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Author Topic: Governments/regulators may eventually actually *like* Bitcoin. - coin blacklists  (Read 3894 times)
cbeast
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December 02, 2011, 06:10:09 PM
 #41

The worst aspect of this sort of tagging is the possibility of silent tags.

You innocently spend some coins at the supermarket, and before you know it, the facial-recognition camera at the checkout has worked out who you are and the police come knocking to ask where you got a specific payment from.

While that has some legitimate law-enforcement use - it's also a pretty horrifying invasion of privacy and open to abuse.

I suspect there isn't a technical fix for this.  Bitcoin won't remove the need to fight for legal principles and rights.

edit: Although some ordinary cash is tracked by serial number, the average person just isn't going to remember where they got a particular note from - so it's hardly likely police will come knocking. With a bitcoin wallet though, there's a record and timestamps so it's more of a possibility.


I think you are over reaching with this problem. Bitcoin will eliminate most crimes.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 02, 2011, 06:47:25 PM
 #42

The worst aspect of this sort of tagging is the possibility of silent tags.

You innocently spend some coins at the supermarket, and before you know it, the facial-recognition camera at the checkout has worked out who you are and the police come knocking to ask where you got a specific payment from.

While that has some legitimate law-enforcement use - it's also a pretty horrifying invasion of privacy and open to abuse.

I suspect there isn't a technical fix for this.  Bitcoin won't remove the need to fight for legal principles and rights.

edit: Although some ordinary cash is tracked by serial number, the average person just isn't going to remember where they got a particular note from - so it's hardly likely police will come knocking. With a bitcoin wallet though, there's a record and timestamps so it's more of a possibility.


I think you are over reaching with this problem. Bitcoin will eliminate most crimes.

Ok.. I'll bite. Are you being sarcastic?
If not..  How? Do you classify governments and bankers as the commiters of 'most crimes' and think bitcoin will bring them down?
And *I* am over-reaching??



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December 02, 2011, 07:02:58 PM
 #43

I think you are over reaching with this problem. Bitcoin will eliminate most crimes.

Ok.. I'll bite. Are you being sarcastic?
If not..  How? Do you classify governments and bankers as the commiters of 'most crimes' and think bitcoin will bring them down?
And *I* am over-reaching??


By most crimes, I mean those that fill our prisons. I wrote about this in this thread: https://bitcointalk.org/index.php?topic=50114.msg597113#msg597113

But as for white collar crimes, well those for the most part aren't really crimes. They are legal forms of theft that sometimes go too far. Laws need better enforcement and Bitcoin can help provide tools for law enforcement while still maintaining privacy.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 02, 2011, 08:53:24 PM
 #44

What's the use case? Pervert Bert buys smut from Sleazy Steve's website. A week later, the website's accounts get opened by law enforcement. Sleazy Steve goes to jail, now the cops are after all of its customers. In the meantime, Pervert Bert sent coins to Innocent Irene from the previous sleazy transaction's change address. Innocent Irene buys an apple from Merchant Mike. Merchant Mike nabs Innocent Irene and calls the cops. The cops go through Innocent Irene's transaction history and question her about a particular purchase weeks earlier.

How many hops before the trail is futile? How much time? A simple solution is to send random denominations with few inputs and random number of outputs at random intervals to new addresses, perhaps a new wallet. Doesn't everyone create a new wallet with each client release and never use labels?

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December 02, 2011, 09:28:55 PM
 #45

What's the use case? Pervert Bert buys smut from Sleazy Steve's website. A week later, the website's accounts get opened by law enforcement. Sleazy Steve goes to jail, now the cops are after all of its customers.

OK so far.

In the meantime, Pervert Bert sent coins to Innocent Irene from the previous sleazy transaction's change address. Innocent Irene buys an apple from Merchant Mike. Merchant Mike nabs Innocent Irene and calls the cops. The cops go through Innocent Irene's transaction history and question her about a particular purchase weeks earlier.

Why would the cops care about where Bert spent his money? They already have him involved with a crime. Are you assuming all criminal activity is committed by evil masterminds?

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 02, 2011, 09:36:38 PM
 #46

What's the use case? Pervert Bert buys smut from Sleazy Steve's website. A week later, the website's accounts get opened by law enforcement. Sleazy Steve goes to jail, now the cops are after all of its customers.

OK so far.

In the meantime, Pervert Bert sent coins to Innocent Irene from the previous sleazy transaction's change address. Innocent Irene buys an apple from Merchant Mike. Merchant Mike nabs Innocent Irene and calls the cops. The cops go through Innocent Irene's transaction history and question her about a particular purchase weeks earlier.

