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Author Topic: Coin Validation misunderstands fungibility and could destroy bitcoin  (Read 29084 times)
adam3us
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November 14, 2013, 05:30:51 PM
 #1

http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/

Its based on significant misunderstanding about bitcoins value proposition - destroy its fungibility and the costs float up to meet credit cards and paypal.

It is also a ridiculous approach.  If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins.  The certificates should be non-transitive they attest to the identity of the user, not the coins.  They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.

Their technical representatives of Coin Validation should be ashamed.  How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem.  

What they are proposing so far at least as explained by the Forbes article is stupid, dangerous and just wrong.  

I am also incensed frankly that someone would step into the market with such a muddle-headed thinking, and attempt to sabotage or destroy the core bitcoin feature that gives its value, where the value has been created by Satoshi and a cast of millions of man-hours of contributions of the community and technical wizards developing it mostly on volunteer time.  I am not someone prone to swearing, but this is astonishingly stupid and dangerous.   Please stop now.  In the article it is claimed they sought advice from the Winklevoss twins, if the twins value their estimated $30million bitcoin holding they should advise them to stop: if fungibility is destroyed bitcoins value as a transaction currency is impacted.  

I encourage anyone with technical skills to put their thinking caps on to find ways to increase fungibility in the short term like CoinJoin, coin control in wallets, helping less technical people migrate to better wallets, educating people about privacy practices that defend fungibility.  And longer term privacy technologies like zero coin, homomorphic encrypted value and committed (hidden) transactions.

I encourage all bitcoin businesses to shun Coin Validation unless we see some major U-turn or corrections.  If your business depends on the success bitcoin, it depends on the fungibility of bitcoin, and Coin Validation seem to be set on destroying both.

You can quote me on that.

I welcome Coin Validations corrections of the claims in the Forbes article.  Tell me you were misquoted.

Adam

ps For people who have no idea who http://cypherspace.org/adam/ I am https://bitcointalk.org/index.php?topic=225463.msg237167 , my small part in bitcoin is I invented distributed mining in 1997 https://en.bitcoin.it/wiki/Hashcash (you can find the reference in Satoshi's paper) and worked on opensource ecash & crypto currency research & implementation for about a decade alongside Wei Dai & Hal Finney & others.

hashcash, committed transactions, homomorphic values, blind kdf; researching decentralization, scalability and fungibility/anonymity
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November 14, 2013, 05:48:27 PM
 #2

Their technical representatives of Coin Validation should be ashamed.  How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem.
thats why i give a damn about media. they never understand what they are talking about...

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November 14, 2013, 06:45:26 PM
 #3

Great post Adam.

In every superhero movie there's also a scumbag traitor who sabotages a noble cause for personal gain.  These guys are it.  They know perfectly well the full implications of what they propose.  To assume they are just stupid or careless or misunderstanding, is to let them off lightly.  They should be shunned and berated and boycotted to the point of never wanting to show their face again in any context related to Bitcoin.  

The many thieves and scammers in this community are an unpleasant reality, but these guys are an even lower life form.  Traitors and collaborators were rightly assigned by Dante to the very deepest circle of hell.


 

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November 14, 2013, 06:58:17 PM
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Reality,

Boycotting won't stop them.  We need to put our thinking caps on, as Adam said, and figure out a better solution.  It seems the dark wallet and mixes is the best option.  If we figure out now what will fix the problem, we can popularize it while the coin is still young.
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November 14, 2013, 07:07:34 PM
 #5

It is also a ridiculous approach.  If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins.  The certificates should be non-transitive they attest to the identity of the user, not the coins.  They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.

Their technical representatives of Coin Validation should be ashamed.  How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem.  

What they are proposing so far at least as explained by the Forbes article is stupid, dangerous and just wrong.  
Oh man, I'm sooooooo supporting you.


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November 14, 2013, 07:27:32 PM
 #6

It is also a ridiculous approach.  If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins. The certificates should be non-transitive they attest to the identity of the user, not the coins.  They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.

Their technical representatives of Coin Validation should be ashamed.  How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem.  

What they are proposing so far at least as explained by the Forbes article is stupid, dangerous and just wrong. 
Oh man, I'm sooooooo supporting you.


100% agree. This is the right approach.

RichardForsyth
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November 14, 2013, 07:37:39 PM
 #7

I agree that this is the wrong approach to be taking cleaning bitcoin.  But I do think it will have to be cleaned before it can become mainstream.
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November 14, 2013, 07:57:34 PM
 #8

In every superhero movie there's also a scumbag traitor who sabotages a noble cause for personal gain.  These guys are it.  They know perfectly well the full implications of what they propose.  To assume they are just stupid or careless or misunderstanding, is to let them off lightly. They should be shunned and berated and boycotted to the point of never wanting to show their face again in any context related to Bitcoin.

The many thieves and scammers in this community are an unpleasant reality, but these guys are an even lower life form. Traitors and collaborators were rightly assigned by Dante to the very deepest circle of hell.


This!


