You may not refuse stolen bitcoins, confisticate them instead

[Ucy]

We want to as much as possible make it very difficult for stolen bitcoins to be sold or exchanged to another person without consequences, so that it becomes less attractive to steal or recieve stolen bitcoins.
The ways we could achieve this is by:
* Having a community-approved platforms where people can permissionlessly join and help in identifying and tagging stolen bitcoins, or even to defend themselves when wrongly tagged or accused of theft.
* Exchangers, wallets, escrows, multisig, smart-contracts, etc should have inbuilt detection system to help detect, warn and possibly confisticate coins with overwhelming/incontrovertible proofs of involvement in the crime

* If stolen coins are sent directly to peers (without escrows or things like that) the peers have the right to seize the coins once proven to be stolen without exchanging products, services or currencies in return to their senders

*Once stolen coins are recovered, they should be sent to community-approved escrow or multisig services established to handle that sort of issues, or security agencies with similar role, for investigation and onward transfer to their owners


Things should be built or handled in a way that makes it almost impossible to sell or exchange stolen bitcoins for goods and services, otherwise their receivers will have lots of issues exchanging the coins and questions to answer. They could be arrested and investigated physically for holding stolen coins. Ofcourse, it they are not the thieves, they should be released but the coins could remain confisticated

[Upgrade00]

Your suggestion leans heavily towards censorship and centralisation which is against how bitcoin operates. Unofficially, the community kicks against scams, when any comes public such address is put on public watch and its difficult to move it without being tracked as in the current coldcard case, but if we want to create a system that enforces this, you lose a key component of bitcoin and it's prone to be abused.

The centralised market already makes it very difficult to move stolen funds and blacklists addresses (sometimes arbitrarily).

[tbct_mt2]

* If stolen coins are sent directly to peers (without escrows or things like that) the peers have the right to seize the coins once proven to be stolen without exchanging products, services or currencies in return to their senders

If you don't have any business deal and trade for that purpose, there is no need to use Escrow.

What are peers in your suggestion above?
Basically, Bitcoin blockchain is a Peer to Peer platform for people to use it for transactions between two peers: sender and receiver. If the sender is a hacker, the receiver can be any entity from centralized exchanges with KYC, no KYC; decentralized exchanges; a person, a business company. So if the receiver does not have tool to detect tainted coins, they can not know that coins sent to them are from any hacker.

Your suggestion is similar to censorship and I can give you an example of MARA mining pool with its OFAC compliance.
Bitcoin mining pool observer.
Censorship attempts of MARA were discussed in this forum too and you can search for such topics to know that the community don't like that action.

[sergiorus]

Before I could write any thoughful reply to this: OP, what is your stance on mixers? Are bitcoins that went through mixers and cannot be connected to any malicious activity fine? Or do you suggest to apply draconian censorship on mixers as well?

[_act_]

If you have the power to see all coins that are stolen or illegal collected from people like through romance scam, you will know that the coins that you are having, part of it are also stolen.

You will see the companies like Tether that said they are centralized, but know that those stolen that are of huge amount of money are the one freezed. But if you combined little amount stolen, it is very possible that their combination will be as high as those large amount in total amount but not freezed.

[Ucy]

Your suggesting leans heavily towards censorship and centralisation which is against how bitcoin operates. Unofficially the community kicks against scams, when any comes public such address is put on public watch and its difficult to move it without being tracked as in yhrbcurrent coldcard case, but if we want to create a system that enforces this, you lose a key component of bitcoin and it's prone to be abused.

Where is the centralization in the post. The word "platform" doesn't necessarily mean centralization, but even if centralized, main thing like data could be decentralized, so that If a platform ceases to exist the data can be moved to another platform.


Regarding censorship, fraud or serious crime like that is not immune from censorship, otherwise doublespent bitcoins will be uncensored in the  name of censorship resistance. If it were easy to prove serious crime like that before the thieves transfer the bitcoins Satoshi would have made it possible for miners to censor them.  One of the core ideas behind Censorship resistance is to prevent abuse by the authorities in the name of fighting crime, but when a crime is proven the criminal maybe censored.




We want the decentralized communities/platforms to be involved in this aswell

[Fivestar4everMVP]

Things should be built or handled in a way that makes it almost impossible to sell or exchange stolen bitcoins for goods and services, otherwise their receivers will have lots of issues exchanging the coins and questions to answer. They could be arrested and investigated physically for holding stolen coins. Ofcourse, it they are not the thieves, they should be released but the coins could remain confisticated

Well, if the person is not the thief, they should be released, how about the inconvenience you must have cost them, the wasted time, who pays them for that?

