New mining pool imposes KYC and censorship

[bbc.reporter]

This is very concerning news.

Is there a chance that regulators can force transaction filtering on all of the mining pools to censor unwanted transactions? The skeptical me thinks that this new mining pool is secretly created by the government to encourage other mining pools to do something similar.



All users of Blockseer’s pool are required to pass KYC (Know Your Customer) protocols, and blocks posted to the Bitcoin blockchain by Blockseer’s pool will only contain filtered transactions using Blockseer and Walletscore’s labeling data, along with verified sources such as the United States OFAC blacklist for crypto. Blockseer’s data analytics platform has been used by various law enforcement agencies over the past six years, providing Blockseer’s new pool with credible data relating to fraud, theft, money laundering and various other nefarious dealings which will be filtered out of any block that this pool will post to the Bitcoin blockchain.. Blockseer has a US patent pending novel approach to transaction filtering which examines transactions to and from bitcoin wallets which will exclude high risk wallets from being included in Blockseer’s posted blocks.

Source https://stockhouse.com/news/press-releases/2020/10/29/dmg-s-subsidiary-blockseer-launches-bitcoin-mining-pool-focused-on-good

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[jackg]

I mean if you were trying to force other people to do something why would you patent it?

Although they could also be finding a way to become more profitible by selling on their users' IDs and other personal information, doing chain analytics or trying to track people that are against decentralisation (and they could be doing that one indirectly if there security isn't that good then a bunch of other people might be able to gain access to know who their users are that won't confirm their transactions because it's painted gray...

[pooya87]

Is there a chance that regulators can force transaction filtering on all of the mining pools to censor unwanted transactions?

"on all"? no.
any mining pool that starts censoring transactions will abandoned be immediately by the miners that connect to it. the more serious the threats gets the more new mining pools in different places of the world will start for miners to migrate to. the more serious it gets can also lead to a mining protocol change that bricks all their efforts.

All users of Blockseer’s pool are required to pass KYC (Know Your Customer) protocols,

i can't even find this pool among the list of bitcoin mining pools!
the smallest listed here (https://btc.com/stats/pool) has 0.22% of the total hashrate.

[witcher_sense]

No rational player will ever join a mining pool that deliberately tends to decrease the revenue of the miners. I mean, bitcoin mining implies certain economic incentives for miners such as block subsidies and transaction fees. If some of the pools start to require KYC from miners, miners can always join other pools that don't. KYCed pools will therefore have fewer miners, less hash power, and less revenue. Moreover, the senders of "suspicious" transactions can always pay more fees to propagate transactions through non-KYC mining pools and thus increase the profit of those. Non-KYC mining pools will always be more profitable, more attractive, faster, and freer.

[Leviathan.007]

That's obvious to see  many miners will soon leave it and this mining pool will be abandoned, because forcing people to do KYC is against bitcoin spirit. Bitcoin was made to be decentralized not being controlled by any organization or government with anonymous transactions and requiring to pass KYC and forcing people to do that is completely against it. This will definitely decrease the miners using this mining pool over time.

[hatshepsut93]

The censorship aspect has been theorized a long time ago, if you control 51% of mining power, you can refuse to include certain transactions, and then just fork if other miners do include them, forcing them to lose all the block rewards. There is some risk that in the future governments will try to regulate/take over Bitcoin, by forcing miners to do this attack.

any mining pool that starts censoring transactions will abandoned be immediately by the miners that connect to it. the more serious the threats gets the more new mining pools in different places of the world will start for miners to migrate to. the more serious it gets can also lead to a mining protocol change that bricks all their efforts.

They can target not only pools but miners themselves. So miners will have to choose between obeying the regulations by enforcing a blacklist or moving to a different country, which might be not possible. And if Bitcoin market will negatively react to this, some miners will just quit.

[Beparanf]

That's obvious to see  many miners will soon leave it and this mining pool will be abandoned, because forcing people to do KYC is against bitcoin spirit. Bitcoin was made to be decentralized not being controlled by any organization or government with anonymous transactions and requiring to pass KYC and forcing people to do that is completely against it. This will definitely decrease the miners using this mining pool over time.

They can't do about it if regulators insist because mining pool operator is a business and needs permit to operate. They are force to apply KYC in able to survive. This is the main reason why Satoshi is anonymous, to make bitcoin completely decentralized because once he was caught, Bitcoin might be controlled by implementing a law that will control on it.

This kind of news is very scary because it might destroy the mining industry of bitcoin since many miners on crypto wants a privacy. This might happened on different mining pool too that located on same country.

[chip1994]

I also think this is a conspiracy theories about the government's desire to dominate information. mining has never needed KYC, only wallets work with wallets. Remember, people can fake KYC very easily, and it's very difficult to find out true identities.
I think this is just a new game that the sharks create so they can make money selling users' information. So be careful when you provide KYC to any organization.

[Darker45]

If the governments won't get into mining, I doubt this pool would turn out successful. I don't think any Bitcoin miner in his/her right mind would join such a pool? Every miner who truly knows and supports Bitcoin won't support such extremely ludicrous idea.

The censorship aspect has been theorized a long time ago, if you control 51% of mining power, you can refuse to include certain transactions, and then just fork if other miners do include them, forcing them to lose all the block rewards. There is some risk that in the future governments will try to regulate/take over Bitcoin, by forcing miners to do this attack.

As pointed out by Eric Voskuil more than a year ago:^[1]

"Assuming sufficient resistance, Bitcoin persists independent of Fedcoin as a black market money. At this point the state concludes that the only effective tactic is to compete as a miner. Given that mining is necessarily anonymous, there is no way for the economy to prevent state participation in mining. Thus Bitcoin enters the competitive phase, with the state attempting a perpetual 51% attack."

