Mike Hearn





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LegendaryActivity: 1526Merit: 1008 Decentralised crime fighting using private set intersection protocols March 23, 2013, 10:04:50 PM #1 Introduction



One of most commonly raised issues with Bitcoin is that of crime and punishment. Over the past 40 years our societies have, through both fair means and foul, built an integrated anti-money laundering system that attempts to let governments trace the proceeds of crime.



Trying to fight crime through chasing money flows is an intuitively attractive proposition - much crime is motivated by profit, so it stands to reason that if you could somehow make it hard to use the profits of crime, youd reduce all kinds of unrelated crimes simultaneously. Killing N birds with one stone, so to speak.



Evidence that existing AML approaches are worth the cost is limited - governments seem to rarely study the topic and when they do, findings that it isnt working very well are simply used to justify making the system ever more pervasive and extreme (e.g. lower reporting thresholds).



However, crime (or fear of crime) is a very common concern amongst citizens and politicians are highly responsive to that, and therefore also highly responsible to requests from law enforcement. The worst case scenario is for Bitcoin vs fiat to be presented as a choice between either freedom or the rule of law because most people would prefer to have both, but given a binary choice we know that many will actually choose the latter over the former. The approach of the USA post 9/11 being a good example.



Can we have our cake and eat it? By that I mean, can we build an approach to fighting crime through finance which is Bitcoin-ish, that is:



Decentralized

Open

Democratic (or market based, take your pick)

Private

Effective at raising the bar for criminals

Potentially acceptable to lots of people with a wide range of political views, so it can be positioned as a credible alternative to just banning Bitcoin or imposing untenable AML requirements on its users?

I think the answer is yes, and we can do it by combining tainting with private set intersection protocols.



Note that the definition of crime is not what you might expect and I will go into that later.



Overview



PSI protocols allow a client in posession of a set to intersect its set with that of the server, such that the client doesnt learn whats in the servers set (beyond the elements that intersect), and the server doesnt learn whats in the clients set at all (not even the intersection). PSI can be implemented using garbled circuits. Huang, Evans and Katz showed that with optimization generic MPC can either beat or match custom protocols but with greater genericity in their paper Private Set Intersection: Are Garbled Circuits Better than Custom Protocols?:



http://rt.cs.virginia.edu/~evans/pubs/ndss2012/psi.pdf



Let us imagine that in the market there is an arbitrary number of what Ill call blacklist providers. Some may be operated by governments, others may be operated by communities that self police (for instance, the Bitcoin Police group here on this forum). To give an extreme example, the Silk Road might operate one themselves for the purposes of handling scammers. Blacklist providers maintain sets of outputs that are blacklisted or tainted in some way, for instance because the owner reported them stolen or because its believed they are owned by some criminal enterprise.



End users have wallet apps that subscribe to zero or more blacklists. The users themselves choose which blacklists to use. On receiving a payment they proceed to trace backwards recursively adding outputs to their client set. The depth to trace is discussed later. Once that set is calculated they do a private set intersection with their chosen blacklist providers.



If a transaction is flagged this way, what to do is up to the end user. They could report it. They could not report it but refuse to deal with the counter-party. They could ignore it. If the counterparty is trusted, they could be asked where they got the money from and the process of walking backwards through the graph of real people or entities can begin to try and identify the culprit.



The privacy provided by these protocols is important in two ways:



End user privacy: the provider of the blacklists doesnt know what is in the users output set, nor when theres a hit. This prevents blacklist providers trying to engage in global surveillance. It also means that providers cannot easily mandate any kind of action when a flagged transaction is found, because they do not even know when it occurs.

Server privacy: the blacklist themselves can be secret, encouraging usage. In many cases victims of theft dont want to announce to the world that they were hacked or scammed, this scheme means only the blacklist operator needs to know of their predicament. It also means outputs can be tainted or blacklisted without the target necessarily finding out - even if the blacklist is open access and not restricted to particular parties, theyd have to be constantly checking it and repeat queries could be identified and blocked by simply requiring an anonymous account (or passport/fidelity-bond).