Look, the best thing to do is to try as much as possible to always apply every available security measures that ensures that you never lose your bitcoin to hackers, scammers and so on, because if your bitcoin is lost, you really can't stop the hacker or those who stole it from spending it..

Your idea is promoting/supporting centralisation, censorship which is clearly against the ethics of bitcoin and what bitcoin represents/promotes, centralised exchanges and other platforms can always apply such censorships, but individual holders doing same is completely contradictory to the financial freedom bitcoin was created to promote.

Just my personal opinion though.

[m2017]

Your suggesting leans heavily towards censorship and centralisation which is against how bitcoin operates.

Because BTC-users want the best of both worlds: a regulator to ensure control and punish those who covet other's property (centralization), and also to enjoy financial freedom and sole ownership of the bitcoin (decentralization). Naturally, such a combination is impossible due to contradictions.

Unofficially the community kicks against scams, when any comes public such address is put on public watch and its difficult to move it without being tracked as in yhrbcurrent coldcard case,

But this is, after all, just an observational function. Scammers can be quite inventive (especially when it comes to covering their tracks to obtain millions) and can come up with a way to safely move this money out of sight. Because they are more interested in it.

but if we want to create a system that enforces this, you lose a key component of bitcoin and it's prone to be abused.

The creation of a similar system would destroy bitcoin as it currently exists. It would upend the entire system, and financial freedom would turn into digital slavery.

The centralised market already makes it very difficult to move stolen funds and blacklists addresses (sometimes arbitrarily).

This, in essence, has already significantly "narrowed" the market opportunities for bitcoin. And for the most part, this has impacted ordinary users, not scammers and thieves.

[KiaKia]

It's not going to work, you will need full centralisation control to make this work and also what about those Bitcoin that walked through mixers successfully after been stolen?

There is no way those people will have a stamp on them as stolen anymore, many people like you who want to avoid stolen Bitcoin might have spent stolen Bitcoin without even knowing it.

This is the work of mixer, once a bad actor successfully washed the Bitcoin trough multiple mixers there is nothing stopping that Bitcoin from coming back into the market as clean Bitcoin again.

[Smartvirus]

~snipe~

Where is the centralization in the post. The word "platform" doesn't necessarily mean centralization, but even if centralized, main thing like data could be decentralized, so that If a platform ceases to exist the data can be moved to another platform.

We want the decentralized communities/platforms to be involved in this aswell

You might not have used the world “centralized” and your intent for suggesting this is pure and one that can offer community value which can in turn result in a refund of stolen or illegally acquired coins back to its original address but, the ideas proposed still revolves around centralization.

Whichever community that might be formed to handle this responsibility of recovering and revamping illegally acquired Bitcoin(s) would have sole authority on how they are formed and regulated. That sounds like centralization to me and it goes against one of the core values of Bitcoin when operated p2p.

When it comes to address flagging, I think a lot of persons using Bitcoin today don’t care so much on the address they receive Bitcoins from before honoring a deal and should we proceed to expect or track Bitcoins as proposed, you can expect a lot of victims from that process. People who must have honored a deal and yet, you expect them not to spend or utilize their pay. What happens when they claim or act completely ignorant when these deals were handled p2p.

Some centralized systems within the space already has some functional means to handle this. It can be improved but then, it should be that which doesn’t victimize ignorant Bitcoin users.

[Upgrade00]

Because BTC-users want the best of both worlds: a regulator to ensure control and punish those who covet other's property (centralization), and also to enjoy financial freedom and sole ownership of the bitcoin (decentralization). Naturally, such a combination is impossible due to contradictions.

I think it depends on where you meet said bitcoin user. Whenever I have that conversation here, people want mo regulators or central bodies in bitcoin. Everything should be kept as decentralised as is possible.

This, in essence, has already significantly "narrowed" the market opportunities for bitcoin. And for the most part, this has impacted ordinary users, not scammers and thieves.

I really don't think it has affected ordinary users much. Anyone who is willing to get KYCed inrmorder to use an exchange shouldn't have much of an issue. Those that do are users that trust central channels as wallets, keeping their bitcoins there for a long period of time, exposing them to theft.
Those addresses involved in the coldcard heist will already be blacklisted by all major exchanges and even P2P users will be aware of if now, making the exit narrower for the scammer(s) involved.

[Son Of Blockchain (SOB)]

 Without reading all the content I just knew your suggestion would be linked to censorship, it's nice that your care about the security of the community at large and seeking ways of eradicating scams through Bitcoin but the community won't tolerate centralisation whether it's for a good cause so think of a more better solution.
 Morever centralised exchanges are already serving the purpose of helping the authorities fish out out scammers if they're foolish enough to send their coins there, as for the address of the Coldcard hacker I believe it's in circulation so people would avoid dealing with it.

