[PROPOSAL] - lock the apparent Mt. Gox coins for now

[CompNsci]

Given the possible recent leak of the Mt. Gox source code and database, what would the core developers and mining community think of locking the apparent large wallet balances belonging to Mt. Gox, Mark Karpeles, and Jeb McCaleb by changing the protocol for now?

The idea would not be to accept any transactions spending these bitcoin until the Mt. Gox bankruptcy case is sorted out. A committee, possibly appointed by the Bitcoin Foundation, could verify proper ownership before the coins are cleared for spending and a change back is made.

This would be a bit different than the idea of taking the coins permanently, or permanently invalidating them. The intention here would be to simply assist the legal process.

I know this is not something which can be done for every theft, etc., but we are talking about 6% of all bitcoin mined to date, which are presently tangled up in a real legal mess.

I suppose a general principle to govern this could be that when an entity controlling greater than some number of fraction of bitcoin is subject to legal action, such as a bankruptcy, charges of fraud, lawsuits, etc., that coins may be locked pending the outcome of litigation.

[QuestionAuthority]

Search discussions - Re: Fungibility

[Timo Y]

neither the mining community nor the developers have the power to do this on their own. the majority of of users and businesses also have to be convinced to update their client. remember, a chain containing invalid transactions will be rejected even if it is the longest.

since many of those users, and some miners, would oppose this out of principle, the result would almost certainly be a fork into 2 seperate bitcoins.

highly undesireable.

[CompNsci]

neither the mining community nor the developers have the power to do this on their own. the majority of of users and businesses also have to be convinced to update their client. remember, a chain containing invalid transactions will be rejected even if it is the longest.

I think the idea here would be for the miners to not put such transactions on the chain in the first place. In that case, would a change in the majority of the clients be needed?

I understand the whole fungibility issue and understand it is contentious.

[DannyHamilton]

neither the mining community nor the developers have the power to do this on their own. the majority of of users and businesses also have to be convinced to update their client. remember, a chain containing invalid transactions will be rejected even if it is the longest.

I think the idea here would be for the miners to not put such transactions on the chain in the first place. In that case, would a change in the majority of the clients be needed?

That depends.

How sure are you that 100% of all miners and all mining pools in the entire world will honor the agreement not to put such transactions into the chain in the first place?

If even one miner somewhere in the world puts such a transaction into the blockchain, how would you suggest the remaining miners handle the situation?  Do they ignore that block, or do they accept it and build on top of it?

[Zooey]

QFT

You do understand you will never convince miners to erase 3,000 blocks of the blockchain however if you did, then Bitcoin is done.   Remember over those 3,000 blocks, newly mined coins have been involved in transactions and this action would double spend all of those.  The coins originally minted would never exist and thus the coins spent wouldn't.  Merchants, other users, exchanges would all see the downstream transactions (which have 6 ro 3,000+ confirmations) suddenly go unconfirmed and invalid.

While this in theory could be done at any time it is generally accepted to be impossible.  If miners by decree can double spend transaction not 1 or 2 confirmations into the blockchain but 3,000 blocks deep then no receiver can ever be sure that the transaction is irreversible.  There is a certain level of faith in all currencies that create the perception of value, and Bitcoin is no exception.  Among those faiths, Bitcoin users believe that while it is possible in theory to 51% the network and undo transactions thousands of blocks deep, that it would have such an economic cost that it infeasible.  All users accept this faith or they wouldn't be using bitcoin (or would require 10,000+ confirmations before concluding the transaction).  Your proposed action (although I think it has no chance) if successful would break that faith.  Without faith in the irreversibility of transactions, there is no value or utility to Bitcoin.  Bitcoin would be dead.  I am not talking the exchange rate goes down a bit and recovers, I mean completely abandoned as a worthless experiment and development moves on to future systems which don't have the vulnerability (likely some floating checkpoint system which acts as a check to the proof of work).

How do you use a currency that at any time could simply be "undone" and erased from your wallet by the actions of a third party?  Would you use that currency?  I know I wouldn't.  I genuinely feel sorry for those who lost significant amounts of money by misplacing their trust in MtGox but this is a situation where the cure is worse than the disease.

