Mike Hearn, Foundation's Law & Policy Chair, is pushing blacklists right now

[jdillon]

reddit discussion

Hearn posted the following message to the legal section of the members-only foundation forum: https://bitcoinfoundation.org/forum/index.php?/topic/505-coin-tracking/ If you're not a member, you don't have access. I obtained this with the help of a foundation member who asked to remain private.

He's promoted blacklists before, but Hearn is now a Bitcoin Foundation insider and as Chair of the Foundations Law & Policy committee he is pushing the Foundation to adopt policies approving the idea of blacklisting coins. I also find it darkly amusing that he's now decided to call the idea "redlists", perhaps he has learned a thing or two about PR in the past few months.

All Bitcoin investors need to make it loud and clear that attacking the decentralization and fungibility of our coins is unacceptable. We need to demand that Hearn disclose any and all involvement with the Coin Validation startup. We need to demand that the Foundation make a clear statement that they do not and will not support blacklists. We need to demand that the Foundation support and will continue to support technologies such as CoinJoin and CoinSwap to ensure all Bitcoin owners can transact without revealing private financial information.

Anything less is unacceptable. Remember that the value of your Bitcoins depends on you being able to spend them.

I would like to start a discussion and brainstorming session on the topic of coin tracking/tainting or as I will call it here, "redlisting". Specifically, what I mean is something like this:

Consider an output that is involved with some kind of crime, like a theft or extortion. A "redlist" is an automatically maintained list of outputs derived from that output, along with some description of why the coins are being tracked. When you receive funds that inherit the redlisting, your wallet client would highlight this in the user interface. Some basic information about why the coins are on the redlist would be presented. You can still spend or use these coins as normal, the highlight is only informational. To clear it, you can contact the operator of the list and say, hello, here I am, I am innocent and if anyone wants to follow up and talk to me, here's how. Then the outputs are unmarked from that point onwards. For instance, this process could be automated and also built into the wallet.

I have previously elaborated on such a scheme in more detail here, along with a description of how you can avoid the redlist operator learning anything about the list's users, like who is looking up an output or who found a match.

Lately I was thinking about this in the context of CryptoLocker, which seems like it has the potential to seriously damage Bitcoin's reputation. The drug war is one thing - the politics of that are very complex. Extortion is something else entirely. At the moment apparently most people are paying the ransom with Green Dot MoneyPak, but it seems likely that future iterations will only accept Bitcoin.

Specifically, threads like this one concern me a lot. Summary: a little old lady was trying to buy bitcoins via the Canada ATM because she got a CryptoLocker infection. She has no clue what Bitcoin is beyond the fact that she needed some and didn't know what to do.

The risk/reward ratio for this kind of ransomware seems wildly out of proportion - Tor+Bitcoin together mean it takes huge effort to find the perpetrators and the difficulty of creating such a virus is very low. Also, the amount of money being made can be estimated from the block chain, and it's quite large. So it seems likely that even if law enforcement is able to take down the current CryptoLocker operation, more will appear in its place.

I don't have any particular opinion on what we should talk about. I'm aware of the arguments for and against such a scheme. I'm interested in new insights or thoughts. You can review the bitcointalk thread on decentralised crime fighting to get a feel for what has already been said.

I think this is a topic on which the Foundation should eventually arrive at a coherent policy for. Of course I know that won't be easy.

-Mike Hearn

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[jdillon]

Gregory Maxwell made an excellent post on this subject, emphasis mine:

We're not going to be able to prevent well funded business people from attempting to promote horrific architectures against the long term interest of Bitcoin and the public... if we could, the same stupidity would have been prevented in the wider world and there would be less need for Bitcoin.

It's hard to count the number of times newbies have made proposals which would have centralized Bitcoin completely in the name of some fool result or another. Powerful businesses interests are now reliving the same history of bad ideas, but this time the bad ideas will be funded and they don't care if luminaries tell them that they're horrible ideas, they don't necessarily care about any of the principles that make Bitcoin a worthwhile contribution to the world.

It's not, of course, a question of "anonymity": thats silly. If you have "good" and "bad" coins, that destroys fungibility, rapidly everyone must screen coins they accept or risk being left holding the bag. Fungiblity is an essential property of a money like good and without it the money cannot remove transactional friction.  Privacy is also essential for fair markets: Without privacy your counter-parties and competition can see into your finances— get a raise and get a rent hike, and as long as there are power imbalances between people privacy is essential for human dignity.

To stop this nonsense we have to make it impractical to pull off by changing the default behavior in the Bitcoin ecosystem: We consider the lack of a central authority to be an essential virtue, which means that we can't be protected by one either. We must protect ourselves. This means things like avoiding address reuse, avoiding centralized infrastructure, adopting— and funding!— privacy enhancing technology.

Miners can play a role in this as Bitcoin users, but also by supporting mining pools and methods that promote privacy.  They want to force people to use identified addresses so they can blacklist?  What happens when miners start deprioritizing transactions that use addresses that have been previously seen?

[oakpacific]

I have some clues about what his idea maybe like, but I will refrain from saying anything specific for the moment, I want to see how things evolve.

