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Author Topic: Donning tin foil hat concerning multisig transactions  (Read 3131 times)
John Kirk
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January 30, 2012, 01:27:24 AM
 #1

I have been pondering over the ramifications concerning multi-signature transactions in bitcoin. While there are some very useful capabilities that can be enabled with this feature, I am concerned that there are some highly undesirable potential consequences as well.  Please convince me that I am just being paranoid, and that these fears are unjustified.

Suppose all of our grandest dreams are realized, and bitcoin has become a world-wide currency.  You buy gas with it, you purchase your groceries with it, and you pay your taxes with it.  There are no central banks, inflation is a thing of the past, and bitcoin has been declared a world-wide legal tender.

Unfortunately, not all members of the U.S. government are happy about their loss of control over the world's finances that bitcoin brought about.  Consequently, they pass a law that all payments made by the U.S. government must send to addresses set up with multi-signature transactions.  The receiver of the bitcoin payments retains one signature, but the U.S. government retains the other.  The law is sold to the public as a security measure.  After all, if a thief steals a person's bitcoin wallet, the thief cannot spend the coins without first getting approval from the U.S. government.  Of course, this requires that the valid owner of the bitcoins must have some form of government ID, similar to a credit card, to identify himself when he tries to spend his bitcoins so the U.S. government can validate the transaction as authentic.

The receiver has no choice but to accept payment in this way, because bitcoins have been declared legal tender, so it is illegal to refuse bitcoins as payment.  Having to identify oneself to spend bitcoins is somewhat annoying.  However, the added security is worth it to most people.

Several years pass, during which the U.S. government convinces other governments to adopt the same policy and form an alliance.  Collectively, they form the World Transaction Federation, or WTF.  After the vast majority of countries have adopted this practice, the U.S. government decides that security can be tightened even further and gets all of the WTF members to sign a treaty stating that bitcoins signed by WTF members can only be spent to receiving addresses similarly signed by WTF members.

Several more years pass, and the world-wide bitcoin economy keeps chugging along, with a greater and greater percentage of the total bitcoin supply falling under WTF control.  Finally, after the WTF controls 99.9% of all bitcoin currency, the WTF collectively decides that the world economy would greatly benefit if the WTF could control the supply of money directly, rather than having to perform its work in the straightjacket of bitcoin.  Consequently, they pass a law that states that no WTF member can sign any bitcoin transaction, except those that exchange bitcoins for some lovely freshly printed bank notes.  Not to fear, though.  The notes are backed in value by gold.  So there is nothing to worry about...




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January 30, 2012, 01:32:14 AM
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LMAO at WTF! I like how you think. I also like how you write.

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January 30, 2012, 01:46:16 AM
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Basically, if people give up their responsibilities, and end up oppressed, it's not the system's fault, it's the people's fault.
Hence, the State of the World Today.

Quote from: John Kirk link=topic=61836
Unfortunately, not all members of the U.S. government are happy about their loss of control over the world's finances that bitcoin brought about.
They would declare Bitcoin a terrorist plot, and nations not making it illegal an "Alliance of Evil" long before that ever occurred. They'd probably arrange for some lucrative (for them) false flag financial meltdown event and blame it on Bitcoin as the impetus for making it illegal. "They" would never allow loss of control like that. Some people would whoop and holler but the average peon would be happy that their safety is being watched over by the govt.

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January 30, 2012, 02:21:40 AM
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Pardon me while I don't let the government have control of my second key, regardless of various laws that might be passed.

Basically, if people give up their responsibilities, and end up oppressed, it's not the system's fault, it's the people's fault.

Pretty much this.

Let's not mince words. Bitcoin has the potential to be a tool of financial freedom so powerful it could completely shake up the status quo.

It also has the potential to be a tool of financial control so complete it could qualify as a Mark of the Beast(tm).

It all depends on the people. If everyone rejects government involvement and refuses to allow centralization, we win. If everyone just accepts government controlling it and forcing you to use it a certain way, we're doomed.

Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
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January 30, 2012, 03:04:17 AM
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I don't see the problem with the OP scenario. I have suggested this numerous times. It simply gives tracking capability to law enforcement. It does not remove privacy and doesn't give away control of your balance. Now if you are saying that this WTF (nice) can actually control your spending, that's another story and I doubt anyone would allow any government to do that to the Bitcoin network law or no law.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
hazek
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January 30, 2012, 03:10:03 AM
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That's not how multisig as far as I understand them will work.. You will always have a secured backup wallet with both keys.

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January 30, 2012, 03:11:33 AM
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I don't see the problem with the OP scenario. I have suggested this numerous times. It simply gives tracking capability to law enforcement. It does not remove privacy and doesn't give away control of your balance. Now if you are saying that this WTF (nice) can actually control your spending, that's another story and I doubt anyone would allow any government to do that to the Bitcoin network law or no law.
If the WTF is signatory on a multi-sig transaction then that presumbly means they would exert control over each and every legal transaction. One can easily imagine they would maintain blacklists of addresses at a minimum and block transactions. With more sophistication they could go further, controlling spends based on time, total volume, economic indicators etc.

The natural result would would be forming a new blockchain without those controls and which in this context would be treated as illegal, black market transactions by the WTF.

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January 30, 2012, 03:17:34 AM
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I don't see the problem with the OP scenario. I have suggested this numerous times. It simply gives tracking capability to law enforcement. It does not remove privacy and doesn't give away control of your balance. Now if you are saying that this WTF (nice) can actually control your spending, that's another story and I doubt anyone would allow any government to do that to the Bitcoin network law or no law.
If the WTF is signatory on a multi-sig transaction then that presumbly means they would exert control over each and every legal transaction. One can easily imagine they would maintain blacklists of addresses at a minimum and block transactions. With more sophistication they could go further, controlling spends based on time, total volume, economic indicators etc.

The natural result would would be forming a new blockchain without those controls and which in this context would be treated as illegal, black market transactions by the WTF.
At least they would not be able to print money. Without that privilege, governments won't be nearly as powerful and corrupt as they are now. It's still not such a bad scenario. You can always still trade gold.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 30, 2012, 03:55:15 AM
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If you can send a coin to an arbitrary address, you can send it to yourself to remove any restrictions. If you can't send it to an arbitrary address, then it's not a Bitcoin and existing vendors won't accept it. This works out the same as if a government created a new currency on a separate blockchain, and offered to trade it for bitcoins. It might catch on, but it would be less valuable than Bitcoins and people probably wouldn't get them confused.
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January 30, 2012, 03:59:49 AM
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I prefer Standard Transaction Federated Union.

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January 30, 2012, 04:06:03 AM
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Basically, if people give up their responsibilities, and end up oppressed, it's not the system's fault, it's the people's fault.

This.

Stop blaming technology for weak minded people.

Could the govt subvert Bitcoin and uses it to enforce a loss of freedom?  Sure however the same thing could be said of the internet too.

The solution isn't a fear of tehcnology.  The solution is standing up for your rights.  Soapbox -> BallotBox -> Ammo Box.

or just accept the dominance is either than resistance and get with the program. 
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January 30, 2012, 04:07:52 AM
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At least they would not be able to print money. Without that privilege, governments won't be nearly as powerful and corrupt as they are now. It's still not such a bad scenario. You can always still trade gold.

I think his story was tongue in cheek.  Remember most of the world currency was gold at one time, then redeemable for gold, then backed but not deemable for Gold, and then finally backed by nothing.  History would likely repeat itself.  Within 50 years it would be back to pure fiat.
John Kirk
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January 30, 2012, 06:27:06 AM
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I think his story was tongue in cheek. 

The example was tongue in cheek, to illustrate the extreme case.  However, the concern is real.

If you allow multi-signature transactions in the blockchain, that essentially means that all parties must agree to spend the coins in that transaction.  If one party has more military authority than the others, in that they can impose their will on the other parties without ramification, a problem potentially arises.  This is especially true if that party is willing to just let those coins rot in the block-chain forever.  The government wouldn't be the slightest bit concerned if you can't spend your money.  All they would be concerned about is whether they are exerting control.

Pardon me while I don't let the government have control of my second key, regardless of various laws that might be passed.

Basically, if people give up their responsibilities, and end up oppressed, it's not the system's fault, it's the people's fault.