[davidgdg]

Given the possible recent leak of the Mt. Gox source code and database, what would the core developers and mining community think of locking the apparent large wallet balances belonging to Mt. Gox, Mark Karpeles, and Jeb McCaleb by changing the protocol for now?

The idea would not be to accept any transactions spending these bitcoin until the Mt. Gox bankruptcy case is sorted out. A committee, possibly appointed by the Bitcoin Foundation, could verify proper ownership before the coins are cleared for spending and a change back is made.

This would be a bit different than the idea of taking the coins permanently, or permanently invalidating them. The intention here would be to simply assist the legal process.

I know this is not something which can be done for every theft, etc., but we are talking about 6% of all bitcoin mined to date, which are presently tangled up in a real legal mess.

I suppose a general principle to govern this could be that when an entity controlling greater than some number of fraction of bitcoin is subject to legal action, such as a bankruptcy, charges of fraud, lawsuits, etc., that coins may be locked pending the outcome of litigation.

Possibly the most appalling idea I have read on this forum and I've read a few.

[repentance]

The intention here would be to simply assist the legal process.

Not only would you not be "assisting the legal process", you would almost certainly be breaking the law because you'd be denying people access to accounts without any legal authority to do so and without any conclusive evidence of who owns those accounts.

Law enforcement and other investigators already have the power to seek injunctions which restrain MtGox principals from moving BTC from company and/or personal accounts.  They can almost certainly obtain court orders compelling the principals to give them access to those accounts if they deem that to be necessary (and failure to do so under those circumstances would put the principals in contempt and subject to penalties).  The community has not such authority and nor should it.

[CompNsci]

Not only would you not be "assisting the legal process", you would almost certainly be breaking the law because you'd be denying people access to accounts without any legal authority to do so and without any conclusive evidence of who owns those accounts.

I don't know that miners are under any legal obligation to carry any transactions at all. Therefore, they can pick and choose. If they choose not to carry transactions involved in such a large criminal activity, that would strike me as reasonable, at least until the matter is properly settled in court.

[Lauda]

Such a thing would destroy bitcoin. It should never be allowed to happen, no blocks will be erased.

[CompNsci]

Such a thing would destroy bitcoin. It should never be allowed to happen, no blocks will be erased.

I don't believe this requires any blocks to be erased or modified in any way. The miners can simply refuse to add transactions moving bitcoin out from the locked addresses to any other address, that is all. All other aspects of new blocks produced can remain the same.

[bassclef]

This will never happen, no way.

[justusranvier]

It would be a good learning experience for everybody involved if the core dev team did indeed release a new version of the client that did this.

[CompNsci]

It would be a good learning experience for everybody involved if the core dev team did indeed release a new version of the client that did this.

I don't believe this requires an immediate change in the client software, does it? Simply the software used by the miners would need to be changed to not incorporate transactions spending from the locked addresses. Eventually I suppose it should be incorporated into the main client software, but that is not the main priority.

Anyone who feels their coins have been unfairly locked, because they weren't part of the Mt. Gox wallets, can just provide proof of ownership to the appropriate group to have the addresses removed from the locked list. Clearly this would require good evidence, but that can be arranged and weighed appropriately.

This shouldn't inconvenience many people at all, at least not the honest ones, and would prevent either insiders at Mt. Gox or the alleged thieves from being able to move these coins until the facts are resolved.

When the bankruptcy is cleared up, which I understand will likely be a year or more, then the coins can be unlocked. Obviously, not something we would want to be doing for every theft and problem, but perhaps something to consider when major problems affecting substantial sums are involved. In fact, the ability to perform such a lock under extreme circumstances can be considered a strength of Bitcoin.

There is nothing wrong with the Bitcoin community, as a consensus, saying they want to be just and support law enforcement in such cases. In fact, I would argue it is using available information and the capabilities of new crypto-currencies in a freedom supporting way.

[justusranvier]

Like I said, it would be a good learning experience.

