A Warning Against Using Taint

[dscotese]

The following proposal has been characterized as a horrible idea (see replies), so I thought it would be fair warning to others who explore the idea.

The Personal Blacklist
I propose a new feature called "blacklist".  This feature allows the user to enter BC addresses into his own personal blacklist because they want to know when they receive BC that came from a certain address.  I think the user should also be able to set a threshold so that any transactions from the blacklisted address that are under that threshold would be ignored handled as if they came from a good address. [Added with title change:] The user should also be able to establish a whitelist so that any transactions coming from whitelisted addresses would not be searched back any further.

The Search
Whenever the user receives BC, the feature will search back through the blockchain to find all the transactions that added funds to that address to see if any of them are in the blacklist.  It does this recursively til it finds either an address in the blacklist or all the blocks that created all the BC that ever found its way into the senders address.

The Output
If the generation blocks for all bitcoin are found without finding any blacklisted addresses, the user gets a happy Message.
If an address is found that is in the blacklist then the user gets the following information:
Some of this bitcoin comes from Blacklisted address XXX:

Block#	Date/Time	Amount	Sent By	Received By
#	//::	#BC	XXX	YYY1
#	//::	#BC	YYY1	YYY2
#	//::	#BC	...	...
#	//::	#BC	YYYn	ZZZ

ZZZ is the user's address.

At this point, the user can either request the sender to send non-stolen bitcoins and provide the thief's address to the sender who can add it to his own blacklist, and probably a link to posts on the internet that explain the theft.

This will have the effect of dividing the BC community into those willing to accept stolen bitcoin (either because they don't know, or because they don't care) and those who aren't.

But what if your address holds stolen bitcoin?  That would be detected when you add a thief's address to your blacklist.  At that point, you get several lists just like the one above, one for each sender who has sent stolen BC to your address.  It's up to you to figure out what to do about it.

This proposal only empowers Bitcoin client users to have more information about their counterparties.  I suspect and hope it would grow into a major headache for bitcoin thieves.  It will certainly be a headache for all BC users who have a lot of transactions, but only if people with great goods and services who accept BC decide to refuse service to recipients of stolen funds, and use low thresholds.  So the effectiveness/headache tradeoff is in the hands of the users, where it should be, and the more work we put into it, the more the thief suffers.

Comments?

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[Stephen Gornick]

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.

[hazek]

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.

A huge +1.

[Mushoz]

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.

+1

Couldn't have said it better.

[Raize]

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.

As someone who coded this sort of thing to watch addresses, I can tell you is it definitely technically feasible, but like Stephen says, I would wholeheartedly disagree with using it. You're going to find that huge numbers of coins are "tainted" illegitimately (accidental sends could give a blacklisted address the power to blacklist other addresses) so any blacklist is going to eventually include coins that were sent in error or even completely legitimately.

Specifically I take issue with this:

I think the user should also be able to set a threshold so that any transactions from the blacklisted address that are under that threshold would be ignored.

What user would want to use a client that could ignore that their own wallet has Bitcoin in it? Why would we want the network to essentially *destroy* coin in the first place? It just doesn't make sense.

Also, Bitcoin works very hard to return us back to the "buyer-beware" type system of handling financial transactions, any departure from this system returns us closer to a "lobby-owned" currency, whereby small groups control what is and is not currency, and ensure that others don't ever have enough of it. Long live the Blockchain.

[dscotese]

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.

Would you consider a proposal that involved no taint to be like it?

Would you consider a proposal that does nothing to prevent theft but reduces the benefits to the thief (without taint) to be like it?

I'm trying to develop a sense of the philosophy behind BC that you hold.

[dscotese]

Specifically I take issue with this:

I think the user should also be able to set a threshold so that any transactions from the blacklisted address that are under that threshold would be ignored.

What user would want to use a client that could ignore that their own wallet has Bitcoin in it? Why would we want the network to essentially *destroy* coin in the first place? It just doesn't make sense.

Also, Bitcoin works very hard to return us back to the "buyer-beware" type system of handling financial transactions, any departure from this system returns us closer to a "lobby-owned" currency, whereby small groups control what is and is not currency, and ensure that others don't ever have enough of it. Long live the Blockchain.

