OFAC-Sanctioned Transactions Being Censored

[digaran]

You know that's impossible without a hard fork, right?

What's the alternative? We sit around, shake our fists, do nothing, wait for more mining pools to capitulate to government demands, and then lament that bitcoin is under government control?

Well, this is the problem of large scale networks, unless pools could operate in a country not influenced by US, or they could somehow anonymize themselves and their farms. This is obviously a takeover of big pools.
~D

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[HmmMAA]

That'd be the time to abandon Bitcoin for good. The day mining pools reorg the chain is the day there is nothing valuable to secure. It'd be suicidal.

No pool would really want to do that because they would probably see the same things and know that it would kill their business.

Would it, though? That'll be the day the likes of us abandon bitcoin, but the masses don't care. They let centralized exchanges act as banks, surveil their every move, hold their coins, and dictate how they can spend them. They use custodial wallets which can stop serving them at any time, like Wallet of Satoshi just did. All they care about is "when moon", and not at all about the whole point of bitcoin in the first place. They cheer for more regulations since it means bitcoin "is going mainstream", and eagerly await institutional investors, ETFs, and the like. Are they going to care about a few transactions belonging to other people are being censored? The fact that this censorship is barely being discussed across this forum/Reddit/Twitter/etc. tells you all you need to know. People don't care.

Well, the problem with the price is that maxis are the ones who want it to only go up . If the price doesn't double as maxis desire in each cycle , then mining/securing the network becomes unprofitable . That's what the other chains saw during the hashwars and decided to split . So don't blame the "ignorant" masses . Just admit that you didn't foresee what was about to happen . Either bitcoin lives from fees and not subsidy , or it dies. Btc chose its path , the only way to survive is if the price goes up . Alternatively , stop running rasppis and decide to invest in mining gear , and run them altruistically to support your ideas . Just make sure to buy a lot of hashpower , as double-spending attacks might occur .

Also fixed a sentence to point things properly: "Are they going to care about a few transactions belonging to other people criminals that are being censored?"

[alani123]

In that case, it would be better to have established some sort of organization to be able to in a way punish the bad faith miners by responding accordingly in a timely manner.

So a centralized third party to police the other centralized third parties? No thanks. What we need is more privacy by default on the base layer to make this kind of censorship impossible to begin with.

No, see, bitcoin already has structures of (certain) authority that help govern it.
It's not complete unstructured anarchy that's going on with it's developments. Certain older core devs approve proposals for discussion for instance.
Others review code changes and push them to release.

Even the mailing list is Grey listed.

This process is neither democratic nor very free (as in freedom). But the community generally trusts these individuals as they have years of contributions to back their position.
But if an emergency event was to happen like an unintended fork or a sustained 51% attack, what were the users going to do?
Would we form a new organization to deal with these emergency issues?
Probably not. Most users would likely follow what the existing core developers proposed as a solution, trusting them in downloading their client update.
Unless of course they were deemed as bad faith actors.

But on that note, with the freedom of being able to exclude transactions, also comes some responsibility that bad faith authorities like the OFAC might want to impose on bitcoin miners.

I expect mining pools to understand the ethics and principles of the BTC network, it is true that mining is a 'business' and miners want to make profit, but sanctioning tx's defeats the principles and ethics of the network and it also doesn't help them in the case of making profit, because they are rejecting the tx fees attached to those tx's. The authorities cannot 'impose' anything on miners, because pools have the 'right' to oppose any policy that affects the nature of the BTC network, and if the conditions because so unfavorable, it is better miners relocate or pack up their gears from such locations, than for them to directly 'attack' the BTC network.

Leaving the window open for abuse means that it's bound to happen at one point or another.
Just as MARA pool was doing OFAC compliant blocks in 2021, same as F2POOL this year etc. Can't base this relationship completely on trust.

So the idea of cloaking transactions before confirmation just so miners can't see what they're confirming might be a good idea after all. No possibility to pick and choose means reduced liability also.

That is not possible, the BTC blockchain is both a public and transparent ledger, everything is open to everyone and even if this was possible, i would not support it.

There might be solutions without making  bitcoin transactions completely dark.
Adam Back called his proposal committed transactions, which was demonstrated 10 years ago. Maybe that idea could be picked up to be worked on again so we can see how feasible it is.