[CompNsci]

Like I said, it would be a good learning experience.

Hopefully we would all learn that the community can pull together for the sake of justice?

In any case, I imagine this would depend almost entirely on what the miners are willing to do, and if a majority of the hashing power would support it.

[DannyHamilton]

Hopefully we would all learn that the community can pull together for the sake of justice?

In any case, I imagine this would depend almost entirely on what the miners are willing to do, and if a majority of the hashing power would support it.

How sure are you that 100% of all miners and all mining pools in the entire world will honor the agreement not to put such transactions into the chain in the first place?

If even one miner somewhere in the world puts such a transaction into the blockchain, how would you suggest the remaining miners handle the situation?  Do they ignore that block, or do they accept it and build on top of it?

[DeathAndTaxes]

Anyone who feels their coins have been unfairly locked, because they weren't part of the Mt. Gox wallets, can just provide proof of ownership to the appropriate group to have the addresses removed from the locked list. Clearly this would require good evidence, but that can be arranged and weighed appropriately.

What "appropriate group"?  The central bank of Bitcoin?  The Central Bitcoin Intelligence Agency?

You have no idea which addresses belong to MtGox.  It doesn't strike you as utter contemptible to just start blocking addresses because you think they belong to MtGox? Forget laws, on what ethical or moral authority do you have the right to arrest the wealth on another person? 

There is nothing wrong with the Bitcoin community, as a consensus, saying they want to be just and support law enforcement in such cases. In fact, I would argue it is using available information and the capabilities of new crypto-currencies in a freedom supporting way.

Except by the responses of this very thread you already don't have a consensus and that is with only a tiny number of people knowing about it.  What you want is a central all powerful authority to control the wealth of others based on the flimsiest of evidence.  Evidence which BTW wouldn't be sufficient in a court of law to freeze assets "Your honor we think these assets might belong to the defandant so we want you to freeze them for an indefinite amount of time just in case.  This was thoroughly researched by some people on the internet and stuff.".

[repentance]

There is nothing wrong with the Bitcoin community, as a consensus, saying they want to be just and support law enforcement in such cases. In fact, I would argue it is using available information and the capabilities of new crypto-currencies in a freedom supporting way.

According to statements by MtGox, they have 127,000 creditors.  You might have noticed that people who are owed money by MtGox cannot come to a consensus about how the situation should be best approached, and those people have the possibility of invoking varying levels of actual authority.

Do you really believe that "the Bitcoin community" - a diverse group with widely varying agendas - would reach a consensus on this?  Even if they did, they have no authority over miners.  How would you even know that a consensus had been reached?  "The Bitcoin community" includes far more people than those who post here and on reddit.  Are miners supposed to just listen to the loudest voices?

You talk about "supporting law enforcement", but you're really talking about taking an action without even consulting them.  Do you think they're not capable of asking the devs whether or not it's possible for Bitcoin addresses to be "frozen" if they believe that's a desirable option?  It takes legal authority to freeze bank accounts, but what your proposing is freezing funds with no legal authority whatsoever based on no evidence whatsoever - the kind of thing this community would be outraged by if it was done by a conventional financial service.

Seriously, many of the proposals to "help law enforcement" I've seen over the last few days seem far more likely to hinder any investigation than anything else.  Y'all need to step back and let investigators do their thing working within the law because if one of you idiots fucks up the legal cases against MtGox in your quest to play Ellery Queen, nobody is going to give a shit that you had "good intentions".

[CompNsci]

How sure are you that 100% of all miners and all mining pools in the entire world will honor the agreement not to put such transactions into the chain in the first place?

I don't believe it would require 100% of all miners. A simple majority, a bit over 50% of the hashing power, should suffice, right?

If even one miner somewhere in the world puts such a transaction into the blockchain, how would you suggest the remaining miners handle the situation?  Do they ignore that block, or do they accept it and build on top of it?

I would suggest they drop it. That way it wouldn't pay to waste a mined block including such a transaction. Since miners choose which transactions are included in the block, they needed include them in the first place.