of addresses, while offering patches for Bitcoin clients ...

Governments could offer patches for Bitcoin clients, but couldn't make me or anyone else run them!  Ha, ha, ha.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
QuantumMechanic
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January 22, 2011, 12:53:22 AM
 #16

Could governments maintain blacklists of addresses, while offering patches for Bitcoin clients ...

Governments could offer patches for Bitcoin clients, but couldn't make me or anyone else run them!  Ha, ha, ha.
My point was that the courts might then reject your plausible deniability defense, "How could I have known those funds he paid me with were gotten illegally?"

Also, if you have a hard time spending those "dirty" bitcoins you keep on receiving, or they have a lower market value than "clean" ones, then you'd probably feel pretty compelled to run some patch that recognized "dirty" or "clean" bitcoins, whether its blacklists they're using, or whitelists.  The bigger businesses would fall in line for the most part since they're easiest to police and they've got the most to lose, and their customers would in turn.  And their customers' customers, etc.  And this would surely get rolled out incrementally somehow so it would feel less invasive and burdensome.

Sounds pretty plausible to me.  And it makes me wonder what could be in store for the homogeneity of bitcoins if lots of different governments have their own separate lists of "dirty" or "clean" bitcoins.
Mahkul
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January 22, 2011, 12:59:07 AM
 #17

Could governments maintain blacklists of addresses, while offering patches for Bitcoin clients ...

Governments could offer patches for Bitcoin clients, but couldn't make me or anyone else run them!  Ha, ha, ha.

The other thing is that the money owned by the government could be as dirty as the money from drug dealing. Smiley

Bitalo.com coming soon!

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