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Author Topic: A Warning Against Using Taint  (Read 14619 times)
Bitcoin Oz
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June 07, 2012, 01:52:03 AM
 #81

The question is how do you verify that coins were actually stolen and not scammed by a site owner Huh?

Anyone can CLAIM that coins were stolen. Proving it is another kettle of fish.

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June 07, 2012, 02:05:56 AM
 #82

Anyway.. the likely implementation would be that the merchant accepts them, but applies the prescribed tax and asks for a further small payment before you walk out of the store.

That would absolutely count as money-laundering.  You're literally charging someone extra to accept funds of questionable origin and you'd be wide open to serious criminal charges.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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June 07, 2012, 02:41:16 AM
 #83

The question is how do you verify that coins were actually stolen and not scammed by a site owner Huh?

Anyone can CLAIM that coins were stolen. Proving it is another kettle of fish.

Yet another point the anti-bitcoin lobby refuses to acknowledge.

Bitcoins are controlled by private keys. Numbers. Information. They are accessed through information.

Someone claiming they had their bitcoins stolen, whether truthful or not, has about as much credibility as someone claiming someone copied their password, and used it to do such-and-such. There's no way to prove there was no collusion, or worse, that there was no theft by an outside party.

Anyone who wants to field an ever-increasing number of fraudulent claims of stolen coins begging for their addresses to be blacklisted, can go right on ahead. I'll pass.


This functionality is built into the bitcoin. Its a fundamental part of bitcoin.

No, it's not. It still just some idea in the minds of some people on this forum, and the fact that you're claiming it's a "fundamental part of bitcoin" just shows how far you're willing to carry this belief in this fiction.

Bitcoin addresses are hashes. They're information. When bitcoins are sent to an address of mine, there's nothing I need to do. In fact, there's nothing I can do to prevent it, regardless of how "unclean" someone claims the coins are. This is the fundamental design of bitcoin.

For this scheme to reject/return/destroy/whatever "unclean" coins to work, you have to write code. That code has to maintain a blacklist (seriously, a blacklist!) of addresses. It has to check the entire blockchain for any and all links to these addresses in all of your wallet's addresses in each block. It has to DO SOMETHING with the transactions, even if that SOMETHING is to just alert you. (Extra credit: guess what frauds are guaranteed if the SOMETHING is to forward the coins to the "rightful owners'" addresses!)

Then you have to incorporate this code into clients and/or apps and/or websites.

And you have to convince people to use it, and to use it properly, and to maintain their blacklists on their own (you're not looking to centralize a list, are you?)

And then you start begging the government to force it on others when everyone ignores your ideas and refuses to use your code.


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I cannot think of a way to remove the possibility of tainted coins from bitcoin without moving to a centralized server like open transactions. If you don't want a taintable currency, run an open transactions server without accounts.

There are no such thing as "unclean" coins. What there are are transactions that can be tied back to addresses that are alleged to belong to thieves. Which, unless we're talking one or two transactions back, doesn't mean much to anyone except to the anti-bitcoiners who are so convinced their good intentions will lead us to cryptocurrency heaven that they refuse to acknowledge the problems with the scheme.

If you want to believe in "unclean" coins, by all means, continue believing, and create code to implement that belief. Pardon us while we choose not to believe.


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There are people, like deathandtaxes, that have claimed they will respond to a voluntary, per-user, tainted coin system by spamming the blockchain with bogus transactions. I think this shows the level of maturity we are dealing with.

There are no such things as "bogus transactions" in bitcoin. There's just money moving around. And spam is prevented via transaction fees. If the fees are paid, there is no spam.

And to that point, what's the harm with him sending money to public addresses anyway? It's not as if your scheme falls to pieces if everyone finds they have "unclean" coins in their wallets, right? Oh, wait... maybe that's one of the issues you should be listening to us about in the first place.

And you're challenging his maturity level?

