A Warning Against Using Taint

[dscotese]

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?)

Absolutely not!  I don't even think any of the other things are necessary.  It's like puling the curtain back so people can see the old man.  They are free to ignore him and continue kneeling before the "wizard".  I think if the ONLY effort is pulling back the curtain, the net effect will be positive.  But I respect the consensus that it won't be positive, so I'm agreeing to disagree, and participating in this discussion now only to point things out that I think are important.

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[dscotese]

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!

Do you mean that the money in my wallet that is tainted is somehow "taken" from me because I can't use it to buy something from... someone... somewhere who sees the taint?  There are plenty of other people to transact with, no?  Remember, it's a personal blacklist.  Most of the people on this thread here have insinuated that they would ignore any taint.

This reminds me of an assumption I made while I was growing up without realizing it, which is a really stupid assumption:  That prices should be the same for everyone.  That's just BS.  If I like you, you'll get a better price.  If I don't like anybody, then my price to all of them will be higher, and I won't get to trade much.  The same thing goes for this taint idea.

The biggest problem I see is lack of original judgment.  Too many people just do what they're told - they're sheeple.  Because of that, the mere suggestion that address XYZ belongs to a thief can ruin the owner of that address.  But I don't think that would happen much, because the average BTC user is a bit brighter than that, and the "mere suggestion" will get the suggester a large load of chastisement for jumping to conclusions.  Or maybe I'm wrong.  Again, it's a faith in the community that perhaps I have too much of, at least as pertains to the exposure of transactions from alleged thieves.

[dscotese]

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.

I guess that means MtGox is already using taint.  Are they really?  How did you find out?

[Bitcoin Oz]

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.

I guess that means MtGox is already using taint.  Are they really?  How did you find out?

I read the forums

imho people should boycott mt gox for such things.

[cbeast]

So what if Apple makes a Bitcoin app and only allows "Apple Coins" approved by Apple to buy Apple approved products and services from Apple vendors in Apple Land? They would call any non-Apple coins "tainted" and will void your Apple Health Insurance and send you to Apple Prison.

[Foxpup]

Do you mean that the money in my wallet that is tainted is somehow "taken" from me because I can't use it to buy something from... someone... somewhere who sees the taint?  There are plenty of other people to transact with, no?  Remember, it's a personal blacklist.  Most of the people on this thread here have insinuated that they would ignore any taint.

The fundamental purpose of money is to give you a means of trading with other people without having to worry about whether you happen to have what they want, because everyone wants money equally. If some people don't want money under certain circumstances, the whole system breaks down. Though, as a general rule, refusing to accept money which is accepted by your competitors is pretty damn stupid, regardless of whether it's technically viable.

This reminds me of an assumption I made while I was growing up without realizing it, which is a really stupid assumption:  That prices should be the same for everyone.  That's just BS.  If I like you, you'll get a better price.  If I don't like anybody, then my price to all of them will be higher, and I won't get to trade much.  The same thing goes for this taint idea.

That prices should be the same for everyone is not an assumption, it's a basic economic fact stemming from the fungibility of money: If everyone's dollars are equal, then everyone's prices should be equal. To suggest that prices should not be equal for everyone is to suggest that everyone's dollars are not equal, which is not only absurd, it's downright stupid if you are in a competitive business. (Note that things like loyalty discounts are no exception to this rule, since the customer to whom the discount applies is providing a service (namely, their continued patronage) to the store which is of equal value (in the store management's opinion) to the discount received.)

The biggest problem I see is lack of original judgment.  Too many people just do what they're told - they're sheeple.  Because of that, the mere suggestion that address XYZ belongs to a thief can ruin the owner of that address.  But I don't think that would happen much, because the average BTC user is a bit brighter than that, and the "mere suggestion" will get the suggester a large load of chastisement for jumping to conclusions.  Or maybe I'm wrong.  Again, it's a faith in the community that perhaps I have too much of, at least as pertains to the exposure of transactions from alleged thieves.

I admire your optimism, but unfortunately assuming that people aren't idiots always ends badly.