[BlackHatCoiner]

Would it, though? That'll be the day the likes of us abandon bitcoin, but the masses don't care.

I don't believe that the referred masses use bitcoin in the first place. To me, only someone who owns their keys can be said to truly use bitcoin.

I don't believe that the masses control the world. Maybe they did once, but not anymore. Democracy is a failure. It's just the least worse regime comparably to the rest. Or as someone had once put it, "Democracy is the worst regime, except all the others". For it to function properly, it requires strong citizen maturity and character, and that is almost never the case. Granted. It is the closest thing we have to harmoniously live alongside and, by compromises, to maintain a healthy community. But it's self-destructive, just as humans. It is inevitable at some point that social institutions will corrupt, and the people will not just turn against the corrupted institution, but to the democratic system itself.

And that is why I like Bitcoin. It is not a democracy. It requires little effort to work; and works good. It is not controlled by the masses, but by neither a tyrant. It inherits the good virtues of democracy without incorporating the extensive effort and conditions it entails. You need Internet connection and a computer. Boom, money sent overseas secured by a mechanism which converts human greed to collective benefit. The bet is that this beautiful combo can overcome human corruption, or at the very least, navigate around it.

To not talk at length, only a fraction of the userbase is the driving force of Bitcoin. Genuine users who endorse the views of state-less money, accept bitcoin and spread the word, miners who maintain the status quo, and technicians who write the code. Not weak hands. Neither regulators. It's just currently apparent that centralized entities like mining pools and exchanges are susceptible to censorship. We already acknowledge that since 2009. We move on.

[cryptosize]

If Bitcoin ever becomes centralized, it will no longer maintain its current purchasing value. That's for sure.

Bitcoin became so valuable because it's the first decentralized, censor-free, digital currency.

Big entities (such as pools) can always become corrupted, assuming they no longer care about making money/profit (ever heard of "go woke, go broke"?). The establishment can ruin everything you love, as long as it's centralized (Hollywood, Netflix, video game companies etc.)

People can always form new pools, or join smaller ones, especially those that don't steal transaction fees from miners (didn't know that was a thing, totally despicable). KYC demands are also unreasonable.

My personal bet is that the WEF elites (Bill Gates etc.) definitely want Bitcoin for themselves as a lifeboat to secure their wealth (convert fiat deposits & SP500 stocks to BTC ETF). They do NOT want it for the masses/plebs.

That's why BlackRock wants to enter the BTC realm. Billionaires want a valuable asset to secure their wealth right before they perform The Great -Currency/Debt- Reset (which I reckon will happen around 2026-2027 during Taiwan's invasion by China). Fiat currencies (USD, EUR etc.) will melt (Weimar-style) and this will be the perfect opportunity to shove CBDC down people's throats.

I know this sounds like a crazy tinfoil hat conspiracy theory to some people around here, but what would you do if you were Bill Gates?

Would you trust CBDC? Especially considering the fact it will have a limit of €2000-3000 (as ECB officials have said)?

Do you wanna own nothing and be happy? Because with only 2-3k dollars/euros you will be forced to rent everything (your house, your car etc.)

This is another reason why NO ONE in their right mind should sell their BTC stash, especially before BlackRock's ETF approval (which will happen by mid-March 2024 at the latest).

I sure as hell wouldn't destroy Bitcoin if I were Bill Gates or Klaus Schwab, BUT I would badmouth it all the time in mainstream media to deter the plebs from buying even a single satoshi!

It makes sense if they want to buy BTC at a low price and even cause weak hands/panic sellers to sell some more to them...

[digaran]

Communism, marxism, and now western "democracy" all these regimes proven to be a failure, a new model is required to rule the world with, there is an infrastructure for such civilization but nobody has been able to present it to the world and demonstrate that it can work.
USD if sanctioned, US will lose it's only actual power, then you can start phase 2 of revolution, proof of work blockchain as a government, where there will be no cheating, no corruption and no rant. Sooner they dig their own grave by suppressing freedom, sooner people realize western democracy does not work.

Love how some people are unaware of their own surrounding but know a lot about the world at large. 😉

[PrivacyG]

Are they going to care about a few transactions belonging to other people are being censored? The fact that this censorship is barely being discussed across this forum/Reddit/Twitter/etc. tells you all you need to know. People don't care.