Feel free to add information on these guys:

https://bitcointalk.org/index.php?topic=332918.0


ya.ya.yo!
justusranvier
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November 14, 2013, 08:02:38 PM
 #9

Its based on significant misunderstanding about bitcoins value proposition - destroy its fungibility and the costs float up to meet credit cards and paypal.
I don't think there's enough evidence to assume that it's based on a misunderstanding.

Credit cards, PayPal, and many other existing players have a lot of investment at risk in the long term if Bitcoin manages to keep its value proposition. They have a very strong financial incentive to understand exactly how to bring Bitcoin down to their level.

Reality,

Boycotting won't stop them.  We need to put our thinking caps on, as Adam said, and figure out a better solution.  It seems the dark wallet and mixes is the best option.  If we figure out now what will fix the problem, we can popularize it while the coin is still young.
Give up on traditional business that have VC investors, physical offices, and bank accounts, and replace them with censorship-resistant organizations.
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November 14, 2013, 08:05:19 PM
 #10

http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/

Its based on significant misunderstanding about bitcoins value proposition - destroy its fungibility and the costs float up to meet credit cards and paypal.

It is also a ridiculous approach.  If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins.  The certificates should be non-transitive they attest to the identity of the user, not the coins.  They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.

Their technical representatives of Coin Validation should be ashamed.  How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem.  

What they are proposing so far at least as explained by the Forbes article is stupid, dangerous and just wrong.  

I am also incensed frankly that someone would step into the market with such a muddle-headed thinking, and attempt to sabotage or destroy the core bitcoin feature that gives its value, where the value has been created by Satoshi and a cast of millions of man-hours of contributions of the community and technical wizards developing it mostly on volunteer time.  I am not someone prone to swearing, but this is astonishingly stupid and dangerous.   Please stop now.  In the article it is claimed they sought advice from the Winklevoss twins, if the twins value their estimated $30million bitcoin holding they should advise them to stop: if fungibility is destroyed bitcoins value as a transaction currency is impacted.  

I encourage anyone with technical skills to put their thinking caps on to find ways to increase fungibility in the short term like CoinJoin, coin control in wallets, helping less technical people migrate to better wallets, educating people about privacy practices that defend fungibility.  And longer term privacy technologies like zero coin, homomorphic encrypted value and committed (hidden) transactions.

I encourage all bitcoin businesses to shun Coin Validation unless we see some major U-turn or corrections.  If your business depends on the success bitcoin, it depends on the fungibility of bitcoin, and Coin Validation seem to be set on destroying both.

You can quote me on that.

I welcome Coin Validations corrections of the claims in the Forbes article.  Tell me you were misquoted.

Adam

ps For people who have no idea who http://cypherspace.org/adam/ I am https://bitcointalk.org/index.php?topic=225463.msg237167 , my small part in bitcoin is I invented distributed mining in 1997 https://en.bitcoin.it/wiki/Hashcash (you can find the reference in Satoshi's paper) and worked on opensource ecash & crypto currency research & implementation for about a decade alongside Wei Dai & Hal Finney & others.

You're a good guy, Adam.

We need level-headed leaders like you. If we are to organize meaningfully, we should be represented by people who understand how to compromise without destroying the essence of Bitcoin.

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November 14, 2013, 08:15:57 PM
 #11

http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/

Its based on significant misunderstanding about bitcoins value proposition - destroy its fungibility and the costs float up to meet credit cards and paypal.

It is also a ridiculous approach.  If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins.  The certificates should be non-transitive they attest to the identity of the user, not the coins.  They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.

Their technical representatives of Coin Validation should be ashamed.  How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem. 

What they are proposing so far at least as explained by the Forbes article is stupid, dangerous and just wrong. 

I am also incensed frankly that someone would step into the market with such a muddle-headed thinking, and attempt to sabotage or destroy the core bitcoin feature that gives its value, where the value has been created by Satoshi and a cast of millions of man-hours of contributions of the community and technical wizards developing it mostly on volunteer time.  I am not someone prone to swearing, but this is astonishingly stupid and dangerous.   Please stop now.  In the article it is claimed they sought advice from the Winklevoss twins, if the twins value their estimated $30million bitcoin holding they should advise them to stop: if fungibility is destroyed bitcoins value as a transaction currency is impacted. 

I encourage anyone with technical skills to put their thinking caps on to find ways to increase fungibility in the short term like CoinJoin, coin control in wallets, helping less technical people migrate to better wallets, educating people about privacy practices that defend fungibility.  And longer term privacy technologies like zero coin, homomorphic encrypted value and committed (hidden) transactions.

I encourage all bitcoin businesses to shun Coin Validation unless we see some major U-turn or corrections.  If your business depends on the success bitcoin, it depends on the fungibility of bitcoin, and Coin Validation seem to be set on destroying both.

You can quote me on that.

I welcome Coin Validations corrections of the claims in the Forbes article.  Tell me you were misquoted.