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June 07, 2012, 04:28:49 AM
 #84

Bitcoin is a protocol.  The Bitcoin.org client is code that implements the Bitcoin protocol.  This taint blacklist idea of yours could be implemented in a client without touching the Bitcoin protocol or requiring a hard-fork to the blockchain.    So my reference earlier to a fork was describing alterations to the Bitcoin.org client and not to a fork of the blockchain.   As you also mentioned, you could even implement a taint blacklist that does not require changes to the Bitcoin.org client (e.g., this could easily be done in Armory, for instance, or some other external service.)
Exactly.  I was pretty sure that the idea forking the blockchain for taint was founded on a deep misunderstanding.  Thanks for clearing it up.
 
So, it's technically very possible for you to do this.  Go do it.  What are you waiting for?  Go nuts!

The reason you haven't is because you know that unless others are using that taint blacklist as well, you doing so unilaterally has no effect.   If you'ld like to boycott tainted coins, you don't need anyone's permission.  You are free to do so.   Isn't Bitcoin and open source fantastic, where you have the liberty to take the software and to basically be allowed to do pretty much whatever you want to with it?
Well, I would like to set up a tool to identify addresses that received coin (in significant amounts) from other interesting addresses just because I'm curious.

Now if instead you want to change the software that I use, that's when I start to have a problem with you.  Your freedom ends where my nose begins.
Agree completely.  As a voluntaryist, I even have a philosophical problem with the use of taint by authorities (as described by Fulz) - but it's the same philosophical problem I have with (coercive) authority in general.  If you are aware of "taint" (not really the right word, because it really only means that "this bitcoin was once in a certain bitcoin address"), then you should be free to use or ignore that awareness in all the decisions you make.  And if you choose to avoid being aware of it, then no one should force you to look at it.

In fact, to vindicate Westky, perhaps s/he was talking about the fact that it's only "taint" if you view the address that once held it as a "bad" address.  When we say it's already there, or intrinsic to bitcoin, we only mean that it's possible to identify all the addresses that now hold bitcoin that was once in any given address.

It's true you can't stop someone sending you coins that are on somebody's taint-list.
How this is handled would depend somewhat on the particular jurisdiction enforcing the taint.
Mostly, in my opinion, it ought to depend on your better judgement.  Or, to put it another way, the particular jurisdiction that should handle this should be you, by yourself, with an awareness of as much pertinent info as possible.

But I respect the choice of many here to remain blind to the history of the BTC they receive.

I've been reading "The Myth of National Defense", a collection of writings edited by Hans-Herman Hoppe.  If you check it out, it might make more sense why I'm looking for a way to thwart thievery that doesn't involve the authorities.

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June 07, 2012, 04:49:37 AM
 #85

You introducing a system that imposes a form of taint does nothing to prevent theft but does make using Bitcoin a hassle for those who are innocent.

Therefore I do not support this and will vigorously reject any movement towards this initiative and any like it.

I concur 100%

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June 07, 2012, 04:52:36 AM
 #86

This is such a non-issue, but I thought I'd chime in. If you are a vendor and someone wants to spend tainted bitcoin at your store and you refuse them, your competitor probably will not.
Only if your competitor is outside of the physical jurisdiction enforcing the taint.
This may however be a good argument against implementing taint in any particular country - as it provides incentive for people to use foreign merchants, thus harming the local economy!

If however, the control-points  are things like supermarkets which have captive local consumers - it's unfortunately not going to be enough to stop it.

Anyway.. the likely implementation would be that the merchant accepts them, but applies the prescribed tax and asks for a further small payment before you walk out of the store.


That's no remotely likely. The coins will usually be going to a safe place not accessable by the on duty clerk. If the customers doesn't want to pay or can't pay the essentially random extra tax are you going to return the coins.. later? different ones?

You are not going to have a popular store that way.

The only way this would happen is if someone forced stores to do it. And even then they would probably bail on bitcoin unless someone was forcing them to keep using it.

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June 07, 2012, 07:20:54 AM
 #87

This is such a non-issue, but I thought I'd chime in. If you are a vendor and someone wants to spend tainted bitcoin at your store and you refuse them, your competitor probably will not.
Only if your competitor is outside of the physical jurisdiction enforcing the taint.
This may however be a good argument against implementing taint in any particular country - as it provides incentive for people to use foreign merchants, thus harming the local economy!

If however, the control-points  are things like supermarkets which have captive local consumers - it's unfortunately not going to be enough to stop it.