Ahh - my bad.  Poorly explained.  Allow me a rewrite:
I think the user should also be able to set a threshold so that any transactions from the blacklisted address that are under that threshold would be handled as if they came from a good address (I made this change in the OP with strikeout too).

The second part of what you said gets more to the point that I think Stephen made.  When I subtract out the misuderstanding I introduced, this objection still has a tiny bit of relevance, but theft is theft no matter how careful buyers should be, and I am interested in making it more costly.  Before I abandon that interest, I will attempt to create a method that doesn't make using BC more of a hassle, but rather less.

Perhaps the theft could be turned into an opportunity for new BC users.  If the mechanism that makes theft less attractive allows the victim to reward anyone willing to help, then people might view this more as an opportunity rather than a hassle.

[istar]

Specifically I take issue with this:

I think the user should also be able to set a threshold so that any transactions from the blacklisted address that are under that threshold would be ignored.

What user would want to use a client that could ignore that their own wallet has Bitcoin in it? Why would we want the network to essentially *destroy* coin in the first place? It just doesn't make sense.

Also, Bitcoin works very hard to return us back to the "buyer-beware" type system of handling financial transactions, any departure from this system returns us closer to a "lobby-owned" currency, whereby small groups control what is and is not currency, and ensure that others don't ever have enough of it. Long live the Blockchain.

Ahh - my bad.  Poorly explained.  Allow me a rewrite:
I think the user should also be able to set a threshold so that any transactions from the blacklisted address that are under that threshold would be handled as if they came from a good address (I made this change in the OP with strikeout too).

The second part of what you said gets more to the point that I think Stephen made.  When I subtract out the misuderstanding I introduced, this objection still has a tiny bit of relevance, but theft is theft no matter how careful buyers should be, and I am interested in making it more costly.  Before I abandon that interest, I will attempt to create a method that doesn't make using BC more of a hassle, but rather less.

Perhaps the theft could be turned into an opportunity for new BC users.  If the mechanism that makes theft less attractive allows the victim to reward anyone willing to help, then people might view this more as an opportunity rather than a hassle.

We are going to see these kind of systems sooner or later.
Bitcoin however can not be froozen. (Or well I think there was a discussion in which some miners could freeze coins?)
But its not as easy to freeze.

The only problem with such a system is that it can be abused. You need to be sure that the theft was really a theft and not just someone who claimed that some adress with coins belonged to them and in that way decrease the value of another holders assets.

So first you need verified adresses.

I think we will see three kinds of markets, black market, grey and white.
Most Bitcoiners love the anonymity Bitcoin can provide, so do not expect lots of coiners to like this idea though.

Ofcourse I think its inevitable in the long run and the thing that will make sure that Bitcoins are legal.

[Gabi]

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.

+1

[Realpra]

Not a good idea.

Makes BTC way more complicated to use and worse it gives miners a huge incentive to f*ck us all:

1. Mined coins (and transactions?) are always "pure".
2. Miners hold such coins.
3. Miners are today huge pools that the average user have little control over.
4. Miners simply need to declare a bunch of coins tainted and suddenly THEY hold significantly more proportionally.

Also a thief would ALWAYS get to spend his BTC as he would always be the FIRST to know about his crime, people like ME would get stuck holding the bag!

[dscotese]

Not a good idea.

Makes BTC way more complicated to use and worse it gives miners a huge incentive to f*ck us all:

1. Mined coins (and transactions?) are always "pure".
2. Miners hold such coins.
3. Miners are today huge pools that the average user have little control over.
4. Miners simply need to declare a bunch of coins tainted and suddenly THEY hold significantly more proportionally.

Why would you bother accepting the claim of a miner who you recognized could f*ck us all?  You would control your own blacklist.  Perhaps you feel there are too many sheep using bitcoin?

Also a thief would ALWAYS get to spend his BTC as he would always be the FIRST to know about his crime, people like ME would get stuck holding the bag!