Adam

ps For people who have no idea who http://cypherspace.org/adam/ I am https://bitcointalk.org/index.php?topic=225463.msg237167 , my small part in bitcoin is I invented distributed mining in 1997 https://en.bitcoin.it/wiki/Hashcash (you can find the reference in Satoshi's paper) and worked on opensource ecash & crypto currency research & implementation for about a decade alongside Wei Dai & Hal Finney & others.

Brilliantly explained. 

more or less retired.
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November 14, 2013, 08:20:34 PM
 #12

it would do wonders for confidence if this the dev of the project would say something like " after hearing the communities concerns, we have decided to change are our plans for a black-list,  thank you for you input."

something to that effect, please.

Carlton Banks
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November 14, 2013, 08:26:34 PM
 #13

Yep, and Mike Hearn really does not understand all this, despite his capabilities as a software engineer and systems designer. Show yourself, Mike. It's trial by fire time, you're gonna have to get this out of the way.

This violates funds security (exceptionally ironic), privacy and fungibility.

We must institute some new behaviour of the block construction functions in the main client, such that miners can reject transactions from a list of their choosing. This is fraught with danger, as it could be used to enforce a blacklist instead of disparaging a whitelist. But I do not see how anonymising can help in the long term, it's characterisitics can be recognised in the anonymised transcations, and so there will be little point to trying to send these transaction to sanitised addresses. You will be banned from sanitary address schemes, and added to blacklist addresses, along with your anonymising buddies that make up the "suspicious" transactions.

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November 14, 2013, 08:28:20 PM
 #14

Yep, and Mike Hearn really does not understand all this, despite his capabilities as a software engineer and systems designer. Show yourself, Mike. It's trial by fire time, you're gonna have to get this out of the way.
He's hiding in the shadows of the private Bitcoin Foundation forums, where he doesn't need to answer inconvenient questions posed by the hoi polloi.
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November 14, 2013, 08:29:21 PM
 #15

But isn't the purpose of CoinValidation to label adresses and not coins?

I don't get why the fungibility of coins is destroyed if only adresses are impacted?
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November 14, 2013, 08:32:23 PM
 #16

But isn't the purpose of CoinValidation to label adresses and not coins?

I don't get why the fungibility of coins is destroyed if only adresses are impacted?

if sending coins to a new address makes them all clean again then this idea is beyond retarded and we need not care about anymore.

Carlton Banks
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November 14, 2013, 08:36:28 PM
 #17

But isn't the purpose of CoinValidation to label adresses and not coins?

I don't get why the fungibility of coins is destroyed if only adresses are impacted?

if sending coins to a new address makes them all clean again then this idea is beyond retarded and we need not care about anymore.

This assumes clean addresses will be the only list. Dirty addresses are being touted by Mike Hearn, when the real solution to theft and ransomware should be technical. And it's not like technical solutions don't exist, Mikes very own face and spiel are advertising the Trezor hardware wallet on it's front page.

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November 14, 2013, 08:38:39 PM
 #18

But isn't the purpose of CoinValidation to label adresses and not coins?

I don't get why the fungibility of coins is destroyed if only adresses are impacted?

if sending coins to a new address makes them all clean again then this idea is beyond retarded and we need not care about anymore.
Reading the Forbes article I think it's pretty clear it's only what they are talking: a base of adresses link to a real world identity.

So I don't see where is the huge problem, like you said sending coin to a new adress destroy the identity link.
Carlton Banks
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November 14, 2013, 08:49:06 PM
 #19

But isn't the purpose of CoinValidation to label adresses and not coins?

I don't get why the fungibility of coins is destroyed if only adresses are impacted?

if sending coins to a new address makes them all clean again then this idea is beyond retarded and we need not care about anymore.
Reading the Forbes article I think it's pretty clear it's only what they are talking: a base of adresses link to a real world identity.

So I don't see where is the huge problem, like you said sending coin to a new adress destroy the identity link.

Read it again.

They say that Avalon mining devices will not be available to people that don't use identified addresses. This is a way of destroying the concept of using multiple addresses at all, and it also compromises the security of the address. The more you re-use addresses, the easier some criminal will find it to synthesize a valid signature for that address, and steal any money sent to it. This is one of the reasons why address re-use is discouraged.

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November 14, 2013, 08:59:10 PM
 #20

But isn't the purpose of CoinValidation to label adresses and not coins?

I don't get why the fungibility of coins is destroyed if only adresses are impacted?

if sending coins to a new address makes them all clean again then this idea is beyond retarded and we need not care about anymore.
Reading the Forbes article I think it's pretty clear it's only what they are talking: a base of adresses link to a real world identity.

So I don't see where is the huge problem, like you said sending coin to a new adress destroy the identity link.

Read it again.

They say that Avalon mining devices will not be available to people that don't use identified addresses. This is a way of destroying the concept of using multiple addresses at all, and it also compromises the security of the address. The more you re-use addresses, the easier some criminal will find it to synthesize a valid signature for that address, and steal any money sent to it. This is one of the reasons why address re-use is discouraged.
I understand how this is a privacy and security issues but I don't get why this is a fongibility issue ?
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