Public, legally registered Bitcoin (for lost keys etc.)

[legiteum]

So here's an interesting thought experiment for you all.

Lost and/or abandoned keys continue to be a problem for Bitcoin. People lose their keys, people die, people are.. Satoshi..., and so on. In addition, physically holding Bitcoin keys presents both a security risk a risk of losing those keys. This risk reduces the appeal of Bitcoin, especially for people and entities holding a large amount. Everybody has read about massive losses from Bitcoin due to lost keys, and also stories about people being tortured or murdered for their keys--and these stories are very scary and reduce the appeal of Bitcoin.

Here's a proposal to solve this problem.

What if we created a way for lost keys to be effectively recovered through a defined legal process. This would entail a change to Bitcoin core, wherein a Bitcoin node would accept a hard-coded key challenge (viz. the public key is hardcoded in the code), which would act as a "skeleton key" to the Bitcoin chain. The code would also hardcode specific UTXOs that (and this list would be an update pushed from time to time).

With that in place, some trusted entity guards the special private key, and this entity only acts as a result of a validated court order, and its actions would be fully public and transparent. We'll call that entity, the "Bitcoin Guardian". The court order would include a wallet address would in turn be connected to a real individual entity (a person or a company or a government agency) that would have been the entity who brought the matter to Court in the first place.

Here's are some scenarios.

1. Take the "Landfill Guy" who lost millions in Bitcoin in a landfill. If the core was changed and the Guardian was created, Landfill Guy could prove, through means other than his (lost) private keys, that the given list of UTXOs legally belonged to him, and thus the New Entity should use their power to move that Bitcoin to Landfill Guy's wallet. (And perhaps the Guardian takes a fee to pay for itself and the personnel needed to run this operation, which would necessarily be manual, thorough process).

2. Take Satoshi's wallet, for instance. A government order could use this mechanism to recover that Bitcoin and distribute it in some way (or even dispose of it). This could be done to any UXTOs that are known to be permanently lost (or perhaps there could be an activity timeout of 10 years or something).

3. Beside being a recovery mechanism for lost keys, this arrangement could also allow people and businesses to proactively register their UTXOs, such that they now have insurance against physically losing their Bitcoin, and also are protected against their keys being stolen or coerced. Hence a UTXO could have a legal name, address, and other information linking it to a real-world entity and giving that entity the benefits of legal ownership, much like the deed to a house. This would give holders of Bitcoin--especially very large holders--the same peace of mind they get if they bought real estate or some other physical asset.

Thoughts?

[odolvlobo]

There is no way for any entity, governmental or other, to recover lost bitcoins unless the UTXO is specifically set up for it, e.g. multisig. So, your #3 is the way to do it and it is already possible. You just need the legal backing to support it. Keep in mind that giving someone the ability to recover your bitcoins also gives them the ability to confiscate them.

Otherwise, ...
Anyone can make a change to bitcoin core that allows them to access any bitcoins, but it won't work unless everyone makes the same change.

[Ayers]

odolvlobo makes fairly important point. i will add more to it

bitcoin guardian concept cannot be implemented with just one code change. this undermines the fundamental nature of bitcoin itself. whenever we attach our master key to court authorized seizure or any trusted recovery authority information system, we are replacing cryptographic ownership with political ownership. at this point we will no longer be the true owner of our coin. we can only hold them until some influential legal or political figure decide otherwise.

[SilverCryptoBullet]

Lost and/or abandoned keys continue to be a problem for Bitcoin. People lose their keys, people die, people are.. Satoshi..., and so on. In addition, physically holding Bitcoin keys presents both a security risk a risk of losing those keys. This risk reduces the appeal of Bitcoin, especially for people and entities holding a large amount. Everybody has read about massive losses from Bitcoin due to lost keys, and also stories about people being tortured or murdered for their keys--and these stories are very scary and reduce the appeal of Bitcoin.

They need to take care of their Bitcoin wallets, private keys, mnemonic seeds. If they want to give bitcoins to the others such as their children, they must prepare necessary inheritance steps including teaching their children about that.

They also have to maintain their privacy, and that will minimize risk of Bitcoin physical attacks.
How to back up a seed phrase
Using Locktime for inheritance planning, backups or gifts.

Here's a proposal to solve this problem.

What if we created a way for lost keys to be effectively recovered through a defined legal process. This would entail a change to Bitcoin core, wherein a Bitcoin node would accept a hard-coded key challenge (viz. the public key is hardcoded in the code), which would act as a "skeleton key" to the Bitcoin chain. The code would also hardcode specific UTXOs that (and this list would be an update pushed from time to time).

I disagree with any "defined legal process", as with private keys, it's enough. Other processes only result in possible technical and security issues which can be exloited while with Bitcoin private keys, it's impossible to brute force it and steal bitcoin.

It's not necessary to move from a safe and secure one to new one that is less safe and secure.

https://github.com/bitcoinbook/bitcoinbook/blob/develop/ch04_keys.adoc

The size of Bitcoin’s private key space (2²⁵⁶) is an unfathomably large number. It is approximately 10⁷⁷ in decimal. For comparison, the visible universe is estimated to contain 10⁸⁰ atoms.

[Ayers]

1. Take the "Landfill Guy" who lost millions in Bitcoin in a landfill. If the core was changed and the Guardian was created, Landfill Guy could prove, through means other than his (lost) private keys, that the given list of UTXOs legally belonged to him, and thus the New Entity should use their power to move that Bitcoin to Landfill Guy's wallet. (And perhaps the Guardian takes a fee to pay for itself and the personnel needed to run this operation, which would necessarily be manual, thorough process).

Lol,, these stories are really emotional. but it is not possible to make the right policy based on emotion. today they may be working for a genuine victim but tomorrow you may see a government demanding satoshi's coin. issues such as sanction, tax enforcement or confiscation of property may follow. what will count as abandoned coin, who will actually own them? which country's court decision will be final?  i don't trust any govt with that kind of power and i certainly don't want bitcoin to depend on them.

[Thawson]

I genuinely agree with the problem you’re trying to solve, for key management is one of bitcoins usability problem but your proposal has many risks and trade off.
Introducing an entity  like a “Bitcoin Guardian” is more like introducing an administrator to bitcoin, nobody is meant to have such control over bitcoin it’s undermines one of bitcoins core principles. In bitcoin whoever possesses the private key controls it so essentially we are trusting the Guardian with a special authority over Bitcoin that no single entity should have, that’s more like relinquishing control and even if the guardian is trustworthy what do we do about potential attack to the guardian? He holds so much sensitive information if peradventure he were ever attacked, I can’t begin to think of the consequences.

Now the issue of requiring court order to enable guardians recover the wallet also brings back a problem which bitcoin has been trying to solve. Government could eventually argue to freeze a wallet, transfer coins and others,  and we may have jurisdiction issue in cases where the us issues a court order and another country issues another court order, which one  should the guardian follow?
finally bitcoin can’t distinguish between a long term holder or a lost key.  I think The problem is valid but this solution just invites so much potential problems.