Of course not.  No body will care except a handful of people like us.  The rest will happily send pictures of their bum hole in macro to any Exchange just so they can have peace of mind and withdraw the 2 fucking Dollars they earned through a Bounty.

-----

And that is why I like Bitcoin. It is not a democracy. It requires little effort to work; and works good. It is not controlled by the masses, but by neither a tyrant. It inherits the good virtues of democracy without incorporating the extensive effort and conditions it entails. You need Internet connection and a computer. Boom, money sent overseas secured by a mechanism which converts human greed to collective benefit. The bet is that this beautiful combo can overcome human corruption, or at the very least, navigate around it.

To not talk at length, only a fraction of the userbase is the driving force of Bitcoin. Genuine users who endorse the views of state-less money, accept bitcoin and spread the word, miners who maintain the status quo, and technicians who write the code. Not weak hands. Neither regulators. It's just currently apparent that centralized entities like mining pools and exchanges are susceptible to censorship. We already acknowledge that since 2009. We move on.

I really wish you are right and this was just yet another bump we jump over.  Events are seemingly more rough and harsh every year however.  I wonder where all of this will lead to.  A single thing is certain.  If they take down Bitcoin then our future is fucked entirely.

After all.  If the day comes when Censorship is applied to Bitcoin by Miners directly.  I guess we will have to move on every now and then from one Fork to another like some weird nomads in order to keep our freedom.

[Poker Player]

I know this sounds like a crazy tinfoil hat conspiracy theory to some people around here, but what would you do if you were Bill Gates?

Would you trust CBDC? Especially considering the fact it will have a limit of €2000-3000 (as ECB officials have said)?

Do you wanna own nothing and be happy? Because with only 2-3k dollars/euros you will be forced to rent everything (your house, your car etc.)

It sounds like a conspiracy theory because it is, like that thing that looks like a duck and turns out to be a duck. The €3,000 limit has been planned to protect banks. You can see it in the following document: Know your (holding) limits: CBDC, financial stability and central bank reliance. But if you find it too complicated, it is summarized in a newspaper article:

The European Central bank is toying with the idea of imposing a €3000 limit on consumer CBDC accounts to discourage users from transferring all their cash from commercial banks to the central bank.

So what the ECB is worried about is that citizens will embrace the Euro CBDC so enthusiastically that they will all want to switch to it, eliminating the need for commercial banks and suddenly all those banks will fail. That is why it is considering imposing an initial limit of €3,000, which will coexist with the existing cash and electronic payments (transfers, card payments, etc.).

[pooya87]

Whenever there is a door to be kicked down, the governments will kick it down.

That is why in Bitcoin we eliminated the "doors" to be kicked down through decentralization. However, centralization has a way of creeping back in somehow. Whether it is custodial wallets, centralized exchanges or the centralized mining pools.
Whet we need to do is to fight this centralization. We are lucky that the mining pools are slightly spread and they can not all be forced to perform such an "attack" on Bitcoin by censoring transactions, ... at this point. But we eventually have to address this vulnerability.

Even in an extreme scenario where most of the hash rate is pro-censorship, there will still be a few pools which will not censor.

And in such a scenario, the pro-censorship majority can simply ignore any blocks which include transactions they dislike. Any blocks mined by the non-censoring pools can just be re-orged out of the chain at will.

As it turns out, bitcoin is not censorship resistant. It simply isn't being censored right now.

This is not an issue with Bitcoin (the protocol) itself. It is an issue with how we use the protocol.
It's kind of like using CEX. If you store your coins there and the CEX owner freezes them, that doesn't mean Bitcoin is vulnerable. It means you used Bitcoin wrong.

It's the same with pools. If majority of them end up censoring transactions, that doesn't make Bitcoin not-censorship resisstant. It is our own fault for not creating more pools for miners to join that are located in jurisdictions that anti-privacy governments don't have authority in. It is our own fault for not finding an alternative to the existing mining pool protocols where the owner decides what to include in the block and what not. A protocol that the owner no longer decides what proposal to signal for and what not. Remember SegWit days that we had the same issue where miners wanted the change but pools refused to signal?

[cryptosize]

I know this sounds like a crazy tinfoil hat conspiracy theory to some people around here, but what would you do if you were Bill Gates?

