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Author Topic: Donning tin foil hat concerning multisig transactions  (Read 3134 times)
DeathAndTaxes
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January 30, 2012, 05:29:46 PM
 #21

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?

small theoretical risk =/= plausible.  There is a small theoretical risk that all life on the planet will be exterminated via events we either will not be able to detect or will be powerless to stop.  Smiley
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January 30, 2012, 05:31:05 PM
 #22

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.

Plenty of people, in a sense, have this, at least in the U.S. It's called a bank.

Government thinks you're a criminal? Boom, your account is frozen. They think you owe them something? Boom, they take the money out directly. The fact that they don't do it that often doesn't mean it never happens. And most people still wouldn't DREAM of not having a bank account, or worse, banking with some *unregulated* bank that doesn't do what the government tells it to.

I've even heard the sentiment expressed in this forum that letting government take a little bit of control of bitcoin in some form or fashion is a good thing because it lends bitcoin legitimacy! To my mind, the idea of there being a push toward government-controlled (read: "regulated") multisig accounts isn't just plausible, it's a question of "when", not "if."

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January 30, 2012, 05:32:47 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.

This crossed my mind a while ago, happy i'm on the same page with others. So we would have a great benefit with increased wallet protection and easier escrow but any government could adopt bitcoin as legal tender and force everyone use the multisig too. Crippling the Bitcoin client to generate only multisig with a predefined gov key would be easy given that the project is open-source.

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January 30, 2012, 05:35:15 PM
 #24

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.

Yes, that's the use-case I care most about -- you have control over all of your keys, you just put them in multiple places so if you lose control of (say) your computer you don't lose your bitcoins.

But there are other use-cases, like you agreeing to let the government control half the keys, so the government can "guarantee" the transactions, etc.  I can imagine the PR campaign: "It is just like Federal Deposit Insurance (FDIC), only for Bitcoin!"

I don't think that will ever happen, though. I know I wouldn't trust the government to keep the keys to my money safe and secure, I don't think most people would, either. More likely is most people will trust banks to hold half the keys, and the governments will then regulate the banks like they do today to get information about who is paying who for what....

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January 30, 2012, 05:42:53 PM
 #25

I see, ty for the explanation.

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January 30, 2012, 07:33:35 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.

Plenty of people, in a sense, have this, at least in the U.S. It's called a bank.

Government thinks you're a criminal? Boom, your account is frozen. They think you owe them something? Boom, they take the money out directly. The fact that they don't do it that often doesn't mean it never happens. And most people still wouldn't DREAM of not having a bank account, or worse, banking with some *unregulated* bank that doesn't do what the government tells it to.

I've even heard the sentiment expressed in this forum that letting government take a little bit of control of bitcoin in some form or fashion is a good thing because it lends bitcoin legitimacy! To my mind, the idea of there being a push toward government-controlled (read: "regulated") multisig accounts isn't just plausible, it's a question of "when", not "if."


Excellent thread! I agree that having govt-controlled multisig accounts is just about time.
When somebody asks why would people want to give up control to govt, they miss one point.
The point is that most of the people will probably hear about this stuff from govt in a first place.
It's like "have you heard our govt came up with this new currency bitcoin to save us from financial collapse?"
So for them it will be the only way to do business and get their salaries. They wouldn't even know that once bitcoin was free.

The question is whether they will be able to technically outlaw non-govt controlled transactions.
Since P2SH addresses are clearly distinguishable from normal ones, they might just declare original ones illegal,
forcing current businesses to convert
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January 30, 2012, 07:37:35 PM
 #27

This may hasten the day that a govt adopts bitcoin as a national currency. Bring it on!

If the govt gains power because people give them the power to control their money, then good for them. But then we will have a lot of people who may decide to jump the fence and run for it. Good for them too.

More people using bitcoins = progress. And at whatever cost.

I have been thinking it would be great to have an alt-coin designed around creating easy to set up currencies for small countries. It would include automatic taxation, inflation, and redistributionist rules. It would be able to contact a central government server so that taxes could automatically be passed to the separate bureaucracies of government. No need for a treasury, this will automatically be passed down the pipeline. Toss in merged mining and miners all around the world will have a little of that country's money, and will help with exports.

Basically you can have "smart" money that will behave according to publicly known rulesets, and with absolute transparency. The country could mint their own bills (or ahem printcoins Smiley and they could be deposited in your digital wallet by scanning them (no bank needed). Counterfeiting would be quickly detected, no one would need to control the production of money, and the government can add in whatever nasty little controls that they like.