Anyway.. the likely implementation would be that the merchant accepts them, but applies the prescribed tax and asks for a further small payment before you walk out of the store.


That's no remotely likely. The coins will usually be going to a safe place not accessable by the on duty clerk. If the customers doesn't want to pay or can't pay the essentially random extra tax are you going to return the coins.. later? different ones?

You are not going to have a popular store that way.

The only way this would happen is if someone forced stores to do it. And even then they would probably bail on bitcoin unless someone was forcing them to keep using it.

Tainting will likely happen after/when Bitcoin is widespread, I would give it 12-15 years.

How do you prove that the coins are stolen?

If you can´t prove it, they wont be tainted.




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June 07, 2012, 08:11:01 AM
 #88

Why do you think you are allowed to use force to prevent me from implementing some scheme on my own client?
Because you can't control who sends you coins. If somebody sends you tainted coins, what are you going to do about it? You can't send them back, since the address they came from may not be under the sender's control (eg, e-wallets), and you can't keep them but refuse to accept them as payment. Can you imagine if that happened with cash? "Sorry, we can't accept this $100 note as payment, you'll have to give us another one. No, you can't have this one back; no, it's not counterfeit, we just think it might have been involved in some form of criminal activity at some point in the past." You'd have some use of force directed at your face if you tried that in real life.

You don't have to accept coins that have been obtained dishonestly, either. That would be a personal choice. Because bad actors could respond, to honest traders who only making transactions with other honest people, with violence does not invalidate the idea.
The problem is that the people who respond with violence are not bad actors, they are honest people who have had their money taken without compensation based on nothing more than the belief that the money might have been involved in an illegal transaction at some point in its history. Remember, YOU CANNOT CONTROL WHO SENDS YOU BITCOINS! If an honest person happens to receive "tainted" bitcoins from someone else, there is absolutely nothing that they or anyone else can do about it, and any attempt to do something about it will simply be punishing innocent users for other people's actions.

Here's another experiment you can try: Open a store and keep a drug kit behind the counter. Drug test every note a customer pays you with, and if the result is positive, refuse to accept the money but don't give it back. See how long you can last without either getting punched in the face or having the cops called on you. I guarantee you'll be out of business one way or another before the day is out.

I encourage the sympathetic readers of this post to stop thinking about bitcoin as "cash" and start thinking in terms of a distributed file system containing a perfect accounting ledger. The idea is much more sophisticated than "cash" and will lead one day to a system that will allow us to keep track of our debts to each other in terms of personal economic value.
So, everyone's bitcoins will have a different value to everyone elses? How exactly are you supposed to set prices with such a scheme? "This product costs 10 BTC, but only 8 BTC if the coins come from a verified Mt Gox account, with a 50% surcharge if the coins ever touched SR, plus 10% if they came from a coin mixing service... etc" Is that pretty much how it's supposed to work? And if so, how does that make any sense? That would cause problems if you tried it in real life, too.

What you're asking is like asking how Mt. Gox can give you 5 USD/BTC one day and 6 USD/BTC the next day. Why are exchange rates set on an open market with bids and asks any different than devaluing dishonest money? If someone you want to trade with wants to charge you more because you have dishonest money, you don't have to trade with them. I'd encourage you to find someone to trade with that will give you the full value you believe your BTC is worth.
No, it's not like that at all, and I'm not sure why you even think that. They are different because the exchange rate assumes that bitcoins (and dollars, for that matter) are fungible, meaning that one bitcoin (or dollar) is just as good as any nother. This is because when you make an offer to buy bitcoins on an exchange, you have absolutely no way of knowing who, out of thousands of other traders, will actually be providing your bitcoins, and so you have no way of knowing whether you'll end up with good bitcoins or "tainted" ones. As I have already pointed out, setting prices will be impossible if "tainted" bitcoins are valued differently from "clean" bitcoins.

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June 07, 2012, 08:18:51 AM
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June 07, 2012, 11:09:40 AM
 #90

Mt Gox has recently blocked peoples access to coins then forced them through onerous ID requirements claiming they came from the bitcoinica hack. You can bet the major exchanges have "blacklists" only know one before they deposit whether they are on this.