Would you trust CBDC? Especially considering the fact it will have a limit of €2000-3000 (as ECB officials have said)?

Do you wanna own nothing and be happy? Because with only 2-3k dollars/euros you will be forced to rent everything (your house, your car etc.)

It sounds like a conspiracy theory because it is, like that thing that looks like a duck and turns out to be a duck. The €3,000 limit has been planned to protect banks. You can see it in the following document: Know your (holding) limits: CBDC, financial stability and central bank reliance. But if you find it too complicated, it is summarized in a newspaper article:

The European Central bank is toying with the idea of imposing a €3000 limit on consumer CBDC accounts to discourage users from transferring all their cash from commercial banks to the central bank.

So what the ECB is worried about is that citizens will embrace the Euro CBDC so enthusiastically that they will all want to switch to it, eliminating the need for commercial banks and suddenly all those banks will fail. That is why it is considering imposing an initial limit of €3,000, which will coexist with the existing cash and electronic payments (transfers, card payments, etc.).

You really think people will be so enthusiastic to abandon cash in favor of CBDC, social credit score, carbon credits, 15-min cities?

Only a gullible person would believe that... I think Bitcoiners can do better than that.

[DooMAD]

The European Central bank is toying with the idea of imposing a €3000 limit on consumer CBDC accounts to discourage users from transferring all their cash from commercial banks to the central bank.

So what the ECB is worried about is that citizens will embrace the Euro CBDC so enthusiastically that they will all want to switch to it, eliminating the need for commercial banks and suddenly all those banks will fail. That is why it is considering imposing an initial limit of €3,000, which will coexist with the existing cash and electronic payments (transfers, card payments, etc.).

You really think people will be so enthusiastic to abandon cash in favor of CBDC, social credit score, carbon credits, 15-min cities?

Only a gullible person would believe that... I think Bitcoiners can do better than that.

I doubt anyone here is entertaining that notion, but it's the kind of thing the bureaucrats obsess over.  I suppose they are accountable if they do get it wrong, but yes, it's a pretty far-fetched scenario.  

Our goal presumably involves trying to highlight to the uninitiated masses what the consequences might be for them if they do adopt CBDCs.  The absolute death-knell of privacy being chief amongst them, but censorship a serious concern as well (and, unlike this current situation with a small percentage of pools censoring OFAC listed addresses, it's likely to be a more pervasive, inescapable and unyielding type of censorship with CBDCs, with little room for recourse).  Even if we can't necessarily persuade people about the advantages of using Bitcoin, it could be an "anything but CBDCs" kind of discussion.  

The masses have a distinct knack for acting against their own self-interests when given the opportunity, so it won't be as easy as it might sound to convince them that CBDCs are very bad for them.  You'd be surprised at how quickly some might embrace this mass-surveillance foolishness.

[Abiky]

This looks bad. If certain bitcoin transactions start to be censored on the basis of suspicions, we are in trouble.

The problem is mining hashrate is largely controlled by centralized mining pools. It's easy enough to censor transactions this way. Only solo miners have the true power to decide which transactions to approve or decline on the network. With how expensive PoW mining is becoming each day, things are going to get worse in the long run (more centralization). BTC needs to switch to an ASIC-resistant algorithm to strip away big mining companies and centralized mining pools from power.

This will be a subject of constant debate within the community. If centralized mining pools censored transactions (particularly F2Pool) tied to criminal activities, what makes you think they won't target the average person in the long run? Anything deemed suspicious could put your funds at risk (unable to move them on the Blockchain). It'll be just like what banks do today. The future is widely unpredictable, so we can only hope for the best.

[o_e_l_e_o]

The bet is that this beautiful combo can overcome human corruption, or at the very least, navigate around it.

Ok, that's the bet. But we need to actually do something about it when faced with pools like F2Pool which are enforcing said corruption. Simply expressing out displeasure will achieve nothing. So the question is - what are we going to do? I would favor more privacy on the base layer making this kind of censorship impossible. I am very clearly in the minority here and this is highly unlikely to ever happen. So what other options are there beyond doing nothing and waiting for the day the government controls bitcoin?

Whenever there is a door to be kicked down, the governments will kick it down.

This summarizes it perfectly.