Several bitcoin users could find out who the thief is if they knew that they were paid from one of his addresses.  We're ignoring that knowledge.  It sounds like most people replying to this thread want to keep ignoring it.  I don't, so I guess I should build the tool and then offer it to anyone else who wants it.  You might still end up holding the bag, but perhaps my efforts will inspire the victims (bitcoinica, MtGox, etc.) to offer you a reward.  Yes, I agree it's disruptive, but it's not like I'm building a nuclear weapon.

[DeathAndTaxes]

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 will throw my +1 behind this.  I will go so far as to taint innocent users, offer coin melting services, drop tainted coins into transaction fees (and thus propagate them to thousands of innocent miners).

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

[dscotese]

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.

Would you consider a proposal that involved no taint to be like it?

Would you consider a proposal that does nothing to prevent theft but reduces the benefits to the thief (without taint) to be like it?

I'm trying to develop a sense of the philosophy behind BC that you hold.

It's nice that you guys back up Stephen's post.  I suppose that by proposing something that alarms you, I get the cold shoulder?  I'm hoping you just quoted his reply before you got to my questions...  but I've seen lots of +1s for Stephen and no answers.  I still have hope.

[hazek]

Take the hint already.

[DeathAndTaxes]

It's nice that you guys back up Stephen's post.  I suppose that by proposing something that alarms you, I get the cold shoulder?  I'm hoping you just quoted his reply before you got to my questions...  but I've seen lots of +1s for Stephen and no answers.  I still have hope.

I read you questions and clarifications a they are nonsensical.

Saying you will develop a system which doesn't involve "taint" is splitting hairs.  Are you blacklisting coins based on their indirect origin?  Then it is taint.  Giving it a new name won't change anything.

Saying you will develop a system which makes Bitcoin "easier" is just hypocritical.  All coins are worth 1BTC.  That is easy.  Any other system is less easy.  Less fungible, less useful, and thus produces less value.

[Stephen Gornick]

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.

Would you consider a proposal that involved no taint to be like it?

I'm not sure what you are describing so can't answer that.

Would you consider a proposal that does nothing to prevent theft but reduces the benefits to the thief (without taint) to be like it?

I'm trying to develop a sense of the philosophy behind BC that you hold.

Here's a proposal that would be acceptable.  Let's say Bitcoinica claims coins are stolen.  I trust Bitcoinica was honest in that claim.  The very first spend from the thief happens to be with me, in exchange for, oh ..., say Liberty Reserve.  I stiff the thief by not sending the Liberty Reserve, but I forward to an escrow the bitcoins I received until Bitcoinica and the thief work things out.

That's acceptable.  I will take any heat I receive as a result.

It is possible the person I am trading with was not actually the thief though.  Perhaps that party I am dealing with exchanged cash with the thief and got the private key in exchange.  That would be stupid to do and I would argue that the reason for transacting in that manner was more likely than not an effort to launder the stolen money to me [edit: transact in a deceptive manner with me].  And that wouldn't be acceptable to me.

Also possible is that in my hypothetical scenario, Bitcoinica wasn't actually defrauded.  That's why I'ld send funds to an escrow so that further details could be brought into the light.

That's the philosophy I hold.

[Update: I probably didn't win any brownie points with that response.  But I did mean to qualify that as something I'ld find acceptable to do only on 100% (not 99.99999%, but 100%) pure coins that were claimed to have been stolen.]

[sunnankar]

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

Ding, ding, ding. This is why von Mises was so right.

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.

Gold and silver are the primary forms of sound money and a major element is their unalienableness. BitCoin ..... is a little more complex but the argument could be made it is sound money. Gold or silver do not care who the 'owner', 'possessor', etc. are because all of those questions are artificial constructs forming The Matrix.

BitCoin, even more so than gold or silver in absence of a compromised network, is perhaps the most unalienable commodity and least able to be imposed upon by restraints on alienation.

[hazek]

sunnankar: It's spelled Bitcoin and bitcoins.

[Littleshop]

I think what bitcoin's honest users need is not a system of following taint but a system of following and ensuring reputation.  Something better then btc-otc ratings or following users on this board. 

What I would propose is a site with both proof of stake, proof of past transactions and proof of digital identity.  Basically it would be btc-otc ratings on steroids. 

[bulanula]

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.

+1

tainted coins are bull. if this happens i will only use USD instead - at least those are hard to counterfeit