If such a thing exists I would like to know beforehand rather than risk having to deal with a  goxing because i unknowingly received tainted coins. Cheesy

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June 07, 2012, 12:09:36 PM
 #91

Tainting will likely happen after/when Bitcoin is widespread, I would give it 12-15 years.
Sorry if this is a stupid question (couldn't find a non-ambiguous answer anywhere) but exactly what is a tainted bitcoin?


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June 07, 2012, 12:13:53 PM
 #92

Tainting will likely happen after/when Bitcoin is widespread, I would give it 12-15 years.
Sorry if this is a stupid question (couldn't find a non-ambiguous answer anywhere) but exactly what is a tainted bitcoin?



You can follow the trail of a coin. Just say a bitcoin was stolen from bitcoinica you can see in the blockchain which address it goes too and how many transactions have happened in between.

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June 07, 2012, 12:55:53 PM
 #93

If however, the control-points  are things like supermarkets which have captive local consumers - it's unfortunately not going to be enough to stop it.

No customers will just use cash or some other system which retains fungibility.  The customer will just ignore worthless Bitcoin and all the complications which produce no value and undermine the system.  That is the whole point.  Once Bitcoin loses fungibility is ceases to have any value as a medium of exchange.

"Here is this new medium of exchange which just happens to suck royally as a medium of exchange.  Please stop using your existing highly fungible payment systems and adopt this one instead"

Quote
Anyway.. the likely implementation would be that the merchant accepts them, but applies the prescribed tax and asks for a further small payment before you walk out of the store.

At which point:
a) Bitcoin loses a user likely forever
b) The store loses a customer possibly forever
c) A class action lawsuit lawyer gains a lucrative plaintiff.
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June 07, 2012, 01:29:52 PM
 #94

Tainting will likely happen after/when Bitcoin is widespread, I would give it 12-15 years.
Sorry if this is a stupid question (couldn't find a non-ambiguous answer anywhere) but exactly what is a tainted bitcoin?



A stolen bitcoin.

Like someone steal a bitcoin, well then this bitcoin is "tainted" and whoever receive it will like be "omg you have a tainted bitcoin you CRIMINAL" wich of course make no sense cause bitcoins keep moving from an address to another and if you sell something to someone and he pay you with a "tainted coin" you are not a criminal.
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June 07, 2012, 02:42:56 PM
 #95

You can follow the trail of a coin. Just say a bitcoin was stolen from bitcoinica you can see in the blockchain which address it goes too and how many transactions have happened in between.
A stolen bitcoin.

Like someone steal a bitcoin, well then this bitcoin is "tainted" and whoever receive it will like be "omg you have a tainted bitcoin you CRIMINAL" wich of course make no sense cause bitcoins keep moving from an address to another and if you sell something to someone and he pay you with a "tainted coin" you are not a criminal.
I see, thanks.

Doesn't seem like a working concept to me. If somebody steals bitcoins (by hacking someone's mtgox account or whatever, and transferring bitcoins stored online to an address of his own) he can simply mix them up with other bitcoins, send them through a few transactions combined with other addresses, or use one of the dozen bitcoin laundry schemes or services, and there's no telling which bitcoins are tainted anymore.

In theory, there's no difference between theory and practice. In practice, there is.
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June 07, 2012, 02:48:00 PM
 #96

Tainting will likely happen after/when Bitcoin is widespread, I would give it 12-15 years.
Sorry if this is a stupid question (couldn't find a non-ambiguous answer anywhere) but exactly what is a tainted bitcoin?



A stolen bitcoin.

Like someone steal a bitcoin, well then this bitcoin is "tainted" and whoever receive it will like be "omg you have a tainted bitcoin you CRIMINAL" wich of course make no sense cause bitcoins keep moving from an address to another and if you sell something to someone and he pay you with a "tainted coin" you are not a criminal.

Not true. Tainted is not a stolen bitcoin, it's a bitcoin merely accused of being stolen, big fking difference.

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June 07, 2012, 03:07:14 PM
 #97

You can follow the trail of a coin. Just say a bitcoin was stolen from bitcoinica you can see in the blockchain which address it goes too and how many transactions have happened in between.
A stolen bitcoin.