Why would the cops care about where Bert spent his money? They already have him involved with a crime. Are you assuming all criminal activity is committed by evil masterminds?


The cops are tracing back to coins that popped up at Merchant Mike's.  They know they came from Sleazy Steve's website, but they don't yet know all the links in the chain.  If they follow the coins back they will find Bert.  They don't have him yet.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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December 02, 2011, 09:41:52 PM
 #47

Bingo! Thank you Notme...




Unless the cops (evil repressive regime - certainly not the country in which you pay taxes) set up a honey trap, I think there is (or should be) enough plausible deniability that this concern is moot. The current behavior of the Satoshi client - to send change to a new address - is a pathetic anonymizer. It needs to be random, multiple, and continual.

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December 02, 2011, 09:47:39 PM
 #48

Bingo! Thank you Notme...




Unless the cops (evil repressive regime - certainly not the country in which you pay taxes) set up a honey trap, I think there is (or should be) enough plausible deniability that this concern is moot. The current behavior of the Satoshi client - to send change to a new address - is a pathetic anonymizer. It needs to be random, multiple, and continual.

I'm glad I don't live in a banana republic with "guilty by association" laws.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 02, 2011, 09:57:13 PM
 #49

The original discussion thread about this problem in this forum: https://bitcointalk.org/index.php?topic=20979.0  
Thanks for the pointer - I hadn't seen that one.


Nihil novi sub sole. Actually, this thread is more original:

https://bitcointalk.org/index.php?topic=5979.0

Check out what Mike Hearn, theymos and Vladimir have said.

And finally, pay attention to the last post, by Anonymous Guest (I did not know that such 'anonymous' commenting was possible - maybe this guy is Satoshi?  Wink)
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December 02, 2011, 10:33:22 PM
 #50

a warning is fine. but you will not be able ton enforce anything on bitcoins - luckily.

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December 02, 2011, 11:00:50 PM
 #51

What's the use case? Pervert Bert buys smut from Sleazy Steve's website. A week later, the website's accounts get opened by law enforcement. Sleazy Steve goes to jail, now the cops are after all of its customers. In the meantime, Pervert Bert sent coins to Innocent Irene from the previous sleazy transaction's change address. Innocent Irene buys an apple from Merchant Mike. Merchant Mike nabs Innocent Irene and calls the cops. The cops go through Innocent Irene's transaction history and question her about a particular purchase weeks earlier.

How many hops before the trail is futile? How much time? A simple solution is to send random denominations with few inputs and random number of outputs at random intervals to new addresses, perhaps a new wallet. Doesn't everyone create a new wallet with each client release and never use labels?
Not only this…but criminals would likely move coins through an exchange or mixing service of some kind long before law enforcement could identify and blacklist an address.

(gasteve on IRC) Does your website accept cash? https://bitpay.com
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December 02, 2011, 11:13:35 PM
 #52

The city is filled with stories like this. Some are even true.
Sally is paid by her boss in Bitcoins. Her employer automatically takes out taxes from her registered Bitcoin address. After paying her bills to registered business Bitcoin addresses she decides to take her remaining salary and go out. Sally calls an escort service and pays their public address. She then meets Lance for a night of frolic. While she is in the shower the pizza arrives at the motel room. She tells Lance to pay the pizza guy Bill with her card. Her card is designed to only accept registered addresses. Lance is disappointed because he was hoping he could buy drugs from Bill with her card too, but ended up payiing for them with a physical Bitcoin and was unable to get change. Bill pocketed his profit thinking "stupid junkie."

Bill is caught by police buying more drugs to sell. They ask him where he got a whole Bitcoin. Bill tells him that it was a tip from a nice lady. Police check his employer records and find his last delivery. They investigate and find Sally barely alive. They rush her to the hospital. Meanwhile Lance was trying to pawn her jewelry. The first pawn shop wouldn't take his items because Lance refused to give them his registered Bitcoin address. They learned their lesson when an undercover cop pawned jewelry and offered to take half the money if they would use an unregistered address. The next pawn shop would register an address for him if he would wait 10 minutes for the transaction to verify. Lance was desperate for another fix so he agreed to wait. Police picked up the unregistered transaction by the pawn shop IP address and intercepted the perp. The escort was then investigated, but the police chief cleared them of any wrongdoing. Sally later went on Oprah with a book she wrote about how Bitcoin saved her life.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 02, 2011, 11:22:27 PM
 #53

The city is filled with stories like this. Some are even true.
Sally is paid by her boss in Bitcoins. Her employer automatically takes out taxes from her registered Bitcoin address. After paying her bills to registered business Bitcoin addresses she decides to take her remaining salary and go out. Sally calls an escort service and pays their public address. She then meets Lance for a night of frolic. While she is in the shower the pizza arrives at the motel room. She tells Lance to pay the pizza guy Bill with her card. Her card is designed to only accept registered addresses. Lance is disappointed because he was hoping he could buy drugs from Bill with her card too, but ended up payiing for them with a physical Bitcoin and was unable to get change. Bill pocketed his profit thinking "stupid junkie."