Definition of crime



One issue with trying to fight crime in an international, decentralized financial network is the fact that theres no one definition of what bad behaviour is. Most obviously, different jursidictions have different laws. Less obviously, the laws of a country may not accurately reflect the feelings of its citizens, e.g. in oppressive regimes or when large numbers of ordinary people end up criminalized (war on drugs, etc).



Fortunately, a list-of-blacklists approach automatically solves this problem for us. If each blacklist represents a particular class of behaviour and nobody except the user knows when there a hit on the blacklist, then the difficulty of tracing a guilty party increases dramatically with each hop in the chain of trades which does not result in blocking/reporting.



Lets make this concrete. On this forum there are lots of libertarians. The libertarian philosophy emphasizes private property rights (theft is bad), and individual freedom (you should be able to get high if you want to). In a highly libertarian society, whilst some entity may serve a blacklist of outputs involved in the drugs trade many people may choose not to check it - or alternatively, to check it and then ignore the outcomes. Even if the government runs that blacklist theres no way to know when there was a hit.



Alternatively, some private institution may run a blacklist that deals only with theft - if money is stolen via hacking then the outputs can be added to the blacklist set so people who believe theft is bad (ie, nearly everyone) and that the provider is trustworthy can check against it. Note that theres no automatic punishment of these transactions here, so theres no concern with people maliciously reporting their own legitimate payments as theft all that would happen is when the legitimate receiver tries to respend the coins and is questioned/reported/flagged they would show evidence that the payment was real (like, a signed payment request) and the malicious party would be ignored by the blacklist provider in future.



In this way, investigation of crime can be decentralized, both allowing far more huge and effective scale than existing AML whilst simultaneously allowing people to exercise their own judgement over what is bad. The fewer people that are checking a particular blacklist, the more effort is required to recursively ask people where did you get this money from? and therefore the likelyhood of prosecution drops in line with societies collective lack of interest.



How deep to trace



One obvious problem is that if the taint depth is fixed, then any bad guy can just generate a tree of transactions deeper than that and know they wont ever be flagged. The depth can be specified in terms of time rather than tree depth, but this is also an arbitrary magic number that can be gamed - for many crimes waiting a while may not be a big deal.



One possibility is to use whitelists for tracing. Lets call a hub of economic activity like an exchange, popular merchant or even tax collector a nexus. Nexuses can serve private sets of outputs that they have themselves checked against blacklists. Therefore you can keep tracing until you find a hit against one of the whitelists, at which point you dont need to go any further - you know that part of the tree is clean. If you're a nexus you then add those outputs to your own private set. Eventually the outputs can be dropped according to some specific formula determined by the cost of the nexuses resources.



If the recursive exploration gets too large without hitting a nexus, that is itself a sign that the transaction may be suspicious, but its a signal thats hard to game because in most cases the counterparty wont know what the depth profile of your average transaction looks like.



Resource consumption and full-set attacks



PSI protocols can be implemented using generic multi-party computation but it was previously assumed that this would be too slow, and special protocols had to be designed. The previously linked paper dispels this notion with measurements of real implementations and shows that with sufficiently smart optimization, generic MPC with Yaos garbled circuits can match or beat the best known specific protocols. Note that the paper also contains a nice overview of how garbled circuits work if you arent familiar with the topic.



The UTXO set size is currently 4M. Even with a 32 bit set size (4 billion possible outputs in the blacklist), according to their results it is possible to run the multi-party computation in around 10 seconds. Admittedly that is with a LAN and desktop computers, not smartphones and WANs. However there have been more optimizations since and real-world demonstration of intersection of sets from large universes such as contact lists that run on Android phones, so by the time anyone actually implements this scheme its very likely to be feasible due to better algorithms and hardware.



One advantage to using generic garbled circuits is that you can easily add auditing on top to prevent a client attempting to upload, for example, the entire UTXO set and thus stripping server privacy. The size of the set to intersect can be limited to some reasonably small value and accounts/passports/fidelity bonds used to prevent or block scraping attacks in which someone tries to enumerate the entire set by submitting lots of queries.