It is not a matter of people giving up their responsibilities.  I'm not talking about you giving the government one of your signatures.  What I am saying is that when the government first gives you payment, that payment will be delivered with the government first generating two signatures, and then giving you one of them.  After all, they are the ones starting out with the bitcoins, so they hold all the cards.  Your only option is to refuse payment.  But, government employees and business that serve the government don't really have that option.  It is not reasonable to expect that even a significant fraction of people working for the government would refuse payment.  And, even if they did, there would be plenty more stepping in to take their place.

If a government has the capability to exert control, and has the need to do so, it will exert control.  Once a government has their hooks in one multisig transaction, they can refuse to allow coins to be spent unless they have hooks in the subsequent transactions as well.  Bitcoin without multisig capabilities does not give governments this hook.  Bitcoin with multisig does.  Whether you see this as a problem or not, is purely up to you.  However, I believe that this goes against the original spirit of bitcoin.



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January 30, 2012, 06:38:07 AM
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At least they would not be able to print money. Without that privilege, governments won't be nearly as powerful and corrupt as they are now. It's still not such a bad scenario. You can always still trade gold.

I think his story was tongue in cheek.  Remember most of the world currency was gold at one time, then redeemable for gold, then backed but not deemable for Gold, and then finally backed by nothing.  History would likely repeat itself.  Within 50 years it would be back to pure fiat.
Poe's Law. http://rationalwiki.org/wiki/Poe%27s_Law

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 30, 2012, 02:45:14 PM
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The good thing about bitcoin is it's easy to create a new blockchain with different characteristics, so if bitcoin was ever corrupted by govt's people could just start a new non-scam blockchain.
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January 30, 2012, 03:03:44 PM
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If a government has the capability to exert control...
So far, I think the pace of technological change has outrun governments' ability to figure out how to use it to exert control.

Maybe governments will get more nimble, but I'm going to continue betting that entrepreneurs and individuals will continue to widen the gap between the new freedoms that technology enables and what the law allows.

RE: multisignature transaction dangers:  I'm completely convinced the (large, practical) benefits far outweigh the (small, theoretical) risks that it'll be abused by some repressive government(s).

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January 30, 2012, 04:51:48 PM
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RE: multisignature transaction dangers:  I'm completely convinced the (large, practical) benefits far outweigh the (small, theoretical) risks that it'll be abused by some repressive government(s).

Wait, so OP's scenario is plausible?? I thought the multisig transaction idea was suppose to have a backup wallet where you didn't need anything else to have access to your Bitcoins?

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January 30, 2012, 04:54:05 PM
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RE: multisignature transaction dangers:  I'm completely convinced the (large, practical) benefits far outweigh the (small, theoretical) risks that it'll be abused by some repressive government(s).

Wait, so OP's scenario is plausible?? I thought the multisig transaction idea was suppose to have a backup wallet where you didn't need anything else to have access to your Bitcoins?
Multisig is like requiring two people to know only half of a password each, instead of both of them knowing the full password.

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January 30, 2012, 05:03:13 PM
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Plausible in the sense that you would accept having a "joint" account with the govt. People don't do that now so it seems unlikely they'd be very willing later. I think the idea was that thru a series of moves the govt convinces people that having a joint account with them for their own protection is a good idea. Personally I can't imagine many people feeling good about having a "joint" account with the govt now or in the future.

Be safe, Let Big Brother watch over your money.

Multi-sig is just what it's name implies - multiple signatories [addresses] needed to spend the money. A backup wallet is only an example usage based on the idea that the backup has both addresses present whereas the normal wallet does not.

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January 30, 2012, 05:12:45 PM
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RE: multisignature transaction dangers:  I'm completely convinced the (large, practical) benefits far outweigh the (small, theoretical) risks that it'll be abused by some repressive government(s).

Wait, so OP's scenario is plausible?? I thought the multisig transaction idea was suppose to have a backup wallet where you didn't need anything else to have access to your Bitcoins?
Multisig is like requiring two people to know only half of a password each, instead of both of them knowing the full password.

I understand that but I thought when this idea was first presented it was said that the user would keep both key's a in a backup wallet so you couldn't be held hostage with your service provider.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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