[mccorvic]

Mike really should be ashamed of himself.  Not like, "Oh, whooops! How embarassing for me" sort of ashamed.  Like, "Where did I go wrong in life?" sort

[cypherdoc]

blacklisting/redlisting will destroy Bitcoin.

the real question is, can it even been done?

[adamstgBit]

blacklisting/redlisting will destroy Bitcoin.

the real question is, can it even been done?

yes it can, but it will 100% of the time NOT be affective, the criminals will know that their coins are red-listed , and they will find ways of dumping these coins on innocent poeple fast, very fast....

[BitchicksHusband]

How stupid are these people?  Don't they know that every dollar bill has traces of cocaine on it?  They've ALL been used for illegal activity, and yet we trade them around every day.

Still, the more "bad" coins that are taken out of circulation, the more my (hopefully clean) coins will be worth.

[Patel]

The Bitcoin Foundation members starting to show their true colors..

I do not think they are lobbying for Bitcoin user's best interests, but instead to promote government agenda.

[Peter Todd]

People need to understand that blacklists fundamentally damage privacy, and decentralization. The only way to achieve even moderate financial privacy in Bitcoin is to mix and swap your coins with others with protocols like CoinJoin and CoinSwap. Those protocols can't work if blacklists are common and people can't risk accidentally mixing their coins with tainted and blacklisted coins; remember that a coin can and will be blacklisted after the fact and you may be the one left holding the bag.

Blacklists and whitelists are inherently sources of centralization: some of them will get the official approval of regulators in your jurisdiction, and the way laws are written guarantees that you will be forced to use those approved lists.

We as a community need to ensure that privacy technologies like CoinJoin are deployed ASAP to ensure that the basic Bitcoin infrastructure and the fundemental way wallets work makes blacklists useless. If we don't do this before people like Yifu Guo and Mike Hearn get their way, we risk losing our chance to deploy this technology, and losing the privacy and fungibility of our Bitcoins.

[adamstgBit]

The Bitcoin Foundation starting to show its true colors..

I do not think they are lobbying for Bitcoin user's best interests, but instead to promote their own agenda.

is the entire Foundation onboard with this idea???

[Patel]

The Bitcoin Foundation starting to show its true colors..

I do not think they are lobbying for Bitcoin user's best interests, but instead to promote their own agenda.

is the entire Foundation onboard with this idea???

Probably not, but there are more influential members than others there. Example, Mike Hearn

Even though Bitcoin is open source, this whole idea of blacklisting goes against everything Bitcoin stands for
You won't be able to send the coins to whoever you want (illicit or non-illicit)
Your coins can be frozen (blacklisted)

[Tirapon]

I want to make my voice heard here.

After reading the post, I've come to the conclusion that Mike has good intentions with this. Unfortunately, I have to say that it is still a terrible idea. The idea of marking coins will completely ruin their fungibility, and will end up destroying Bitcoin.

Mike, if you're reading this, please please reconsider. There must be another way of solving the problems that you have brought up. Problems caused by implementing this idea will be worse than those you are trying to solve.

[corebob]

The first thing that comes to mind is to make sure all coins get red listed asap.

But this whole thing is really just stupid. What we really need is a currency that is technically impossible to twart into a new fiat system

[Raoul Duke]

The Bitcoin Foundation starting to show its true colors..

The Bitcoin Foundation members, you mean.
Truth is, you can not trust anyone who voluntarily involve themelves in the corrupt and dirty political games of our current times. The Bitcoin Foundation is politics, wether you want to recognize it or not. That was my motive not to join any Foundation and every day that goes by I'm proven right on my choice. Lobbyism must die.

[kellrobinson]

Let Mike just keep quiet about this in public.
We haven't heard anything from law enforcement yet.  Wait until we hear from the panel in the upcoming Senate hearings.  If they suggest controls, then it will be time to consider options.  Otherwise, we have no need to implement a blacklist, redlist, or any other restriction.

[drawingthesun]

And Bitcoin starts to rip itself to pieces just as it goes mainstream...

How predictable, the human element always destroys everything.

Will Mike post here and answer to us?

[Patel]

The Bitcoin Foundation starting to show its true colors..

The Bitcoin Foundation members, you mean.
Truth is, you can not trust anyone who voluntarily involve themelves in the corrupt and dirty political games of our current times. The Bitcoin Foundation is politics, wether you want to recognize it or not. That was my motive not to join any Foundation and every day that goes by I'm proven right on my choice. Lobbyism must die.

fixed for the mod

[Skinnkavaj]

If this is true then I have lost all respect for Mike Hearn.

[Moebius327]

The Bitcoin Foundation members starting to show their true colors..

I do not think they are lobbying for Bitcoin user's best interests, but instead to promote their own agenda.

You mean promote the Government's agenda?

[cypherdoc]

How stupid are these people?  Don't they know that every dollar bill has traces of cocaine on it?  They've ALL been used for illegal activity, and yet we trade them around every day.

Still, the more "bad" coins that are taken out of circulation, the more my (hopefully clean) coins will be worth.

here's the thing.

you/we can't afford to have ANY coins taken out of circulation due to redlisting.  that mere act alone will destroy your remaining coin's value.