[uchegod-21]

If only it will be that simple to make stealing bitcoins or receiving stolen bitcoins less attractive without altering Bitcoin's decentralized feature, then it would have really been a nice idea.

If we are targeting bitcoin thieves, innocent people will also be affected. Freedom they enjoy when they do simple transactions  will be lost. Bitcoiners may have to wait days or longer for their bitcoins be confirmed that it is clean. I am already imagining that scenario and it doesn't seem to me like an experience anyone would want to have.

We receive bitcoins regularly and can't tell if such  bitcoins were originally stolen or not. We don't need all of those stress. Every bitcoiner should just ensure that they are security conscious and try as much as possible to keep thieves far away from their bitcoins. We can't really chase the thieves away though, even with the suggestion, they will still come up with more scam tactics.

[Hamza2424]

We want to as much as possible make it very difficult for stolen bitcoins to be sold or exchanged to another person without consequences, so that it becomes less attractive to steal or recieve stolen bitcoins.
The ways we could achieve this is by:

I have a question, let's take an example of the Coldcard wallet hack, the hacker has almost 1000+ bitcoin sitting in a single address, which he received from hundreds of different wallets, and hundreds of people were affected.

So let's say 500 BTC somehow are not recovered when the hacker tried to exchange them, now those 500 BTC will be moved to the community-approved escrow, which you proposed, now what? How will you decide who will receive how much? Would you divide the whole amount among all the victims or what?

Anyway, getting something back is a lot better than losing it all, ask FTX victims, they are at least receiving their coins in the form of stable currency, which is not calculated according to the current price but repaid according to the price when the incident occurred.

[Shadiq]

The proposal you put forward is the opposite of decentralized. To identify stolen Bitcoins, there must be an organization that you mentioned, that organization must have control of Bitcoin if they want to control the stolen money, Satoshi Nakamoto basically launched this decentralized financial system to free people from this control.
What you said will never happen, it is impossible in Bitcoin. If Bitcoin is centralized, then Bitcoin will lose most of its users. Instead of putting forward this proposal, try using centralized exchanges, you can get this benefit on exchanges. But let decentralized Bitcoin remain decentralized.

[Livingleged]

~snip

With the whole issue coming from bitcoin theft, I think this your idea is making sense. Because it will definitely make stolen bitcoin harder to spend or cashout. But the main challenge will be who get to identify that a particular coin was stolen without falsely accusing innocent people and making them lose their coins due to a false accusation.
Bitcoin transactions only recognises UTXO’s. the blockchain can only show transactions and ownership through the private keys that those coins are locked on. And changing few things will just be changing bitcoin basic rules which I don’t think it’s even possible. May be it can work as additional community legal layer to the protocol it self. but bitcoin permissionless nature cannot be compromised because we want to identify bad coins.

[Dunamisx]

We want to as much as possible make it very difficult for stolen bitcoins to be sold or exchanged to another person without consequences, so that it becomes less attractive to steal or recieve stolen bitcoins.
The ways we could achieve this is by:

Exchanges should be able to take some control measures over this and ensure that they don't permit dirty coins to be exchanged on their platform for p2p and any other form of transactions users may intend to do with them.

Even though some are still trying their best in fighting against dirty bitcoin, because once they see any, they easily flag the account and restricted from performing any transaction.

Mixers cannot all be regulated,d and this could also be another serious challenge; many are using them to perpetrate all forms of illegal transactions and clean their coins. Even some decentralized exchanges and possibly other crypto platforms, including gambling platforms,s all have to come together in the fight against people going away with stolen coins.

[Donneski]

Hope you're very much aware that it's not every wallet that receives stolen coins belongs to the thief. Sometimes , coins pass through several hands before anyone realizes that part of it are stolen or illegally gotten. If confiscation becomes the default measure, innocent users might easily end up paying the price for something they had nothing to do with.

[decodx]

Where is the centralization in the post.
<...>

Centralization comes into play when there would have to be a governing body or consortium to rule on disputed cases. Who gets to decide on the authenticity of identifying and tagging stolen coins? Take a hacking incident like the Coldcard case, where at least two people hold the exact same private key for a compromised wallet. Who decides who the real owner is? There you have it - centralization!

From there, government interference isn't just a possibility; it becomes guaranteed.

[Supreme Donvic]

The suggestion you have given is going to cause a lot of trouble in the future if it is allowed, it may actually work smoothly in the beginning but as time goes on it will not work smoothly anymore, even those bitcoin that are not stolen are going to be affected in one way or the other. I would like to ask you how are they properly going to differentiate stolen and non stolen Bitcoin?. This is where the problem is going to start in the future and some people are going to be frustrated with this policy because it does not give freedom anymore.