The perfect stage for a compromise between liberty and authoritarian self-empowerment.

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January 30, 2012, 08:23:20 PM
 #28

The day the evil gov't gets into bitcoin, I am out of it (and into the wild alt-coin west).
I wonder why the poster who like taxes and regulations got in in the first place. 

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January 30, 2012, 08:35:16 PM
 #29

This thread kind of confuses me. If the government has the power to make normal transactions illegal and force you to use multi sig, they have the power to make normal transactions illegal. Who cares if they force you to use multi sig at that point?  Huh

Well if you consider the scenario when instead of creating its own blockchain govt announces bitcoin to the masses.
They then release their official client (which is originally compatible with bitcoin) and tell people that they can mine for bitcoins to help our economy grow.
Imagine the whole population of US compared to our little community here, no one would even remember us after that.

They do a few tricks however, they make sure that default addresses in their client are multisig with second key belonging to govt.
They also build the mining capability into the client so that people would start mining right away.
The only way to make it compatible with bitcoin network is if the latter supports multisig (which it is going to right about now).
The final step after critical mass was reached they release update to their client (maybe automatically) that outlaws the original addresses.
300 million miners across US would outhash the existing network with new rules turning current bitcoin community into a bunch of outlaws...
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January 30, 2012, 08:42:46 PM
 #30

...
Imagine the whole population of US compared to our little community here, no one would even remember us after that.
...
300 million miners across US would outhash the existing network with new rules turning current bitcoin community into a bunch of outlaws...
A : The problem is that we who know about Bitcoin have significant control over the news pipe. (can't cover this up)
B : They would just start their own chain from scratch or with premined coins Wink.
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January 30, 2012, 08:50:08 PM
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...
Imagine the whole population of US compared to our little community here, no one would even remember us after that.
...
300 million miners across US would outhash the existing network with new rules turning current bitcoin community into a bunch of outlaws...
A : The problem is that we who know about Bitcoin have significant control over the news pipe. (can't cover this up)
B : They would just start their own chain from scratch or with premined coins Wink.

A: I don't think that any of our current news pipes would compare to Mr president Obama telling his dear citizens that our economic situation is swiftly approaching a point of no return and we have just come up with a great idea how to fix it, a new currency - bitcoin!

B: This way they won't be able to destroy bitcoin, in my scenario they will!
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January 30, 2012, 08:58:58 PM
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...
Imagine the whole population of US compared to our little community here, no one would even remember us after that.
...
300 million miners across US would outhash the existing network with new rules turning current bitcoin community into a bunch of outlaws...
A : The problem is that we who know about Bitcoin have significant control over the news pipe. (can't cover this up)
B : They would just start their own chain from scratch or with premined coins Wink.
What would be the incentive to support that blockchain and not ddos it?
[edit] I think you were kidding.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 30, 2012, 09:09:39 PM
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What would be the incentive to support that blockchain and not ddos it?
[edit] I think you were kidding.

If the question what is the point for govt to support bitcoin - the answer is to take control over it via multisig.
If the question what is the point for current bitcoin community to support govt-hijacked bitcoin network is because you probably have some investments in bitcoins already and you will loose them if you quit that network.
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January 30, 2012, 09:42:32 PM
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If the question what is the point for govt to support bitcoin - the answer is to take control over it via multisig.
If the question what is the point for current bitcoin community to support govt-hijacked bitcoin network is because you probably have some investments in bitcoins already and you will loose them if you quit that network.
But if a govt decides to start an alt block chain, would you support it if

B : They would just start their own chain from scratch or with premined coins Wink.
or would you?

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 30, 2012, 09:59:46 PM
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If the question what is the point for govt to support bitcoin - the answer is to take control over it via multisig.
If the question what is the point for current bitcoin community to support govt-hijacked bitcoin network is because you probably have some investments in bitcoins already and you will loose them if you quit that network.
But if a govt decides to start an alt block chain, would you support it if

B : They would just start their own chain from scratch or with premined coins Wink.
or would you?

The trick is that Bitcoin is a brand, people will learn that it is decentralized international and all good, so when the govt says they support bitcoin people will buy into it. Only to learn later that govt took control over it. If govt announces alt-chain well the bitcoin community might start to argue that it is bad and corrupted and that our public chain is better. At least we would keep our ways intact and will be able to continue building the infrastructure.