[dscotese]

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.

I guess that means MtGox is already using taint.  Are they really?  How did you find out?

I read the forums

imho people should boycott mt gox for such things.

Here's a link to a story on it.

and the police, working with MtGox and other Bitcoin services, could theoretically trace their way back through each link... It’s hard to tell how practical such a strategy actually is...

I guess they mean the strategy of identifying each person along the way in order to get the identity of the next person back.  I hope that is impractical.  I'd much rather trust the community than the authorities.  Let each account holder decide on their own what past addresses matter to them.  The proposal allows anyone to filter for whatever addresses are important to them (personal black/white lists) and then do whatever they want with that information.  Beating the authorities to a resolution (maybe it did - see below) would be an excellent feather in the cap for anarchy.

It looks like MtGox has already stopped ("Bitcoinica no longer wishes to pursue this case"  MtGox, at least according to the reddit user - whose account has been deleted).

I wonder if Bitcoinica's wish to pursue the case was costing them anything.  Why else would they not wish to pursue it?  Perhaps the taint-tracking was effective enough for the thief to quietly beg for mercy and return enough of the proceeds to get the authorities off his trail.  That is the end I'd like to see for all BTC heists.  It would make a good cover story in case something more nefarious was going on.

[westkybitcoins]

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?)

Absolutely not!  I don't even think any of the other things are necessary.  It's like puling the curtain back so people can see the old man.  They are free to ignore him and continue kneeling before the "wizard".  I think if the ONLY effort is pulling back the curtain, the net effect will be positive.  But I respect the consensus that it won't be positive, so I'm agreeing to disagree, and participating in this discussion now only to point things out that I think are important.

...

Let's say I don't visit the forums. I have an older version of Bitcoin that I consider more stable and trustworthy, and the "bitcoin community" I get my info from is a small circle of friends and Bitcoin Magazine. We've not heard about "tainted coins."

Let's also say you have a website selling widgets. 50 BTC each, including shipping. But you have a small disclaimer at the bottom of the page saying you don't accept tainted coins, with a link to your blacklisted addresses. I don't see this disclaimer (or perhaps I just don't get it, since I'm not a thief, and no one I associate with is,) and send you 50 BTC for a widget.

6.2091 BTC of that transaction comes from an input that can be traced all the way back to the MyBitcoin.com nastiness. Your software (whether an extra program or coded directly into the latest Satoshi client) catches this.

Do you:

1) Send me the widget I paid for?

or

2) Ask for an address to refund my 50 BTC?

[Gabi]

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.

Right, sorry, my fault

[dscotese]

Let's say I don't visit the forums. I have an older version of Bitcoin that I consider more stable and trustworthy, and the "bitcoin community" I get my info from is a small circle of friends and Bitcoin Magazine. We've not heard about "tainted coins."

Let's also say you have a website selling widgets. 50 BTC each, including shipping. But you have a small disclaimer at the bottom of the page saying you don't accept tainted coins, with a link to your blacklisted addresses. I don't see this disclaimer (or perhaps I just don't get it, since I'm not a thief, and no one I associate with is,) and send you 50 BTC for a widget.

6.2091 BTC of that transaction comes from an input that can be traced all the way back to the MyBitcoin.com nastiness. Your software (whether an extra program or coded directly into the latest Satoshi client) catches this.

Do you:

1) Send me the widget I paid for?

or

2) Ask for an address to refund my 50 BTC?

You've given me information here that I wouldn't have there.  I will pretend to not know it...

You've set up a website for me that I wouldn't set up.  However, the changes would only make it more difficult for this to be messy, so I'll stick with your description.

Not sure what you mean by "traced all the way back" - am I getting BTC straight from an address that MyBitCoin's alleged theft put BTC into?  Or has this 6.2091 BTC remained undivided traveling from address to address?  Is MyBitCoin offering any reward for information or help?  Those questions would factor into my thinking, but...