The government want bitcoin to be under their control. There is currently a route which we can foresee to the government achieving this (get 51% of the hashrate to comply with their blacklists and censorship). The government are not going to stop kicking down doors until they achieve their goal, unless we do something to stop them. Shaking our fists and hoping for the best is insufficient.

It's kind of like using CEX. If you store your coins there and the CEX owner freezes them, that doesn't mean Bitcoin is vulnerable. It means you used Bitcoin wrong.

The difference is I can simply refuse to use any CEX as I always have done and there is nothing they can do to my coins or my transactions. I hold no such power when it comes to mining pools deciding to censor me.


When it comes to other options, I've spoken before about Stratum V2, and with perfect timing I see this news story pop up yesterday: https://bitcoinmagazine.com/business/demand-launches-worlds-first-stratum-v2-bitcoin-mining-pool

A key feature of Stratum V2 is its empowerment of individual miners to construct their own block templates. Traditionally, mining pool operators wielded control over transaction selection, posing centralization risks vulnerable to potential regulatory pressures for transaction censorship. Stratum V2 now grants mining pool users the autonomy to select transactions for block inclusion, fostering a more decentralized network resistant to censorship.

[BlackHatCoiner]

Ok, that's the bet. But we need to actually do something about it when faced with pools like F2Pool which are enforcing said corruption.

I say we do what we're already doing. Writing software. When exchanges started implementing KYC, and out of nowhere taint appeared, decentralized exchanges emerged as a need. And they did because centralized exchanges were central point of failures. Today there is a daily volume of more than 2 million dollars worth of bitcoin, with over 900 trades per day, proving that it works: https://bisq.markets/.

Now, mining in a decentralized manner but with attractive conditions is what's needed.

When it comes to other options, I've spoken before about Stratum V2, and with perfect timing I see this news story pop up yesterday: https://bitcoinmagazine.com/business/demand-launches-worlds-first-stratum-v2-bitcoin-mining-pool

Good news. Miners deciding the candidate block's transactions is step 1. Step 2 would be to decentralize their coordination altogether, because now the government will be hostile towards the mining pools that'll adopt this.

[Jon_Hodl]

Troubling for some but the incentives of bitcoin will render these attempts at censorship impotent.

If transactions continue to get censored, the natural outcome is that mempool fees will bloat and the market dynamic of on-chain fees and the fee rate come into play. The highest fees will be included in the next block. If your transactions are censored, then you will need to pay a greater fee rate to get included in a block in a reasonable amount of time. You can also CoinJoin to prevent this sort of thing from happening in the first place.

Additionally, we are seeing the beginning of the emergence of a pleb mining pool (https://web.public-pool.io) that is likely to continue to grow even if only as a hobby project.

The more transactions that are censored, the greater the incentive for fees to rise which incentivizes more miners to come online and add those transactions to the blockchain

IMHO, all this shows is that OFAC is scared of bitcoin but they can't really do anything to stop it.

[alani123]

Troubling for some but the incentives of bitcoin will render these attempts at censorship impotent.

If transactions continue to get censored, the natural outcome is that mempool fees will bloat and the market dynamic of on-chain fees and the fee rate come into play. The highest fees will be included in the next block. If your transactions are censored, then you will need to pay a greater fee rate to get included in a block in a reasonable amount of time. You can also CoinJoin to prevent this sort of thing from happening in the first place.

I think you're overestimating, and dare I say romanticizing, bitcoin's blockchain infrastructure.
If miners unilaterally decide to block certain addresses there's very little the users can do while staying on the same network.
Even if they actively blocked a significant portion of total transactions going on, a smart client could chose to also ignore these transactions and set its fees regardless of them, knowing that they will never get confirmed. So users not caring about censorship and only interested to transact cheaply would be incentivιsed to just filter transactions in the same way that miners do too.  
So no, censorship is not a problem that could solve itself. Some action and intervention would be needed if it became a large problem.

[BlackHatCoiner]

A smart client is not that smart if it endorses censorship that might turn up against them in the future.

Besides that. "Information is easy to spread but hard to stifle"-- Someone someone. You cannot prevent information from spreading across a peer-to-peer network. If a few pro-censorship nodes decide to blacklist addresses, the owners of the blacklisted coins can simply select to broadcast them elsewhere.