Like someone steal a bitcoin, well then this bitcoin is "tainted" and whoever receive it will like be "omg you have a tainted bitcoin you CRIMINAL" wich of course make no sense cause bitcoins keep moving from an address to another and if you sell something to someone and he pay you with a "tainted coin" you are not a criminal.
I see, thanks.

Doesn't seem like a working concept to me. If somebody steals bitcoins (by hacking someone's mtgox account or whatever, and transferring bitcoins stored online to an address of his own) he can simply mix them up with other bitcoins, send them through a few transactions combined with other addresses, or use one of the dozen bitcoin laundry schemes or services, and there's no telling which bitcoins are tainted anymore.

Well, that's the problem, but apparently the solution is, to use the blockchain to declare unclean ALL other coins that may have ever directly or indirectly touched the "tainted" ones, no matter how much tracing back has to be done.

You would think the unworkability of this would be obvious, yet here we are, having to point this out to people who want to reject your money because it's evil. (And by "reject," they either mean keep or naively hand over to someone else, since they seem to know full well that a payment can't really be rejected, even though they keep using the word.)

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In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
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The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
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June 07, 2012, 04:17:05 PM
 #98

Well, that's the problem, but apparently the solution is, to use the blockchain to declare unclean ALL other coins that may have ever directly or indirectly touched the "tainted" ones, no matter how much tracing back has to be done.
Afaik, a typical bitcoin laundry service works like this:



You transfer N bitcoins from address A to P.
They Someone transfers X bitcoins from address Q to B, and Y bitcoins from R to C (where X+Y ≈ N minus a random fee of ±2%).
No money is transferred between A and B, A and C, P and Q, P and R, or Q and R.

Can the coins at Q or R now be considered dirty?

(the ones at P are eventually cashed out at MtGox)

In theory, there's no difference between theory and practice. In practice, there is.
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June 07, 2012, 05:16:03 PM
 #99

I'm 6 pages in before my reply, but here's my thinking:
 
I don't support this at all, because I view bitcoins as cash.  Let's say you sell something for $100 on craigslist, and you get a nice $100 bill, you try the ink mark and determine it's a legit $100.  You go into the bank to deposit it and they say, "this $100 was stolen last month, we have its serial number written down.  You cannot use this $100 anymore"
 
I call bullshit.  It's my money, I got it through legal means.  It sucks to the person who had it stolen, but I'll be damned if I'm going to give up my money (government stealing notwithstanding).

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June 07, 2012, 07:42:22 PM
 #100

Well, that's the problem, but apparently the solution is, to use the blockchain to declare unclean ALL other coins that may have ever directly or indirectly touched the "tainted" ones, no matter how much tracing back has to be done.
Afaik, a typical bitcoin laundry service works like this:



You transfer N bitcoins from address A to P.
They Someone transfers X bitcoins from address Q to B, and Y bitcoins from R to C (where X+Y ≈ N minus a random fee of ±2%).
No money is transferred between A and B, A and C, P and Q, P and R, or Q and R.

Can the coins at Q or R now be considered dirty?

(the ones at P are eventually cashed out at MtGox)

Yes, that's how to try to get around it, but once Mt. Gox starts "rejecting" (read: keeping for themselves) the coins at P because someone some time ago back said a transaction was a theft, how long can such a service remain viable? Why would they give you coins from Q and R when they know they can't use the coins at P?

True, the coins at P could be split to several addresses which are passed around on paper via private keys (similar to Casascius coins.) But if those coins can't be spent on the blockchain, and instead they require that one private key to be constantly passed around yet kept secret, that doesn't seem like a workable plan either.

Once someone chooses to believe in "tainted" coins (just like believing in "dirty money",) they'll be set on trying to "reject" any transactions even tangentially related. The best approach to dealing with this and avoiding having innocent people be defrauded and stolen from is to just ignore their belief and refuse to use code or services that implement their schemes.

Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
...
...
In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
...
...
ATTENTION BFL MINING NEWBS: Just got your Jalapenos in? Wondering how to get the most value for the least hassle? Give BitMinter a try! It's a smaller pool with a fair & low-fee payment method, lots of statistical feedback, and it's easier than EasyMiner! (Yes, we want your hashing power, but seriously, it IS the easiest pool to use! Sign up in seconds to try it!)
...
...
The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
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