I'd send an email with what I discovered, in an effort to uncover all the information you've provided in this post that I wouldn't have yet.  I like to explain my chess moves to my opponent.  You'd be able to sway me toward one side or the other.  If you asked for a refund, I'd give it immediately.  If not, I'd be more likely to send the widget.

Is my assumption correct that you wouldn't do anything any differently no matter how closely related to the MyBitCoin theft your counterparty appeared to be?  Suppose it was a friend of yours instead of MyBitCoin?

These are fun mental games to play around with, but your answers to the same questions wouldn't affect me much and I don't think my answers should affect you much.  It's the aggregate behavior that I trust, assuming everyone has all the information that's important to them.  The "chaotic" nature of how BTC users would apply or ignore taint (or any information that suddenly appears to be a lot more accessible than they first thought) will help keep everyone more honest.

It seems a bit like the second amendment argument that if gun ownership were very common, violence would be very uncommon.  I buy that argument.  Do you?

[Stephen Gornick]

A currency is fungible.  Period.  If it lacks fungibility it is no longer a currency and the entire rational for Bitcoin ceases to exist.

This was just learned again today after this:



Those were bills stolen in a robbery from a Bank of America.

LAPD spokesman Sgt. Rudy Lopez said there was plenty of video footage of the chase that will help them identify those people who grabbed money from the street and the suspects' vehicle.

"If they're identified, they will be prosecuted for receiving stolen property," Lopez said, adding that conviction on such a charge, a felony, is punishable by more than a year in prison.

 - http://latimesblogs.latimes.com/lanow/2012/09/police-still-investigating-cars-suspects-after-bizarre-bank-robbery.html

If the serial numbers for those bills were known, then the solution is simple right?    List a database of the stolen bills, and any of these tainted bills that end up at a bank get turned over to the secret service.  The person that deposited them loses those funds, as they were stolen property and thus they had no right to them in the first place (should have checked to see if they were tainted first!)

Now of course, this is absolute lunacy.  Cash is cash.  It is fungible money.

Bitcoins are the same.

[marcus_of_augustus]

Now of course, this is absolute lunacy.  Cash is cash.  It is fungible money.

Bitcoins are the same.

No, they clearly are not. We wish bitcoins were fungible, but they are not, each bitcoin has a unique, identifiable number (and a string of previous transactions) associated with them, stored in a public database.

Cash is still king, until crypto-currencies nail the strong-anonymity problem natively (that bitcoin is deficient in).

[Stephen Gornick]

Now of course, this is absolute lunacy.  Cash is cash.  It is fungible money.

Bitcoins are the same.

No, they clearly are not. We wish bitcoins were fungible, but they are not, each bitcoin has a unique, identifiable number (and a string of previous transactions) associated with them, stored in a public database.

Cash is still king, until crypto-currencies nail the strong-anonymity problem natively (that bitcoin is deficient in).

Paper currency has serial numbers.  That data isn't collected so it is of little use currently, but cash has the capacity to carry taint and thus be less than fungible.  The drawbacks to doing that outweigh any benefit so that's why even the technology to start tracking that data will not be implemented.

Bitcoins can be transferred from one address in a wallet to another in the same wallet, and at that point it becomes less than 100% certain that they are still held by the original party.   Any recognition of taint then potentially penalizes innocents and thus cannot be allowed, regardless of the opportunity to do whatever good is intended.  Fungibility trumps all.

[thebaron]

Paper currency has serial numbers.  That data isn't collected so it is of little use currently

The other day, I had the thought that if I was the Federal Reserve, I would have high speed scanners and a computer system that tracked the movement of the money coming in and going out. We know that bills are checked for wear and damage before they're placed back into circulation. Completely feasible, and I wouldn't doubt if they were already doing it.

[FreeMoney]

There would be so much less demand for cash if you couldn't break the law with it. Value would absolutely crater.

[thebaron]

There would be so much less demand for cash if you couldn't break the law with it. Value would absolutely crater.

The government still needs a way to pay for their off the books "contractors" too. If they weren't actually corrupt, they would have probably banned possession of over a certain amount of cash by now. After all, why do you need cash if you're a law abiding citizen?