Government attacks



It should be obvious that this scheme is not intended to resist a maximally coercive government. Bitcoin itself cannot work inside a totalitarian police state because a currency must be widely accepted to be useful, and thus people must publicly advertise that they accept it. An unconstrained government can just fine, jail or kill anyone who advertises that they accept Bitcoin.



Instead this scheme is designed to be an acceptable proposal to existing western governments that are somewhat democratic. It balances the desire to fight crime with the need for privacy and blocking abuse by the state. In practice, all democracies recognize this balance is important and (try to) constrain what the police can do.



One failure mode is that governments may try to mandate police produced superblacklists that merge things the user cares about stopping with things the user doesnt - given a match, its impossible to know what the reason for blacklisting was, and given the requirement for everyone to use it, auditing compliance is fairly easy using sting operations.



There isnt any good solution to this beyond the people demanding that the blacklists be fine grained (i.e. one for drug offences, one for theft, one for corruption, etc). Its hard to argue against such a setup because it only adds information to the system: having undifferentiated blacklists is tantamount to admitting that some laws dont enjoy wide support but you want to enforce them anyway. Its a position thats trivially reduced to I dont believe in democracy, which is a difficult position for a politician to hold over the long run.



One of most commonly raised issues with Bitcoin is that of crime and punishment. Over the past 40 years our societies have, through both fair means and foul, built an integrated anti-money laundering system that attempts to let governments trace the proceeds of crime.Trying to fight crime through chasing money flows is an intuitively attractive proposition - much crime is motivated by profit, so it stands to reason that if you could somehow make it hard to use the profits of crime, youd reduce all kinds of unrelated crimes simultaneously. Killing N birds with one stone, so to speak.Evidence that existing AML approaches are worth the cost is limited - governments seem to rarely study the topic and when they do, findings that it isnt working very well are simply used to justify making the system ever more pervasive and extreme (e.g. lower reporting thresholds).However, crime (or fear of crime) is a very common concern amongst citizens and politicians are highly responsive to that, and therefore also highly responsible to requests from law enforcement. The worst case scenario is for Bitcoin vs fiat to be presented as a choice between either freedom or the rule of law because most people would prefer to have both, but given a binary choice we know that many will actually choose the latter over the former. The approach of the USA post 9/11 being a good example.Can we have our cake and eat it? By that I mean, can we build an approach to fighting crime through finance which is Bitcoin-ish, that is:I think the answer is yes, and we can do it by combining tainting with private set intersection protocols.Note that the definition of crime is not what you might expect and I will go into that later.PSI protocols allow a client in posession of a set to intersect its set with that of the server, such that the client doesnt learn whats in the servers set (beyond the elements that intersect), and the server doesnt learn whats in the clients set at all (not even the intersection). PSI can be implemented using garbled circuits. Huang, Evans and Katz showed that with optimization generic MPC can either beat or match custom protocols but with greater genericity in their paper Private Set Intersection: Are Garbled Circuits Better than Custom Protocols?:Let us imagine that in the market there is an arbitrary number of what Ill call blacklist providers. Some may be operated by governments, others may be operated by communities that self police (for instance, the Bitcoin Police group here on this forum). To give an extreme example, the Silk Road might operate one themselves for the purposes of handling scammers. Blacklist providers maintain sets of outputs that are blacklisted or tainted in some way, for instance because the owner reported them stolen or because its believed they are owned by some criminal enterprise.End users have wallet apps that subscribe to zero or more blacklists. The users themselves choose which blacklists to use. On receiving a payment they proceed to trace backwards recursively adding outputs to their client set. The depth to trace is discussed later. Once that set is calculated they do a private set intersection with their chosen blacklist providers.If a transaction is flagged this way, what to do is up to the end user. They could report it. They could not report it but refuse to deal with the counter-party. They could ignore it. If the counterparty is trusted, they could be asked where they got the money from and the process of walking backwards through the graph of real people or entities can