We'll see how desperate the government regulators would turn out in the next years.

[1] https://github.com/libbitcoin/libbitcoin-system/wiki/Other-Means-Principle

[Wind_FURY]

This is very concerning news.

Is there a chance that regulators can force transaction filtering on all of the mining pools to censor unwanted transactions? The skeptical me thinks that this new mining pool is secretly created by the government to encourage other mining pools to do something similar.

GOOD! That should emphasize the community's attention to the development of Stratum V2, and that mining pools should start implementing it, once they're ready.

https://bitcoinmagazine.com/articles/with-stratum-v2-braiins-plans-big-overhaul-in-pooled-bitcoin-mining

I believe it should encourage the use of LN too. For more on-chain privacy to mitigate that kind of censorship.

[mk4]

This is very concerning news.

I personally don't think so. If a certain mining pool imposes KYC, then what's stopping miners from hopping to a different pool that doesn't impose KYC? Seems simple enough to me. Or am I missing something here?

[dothebeats]

And this just opens up a new market for miners that couldn't care less on who they are dealing with and might even set up a premium for the fees if a multitude of mining pools start taking this route. Ultimately this is just dividing the network into two distinct groups, but I'm pretty sure most miners will just continue doing what they're doing and would not implement this preposterous idea of taking over privacy just because a government-led pool is doing it.

[target]

So annoyed that currently cryptocurrency is filled with KYC words. This clearly will make people lazy to do it and eventually they leave. It seems the government always wants to regulate what they can control even though it was not created for them to control.

It's what government does, censorship is their solution.
Obviously any miner can move to another pool to avoid it but if the government will really see mining as a business and will have to impose law or cease miners all because he had not registered his business, it will be the end. Kind of scary for miners. Maybe miners will be forced to do solo in the hiding.

[Ucy]

Well, any platform that wishes to do such thing has to be well decentralized, transparent, censorship resistant, immutable, permissionless/trustless, privacy-friendly, subjected to Bitcoin rules/principles, etc.  Foreign centralized body/platform that lacks this features would only end up violating the ideals/rules and leave Bitcoin vulnerable.
By the way, I think the Bitcoin network could penalize any pool that does that or breaks the censorship resistant rule. Better to have seperate community tag/blacklist coins transparently and the coins can be automatically rejected by miners based on the seriousness/intensity of the crime which could be represented in colours... with the nature of the crime clearly attached to the coin/transaction

[NotFuzzyWarm]

This is very concerning news.

I personally don't think so. If a certain mining pool imposes KYC, then what's stopping miners from hopping to a different pool that doesn't impose KYC? Seems simple enough to me. Or am I missing something here?

I agree - a big yawn here as folks will simply not use said pool. Unless a government is going to force ISP's to filter (whitelist/blacklist) traffic to/from pool nodes there is nothing that could be done to enforce KYC.

The only possible 'good' side to what Blockseer is trying to do is that because a fair amount of Tx validation is involved it could finally eliminate the idiotic practice of mining empty blocks that some pools are so fond of.

[Sterbens]

This is very concerning news.

I personally don't think so. If a certain mining pool imposes KYC, then what's stopping miners from hopping to a different pool that doesn't impose KYC? Seems simple enough to me. Or am I missing something here?

yes, in fact, this will actually encourage many fishermen to flock to switching to kumplan which does not enforce KYC. because data and IDs used under the pretext of crime are rampant everywhere. in fact, it is enforced by the government just to avoid data theft. It's really annoying doing KYC, and I'm the one avoiding it a lot

[meanwords]

Not that serious. There's a lot of mining pool all over the world and those who restrict miners will probably changed into a mining pool that has a decent service so that KYC probably won't be a problem because those who mining pool who comply will lose.

It's not like US is the whole world anyway.

The skeptical me thinks that this new mining pool is secretly created by the government to encourage other mining pools to do something similar.

Nope. Pretty stupid if they think that this will work.

[bbc.reporter]

Is there a chance that regulators can force transaction filtering on all of the mining pools to censor unwanted transactions?

"on all"? no.
any mining pool that starts censoring transactions will abandoned be immediately by the miners that connect to it. the more serious the threats gets the more new mining pools in different places of the world will start for miners to migrate to. the more serious it gets can also lead to a mining protocol change that bricks all their efforts.

All users of Blockseer’s pool are required to pass KYC (Know Your Customer) protocols,

i can't even find this pool among the list of bitcoin mining pools!
the smallest listed here (https://btc.com/stats/pool) has 0.22% of the total hashrate.

How about if the government enacts a law or an order that forces the large miners to use a pool that is compliant under government standards or the licenses of the miners will be revoked?

[pooya87]

As pointed out by Eric Voskuil more than a year ago:^[1]

"Assuming sufficient resistance, Bitcoin persists independent of Fedcoin as a black market money. At this point the state concludes that the only effective tactic is to compete as a miner. Given that mining is necessarily anonymous, there is no way for the economy to prevent state participation in mining. Thus Bitcoin enters the competitive phase, with the state attempting a perpetual 51% attack."

first of all bitcoin, apart from a short time at the beginning, has never had "black market usage" as its main use case and it will not change in the future either. fiat still dominates all illegal activities with anon coins such as monero trying to take the lead. meanwhile bitcoin is used for everything else.

secondly 51% attack is irrelevant here because with this attack you can only scam people who receive money from you by double spending the money you paid them, otherwise you can not force KYC, censor transactions, etc. which is the discussion here.

[Chris Barth]

That's wrong. Personally, I don't like kyc. I want my online activities to be incognito. And I'm sure there are users in that mining pool who distastes kyc too. Bitcoin supports anonymity so where are they getting their idea from? I'm sure the stats in the back-end would show the number of people they'll lose.