[muyuu]

Why is the title of the thread "A Warning Against Using Taint" and then you proceed to recommend a system to give a measure of taint?

[dscotese]

Why is the title of the thread "A Warning Against Using Taint" and then you proceed to recommend a system to give a measure of taint?

The answer is in the thread.

Thanks to Stephen for bringing this thread up again.  It's still fun for me to read.

If you look up a BTC address at https://blockchain.info/, you get a "Taint Analysis" button which will then show the % of funds received by an address that can be traced back to other addresses, or if you reverse it (drop down top right), the % of funds sent from an address which passed through other addresses.  It's fun to play with.  It was added around 6/24 this year.

Any recognition of taint then potentially penalizes innocents and thus cannot be allowed, regardless of the opportunity to do whatever good is intended.  Fungibility trumps all.

So are you mounting any effort to get blockchain.info to remove that feature?  The address to which the Bitcoinica heist went is public knowledge, so the potential is there, I guess.  On the other hand, every capability and piece of information that can be used to penalize others has the same potential.  I don't think the answer is censorship, but rather education and decentralization.

I'm glad they added that tool.  It should make my investments in mixing services do well, and also discourage thieves.  Exactly what I wanted!  Has anyone suffered from it?  Gotten an email from someone they paid with BTC, asking nosy questions?  Perhaps so, but are they willing to bring it up?  I guess it's kind of like admitting you've been mugged or raped.  Personal decision, I suppose.

To suggest that prices should not be equal for everyone is to suggest that everyone's dollars are not equal, which is not only absurd, it's downright stupid if you are in a competitive business.

Ok, but I run a competitive business (selling my programming skills) and I charge assholes more than I charge nice people all the time.  Same thing goes when I sell stuff at garage sales.  I suppose it might leave me with less cash at the end of the day, but I feel better about myself and the world in general.  So for me, everyone's dollars are certainly not equal.  The indiscriminate nature of your view on selling seems a bit creepy to me.  But I think you extrapolated a bit too far:

The dollars themselves are equal, but they are a medium of exchange, which requires two parties making an exchange to be useful.  I imagine that the view each party takes of the other reasonably has some influence over what they demand in return for what they offer.  I think your description extrapolates the equivalency of the medium of exchange to the equivalency of the parties.  That seems a lot like the propaganda subtly  imposed on us in public school, that we are all the same, just interchangeable consumers, non-individual and unimportant pawns.  That is the propaganda I recognized and rejected when I realized that different prices for different people makes sense.

[Syke]

Ok, but I run a competitive business (selling my programming skills) and I charge assholes more than I charge nice people all the time.

But with taint all the nice people will be treated like assholes and the assholes will find ways to avoid the taint. Taint is like copy protection. It never hurts the pirates.

[dscotese]

Ok, but I run a competitive business (selling my programming skills) and I charge assholes more than I charge nice people all the time.

But with taint all the nice people will be treated like assholes and the assholes will find ways to avoid the taint. Taint is like copy protection. It never hurts the pirates.

So are you going to contact blockchain.info and ask them to remove the analysis?

I think any time there are assholes, and they get treated like assholes, some of them will point out that nice people are being treated like assholes, and also claim to be one of those nice people.  The first part of their claim is probably right, just because there are always people who err on the side of treating too many people like assholes instead of too few.  But if it is an asshole making the claim, the second part is dead wrong.

I bet there are some would-be pirates who gave up because the copy-protection frustrated them.  But I also bet that the net effect has been to worsen the problem of piracy, and it certainly frustrates people who try to back up the stuff they buy.  Copy protection, however, is generally an alteration to otherwise normal media that makes a common activity more difficult.  Taint requires an actual human mind to translate it into making a common activity more difficult.  As I've already pointed out, every capability and piece of information that can be used to penalize others has the same potential.  I will always argue against keeping people as incapable and stupid as possible in order to prevent them from penalizing innocents.  Wouldn't you?