Bill is caught by police buying more drugs to sell. They ask him where he got a whole Bitcoin. Bill tells him that it was a tip from a nice lady. Police check his employer records and find his last delivery. They investigate and find Sally barely alive. They rush her to the hospital. Meanwhile Lance was trying to pawn her jewelry. The first pawn shop wouldn't take his items because Lance refused to give them his registered Bitcoin address. They learned their lesson when an undercover cop pawned jewelry and offered to take half the money if they would use an unregistered address. The next pawn shop would register an address for him if he would wait 10 minutes for the transaction to verify. Lance was desperate for another fix so he agreed to wait. Police picked up the unregistered transaction by the pawn shop IP address and intercepted the perp. The escort was then investigated, but the police chief cleared them of any wrongdoing. Sally later went on Oprah with a book she wrote about how Bitcoin saved her life.

 Shocked  Amazing!  Grin

But: this all makes the bold assumption you can absolutely tie an address and specific Bitcoins with an individual or entity.
It won't happen, I can assure you. (Some hints: connecting through Tor; building OpenTransaction overlay upon bitcoin > exchanging blind tokens, etc)
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December 03, 2011, 12:24:42 AM
 #54

Quote
But: this all makes the bold assumption you can absolutely tie an address and specific Bitcoins with an individual or entity.
It won't happen, I can assure you. (Some hints: connecting through Tor; building OpenTransaction overlay upon bitcoin > exchanging blind tokens, etc)

You dont allways have to tie them to a person or entity, its enought to tie them to a crime to taint the adress they are at and maybe any adresses they go to.

One problem though is speed, it has to go quite quick? What happens when it goes to slow...Before an adress is tainted, the coins are allready moved into an exchange and ends up spread to other users.

Should those user be asked to send the coins back otherwise their adresses will be tainted? Thinking about it, its not reasonable...

So this tainting system should perhaps only be there to prevent crimes such as extortion and kidnapping from being based on Bitcoins, because in both cases you will be able to know in advance that a certain adress will contain tainted money.

Ofcourse a kidnapper could allways threaten that the adress should not be tainted or else.
But in these case I see governments cooperating with exchanges and warning them of the adress without tainting it.
Though thinking further would not be possible since he could send the coins to a new adress, exchange them at an exchange and claim that he bought the coins from someone unknown etc.


Thinking about the speed...

Thats where whitelisted adresses comes in, or known adresses.

Exchanges will have to only accept coins with zero day delay from whitelisted adresses. 
Any unknown adress will have to be in quarantine waiting to be aknowledged for say 3 weeks depending on country, so that its not money from a serious crime.

Some poker networks have these kinds of quarantine when withdrawing funds.

This will also force real users to rather use and keep their coins at whitelisted adresses.
An adress will probably be "whitelisted" just by doing a verification at any of the exchanges.

 

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December 03, 2011, 12:45:34 AM
 #55

Shocked  Amazing!  Grin

But: this all makes the bold assumption you can absolutely tie an address and specific Bitcoins with an individual or entity.
It won't happen, I can assure you. (Some hints: connecting through Tor; building OpenTransaction overlay upon bitcoin > exchanging blind tokens, etc)

I'm not so jaded as some here. I really think most people are honest. Tor, darknets, black markets, etc. are only a tiny portion of financial transactions. When robbers, muggers, and lunch money bullies no longer have cash to steal, people will become more trusting. There will always be some criminality, but Bitcoin brings financial control back to the people rather than arcane derivative sorcerers.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 03, 2011, 03:04:06 AM
 #56

Okay, spent some time to read this through. [Hello, ‘bitcoin kidnapper’ poster – sorry, skipped through yours] Conclusion – any regulative restriction is legally and even financially [for totalitarian regimes] impossible to implement. Propaganda restriction is already in place and unlikely being cost-effective if the goal is to destroy, not regulate. I can, however, imagine a time when regulating bitcoin would be a real goal, but still cannot see a legal way to do it in a manner described here. To think further: all bank notes in circulation are traceable, therefore can be traced to a degree [when it is worth it], so are bitcoins [maybe, questionably, at much lower costs]. But no more. Never more. Freedom is always a given, such is the difference between any law and enforcing it. Majority of human population at risk/unsustainable – discuss then.
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