So the solution seems to be:
1) Get to the masses before govt does. Then people will know that there is open source client as well not just the govt one.
2) Make sure that format of P2SH addresses doesn't make a particular scheme easily recognizable
If the format of (user key + govt key) is easily recognizable from format (user key  + another user key) then the second format can be outlawed.
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January 31, 2012, 04:57:15 AM
 #36

But there are other use-cases, like you agreeing to let the government control half the keys, so the government can "guarantee" the transactions, etc.  I can imagine the PR campaign: "It is just like Federal Deposit Insurance (FDIC), only for Bitcoin!"

I don't think that will ever happen, though. I know I wouldn't trust the government to keep the keys to my money safe and secure, I don't think most people would, either. More likely is most people will trust banks to hold half the keys, and the governments will then regulate the banks like they do today to get information about who is paying who for what....

Banks are essentially an extension of the government.  So, I could see a government placing trust in a bank to keep/manage the government keys since they have control of the banks anyway.

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.

You feeling good about it or agreeing to it is irrelevant.  Here's the basic way I see this happening:

1) You pay your taxes in bitcoin to whatever government you are a citizen.  The bitcoins you use to pay your taxes may be single signature or multisig, it doesn't matter.  They will accept any kind of bitcoins whatsoever.  In fact, they would prefer you sent them bitcoins that weren't multisig so that they could then "brand" them with their own signature, thereby increasing their influence over the system.

2) You file your taxes and declare how much of a tax return the government owes you.

3) The government generates a multisig transaction containing the number of coins needed to pay your tax return.

4) The government sends you one of the two signatures to that transaction along with an ID card to identify yourself when you want to spend the coins.

5) At this point, you have two options.  You can either spend the coins in a government approved transaction, or you can choose to not spend the coins ever.  The government doesn't care, because they consider your tax return paid in full, whether you like it or not.

6) If you choose to spend the coins, the government has veto-power over where and how you can spend them.  They use this veto-power to ensure that the person receiving the coins accepts them with a multisig transaction in which the government has a signature.  If the recipient refuses, the government refuses to let you spend them.  In essence, once a bitcoin is "branded", it will forever remain branded regardless of how many transactions it goes through.

This whole process does not require the government to outlaw normal single signature transactions.  Nor does it require them to create their own client that prevents normal bitcoin transactions or fork off an entirely new block-chain.  All it requires is for them to be patient.  Over time, more and more bitcoins would be branded and fall under government control.  Eventually, the vast majority of coins would be branded in this way, giving them sway over pretty much the whole network.

Now, there are both benefits and drawbacks to this.  You will have to decide whether you think the benefits outweigh the costs.  I just thought I should bring it to everyone's attention that multisig transactions open up this possibility.
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January 31, 2012, 05:15:22 AM
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1) You pay your taxes in bitcoin to whatever government you are a citizen.  The bitcoins you use to pay your taxes may be single signature or multisig, it doesn't matter.  They will accept any kind of bitcoins whatsoever.  In fact, they would prefer you sent them bitcoins that weren't multisig so that they could then "brand" them with their own signature, thereby increasing their influence over the system.

You have literally zero idea what you are talking about so Standard Transaction Federal Union.

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January 31, 2012, 05:30:29 AM
 #38

You have literally zero idea what you are talking about so Standard Transaction Federal Union.

I will be happy to STFU, as soon as someone explains where the flaw in my logic lies.  If this is not an actual possibility, I truly want to know.

Please enlighten me.
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January 31, 2012, 05:35:57 AM
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You have literally zero idea what you are talking about so Standard Transaction Federal Union.

I will be happy to STFU, as soon as someone explains where the flaw in my logic lies.  If this is not an actual possibility, I truly want to know.

Please enlighten me.
It doesn't matter what governments want. We will want law enforcement to protect us from using bitcoin to harm us, but beyond that goverment will no longer be able to print money. They will take the tax money we give them for the services we need and no more.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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January 31, 2012, 05:38:54 AM
 #40

You have literally zero idea what you are talking about so Standard Transaction Federal Union.

I will be happy to STFU, as soon as someone explains where the flaw in my logic lies.  If this is not an actual possibility, I truly want to know.

Please enlighten me.
It doesn't matter what governments want. We will want law enforcement to protect us from using bitcoin to harm us, but beyond that goverment will no longer be able to print money. They will take the tax money we give them for the services we need and no more.

Yes.  There will only ever be 21 million bitcoins.  This point I concede.
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