[HmmMAA]

Additionally, we are seeing the beginning of the emergence of a pleb mining pool (https://web.public-pool.io) that is likely to continue to grow even if only as a hobby project.

The more transactions that are censored, the greater the incentive for fees to rise which incentivizes more miners to come online and add those transactions to the blockchain

IMHO, all this shows is that OFAC is scared of bitcoin but they can't really do anything to stop it.

Good luck spending power if major pools decide to reject those blocks . And i really wonder , for how long will those miners are willing to burn money until they find out that they can't do anything ?
You should study how bitcoin works , and Antonopoulos isn't the best source . You are the only one that can question how the structure of the network is made , stop believing others .
As for stratum V2 that some like , you will find out that sooner or later it leads to the same model . There's no way way out , like in hotel California
"We are programmed to receive
You can check out any time you like
But you can never leave!"

Edit : Oh , and good luck trusting a pool that takes advantage of what the btc community currently needs , hope . Another rug pull on the making . Good luck to those who chose it .

[cryptosize]

The European Central bank is toying with the idea of imposing a €3000 limit on consumer CBDC accounts to discourage users from transferring all their cash from commercial banks to the central bank.

So what the ECB is worried about is that citizens will embrace the Euro CBDC so enthusiastically that they will all want to switch to it, eliminating the need for commercial banks and suddenly all those banks will fail. That is why it is considering imposing an initial limit of €3,000, which will coexist with the existing cash and electronic payments (transfers, card payments, etc.).

You really think people will be so enthusiastic to abandon cash in favor of CBDC, social credit score, carbon credits, 15-min cities?

Only a gullible person would believe that... I think Bitcoiners can do better than that.

I doubt anyone here is entertaining that notion, but it's the kind of thing the bureaucrats obsess over.  I suppose they are accountable if they do get it wrong, but yes, it's a pretty far-fetched scenario.  

Our goal presumably involves trying to highlight to the uninitiated masses what the consequences might be for them if they do adopt CBDCs.  The absolute death-knell of privacy being chief amongst them, but censorship a serious concern as well (and, unlike this current situation with a small percentage of pools censoring OFAC listed addresses, it's likely to be a more pervasive, inescapable and unyielding type of censorship with CBDCs, with little room for recourse).  Even if we can't necessarily persuade people about the advantages of using Bitcoin, it could be an "anything but CBDCs" kind of discussion.  

The masses have a distinct knack for acting against their own self-interests when given the opportunity, so it won't be as easy as it might sound to convince them that CBDCs are very bad for them.  You'd be surprised at how quickly some might embrace this mass-surveillance foolishness.

I already see some people around here embracing things such as Digital ID, carbon credits (because apparently human beings cause climate change) and yes, even mass surveillance with tons of cameras and suggesting that Bitcoin is the perfect "timestamp machine" to store video feeds from innocent citizens.

Trust me, sometimes I'm genuinely wondering if I'm talking to Bitcoiners or feds... people conceal their identity, so it's very easy to pretend and play some fictitious role.

Regarding OFAC, I remember back in 2020 during the 1st COVID lockdown some BTC pool trying to censor transactions, but it didn't last for too long.

F2pool only has 11.4% of the hashrate. Still a far cry from 51%. Chances are it will fizzle out again.

You should study how bitcoin works , and Antonopoulos isn't the best source .

Who is the best source? Craig Wright?

[Kavelj22]

This is one of the worst things I have ever read this year.

I am not only surprised by a mining pool's participation in distorting the decentralization on which they operate their services, but by their accepting involvement in this and depriving themselves of a measure of the profits that they receive in the form of fees, even if the transactions are few, but this is fundamentally against the principles of investment profit.

Now let us change the angle of analysis a little: You can imagine how what happened will raise waves of debate about the right of mining pools to do this for two main reasons: First, because there are no laws controlling their field, and any mining pool has the right to choose the transactions it includes without accountability from anyone. Secondly, how appropriate are these actions with reality, since it can be argued that these mining pools refuse to facilitate the transactions of those who are classified as terrorists or subject to sanctions by one of the most important international approval bodies.

The last point I would like to point out, which also surprised me, is that Binance, which seeks to curry favor with the American authorities, has not engaged in such actions, but we find F2Pool doing so even though it is an Asian company. I doubt that this was done at the request of the American authorities.