begin to try and identify the culprit.The privacy provided by these protocols is important in two ways:One issue with trying to fight crime in an international, decentralized financial network is the fact that theres no one definition of what bad behaviour is. Most obviously, different jursidictions have different laws. Less obviously, the laws of a country may not accurately reflect the feelings of its citizens, e.g. in oppressive regimes or when large numbers of ordinary people end up criminalized (war on drugs, etc).Fortunately, a list-of-blacklists approach automatically solves this problem for us. If each blacklist represents a particular class of behaviour and nobody except the user knows when there a hit on the blacklist, then the difficulty of tracing a guilty party increases dramatically with each hop in the chain of trades which does not result in blocking/reporting.Lets make this concrete. On this forum there are lots of libertarians. The libertarian philosophy emphasizes private property rights (theft is bad), and individual freedom (you should be able to get high if you want to). In a highly libertarian society, whilst some entity may serve a blacklist of outputs involved in the drugs trade many people may choose not to check it - or alternatively, to check it and then ignore the outcomes. Even if the government runs that blacklist theres no way to know when there was a hit.Alternatively, some private institution may run a blacklist that deals only with theft - if money is stolen via hacking then the outputs can be added to the blacklist set so people who believe theft is bad (ie, nearly everyone) and that the provider is trustworthy can check against it. Note that theres no automatic punishment of these transactions here, so theres no concern with people maliciously reporting their own legitimate payments as theft all that would happen is when the legitimate receiver tries to respend the coins and is questioned/reported/flagged they would show evidence that the payment was real (like, a signed payment request) and the malicious party would be ignored by the blacklist provider in future.In this way, investigation of crime can be decentralized, both allowing far more huge and effective scale than existing AML whilst simultaneously allowing people to exercise their own judgement over what is bad. The fewer people that are checking a particular blacklist, the more effort is required to recursively ask people where did you get this money from? and therefore the likelyhood of prosecution drops in line with societies collective lack of interest.One obvious problem is that if the taint depth is fixed, then any bad guy can just generate a tree of transactions deeper than that and know they wont ever be flagged. The depth can be specified in terms of time rather than tree depth, but this is also an arbitrary magic number that can be gamed - for many crimes waiting a while may not be a big deal.One possibility is to use whitelists for tracing. Lets call a hub of economic activity like an exchange, popular merchant or even tax collector a nexus. Nexuses can serve private sets of outputs that they have themselves checked against blacklists. Therefore you can keep tracing until you find a hit against one of the whitelists, at which point you dont need to go any further - you know that part of the tree is clean. If you're a nexus you then add those outputs to your own private set. Eventually the outputs can be dropped according to some specific formula determined by the cost of the nexuses resources.If the recursive exploration gets too large without hitting a nexus, that is itself a sign that the transaction may be suspicious, but its a signal thats hard to game because in most cases the counterparty wont know what the depth profile of your average transaction looks like.PSI protocols can be implemented using generic multi-party computation but it was previously assumed that this would be too slow, and special protocols had to be designed. The previously linked paper dispels this notion with measurements of real implementations and shows that with sufficiently smart optimization, generic MPC with Yaos garbled circuits can match or beat the best known specific protocols. Note that the paper also contains a nice overview of how garbled circuits work if you arent familiar with the topic.The UTXO set size is currently 4M. Even with a 32 bit set size (4 billion possible outputs in the blacklist), according to their results it is possible to run the multi-party computation in around 10 seconds. Admittedly that is with a LAN and desktop computers, not smartphones and WANs. However there have been more optimizations since and real-world demonstration of intersection of sets from large universes such as contact lists that run on Android phones, so by the time anyone actually implements this scheme its very likely to be feasible due to better algorithms and hardware.One advantage to using generic garbled circuits is that you can easily add auditing on top to prevent a client attempting to upload, for example, the entire UTXO set and thus stripping server privacy. The size of the set to intersect can be limited to some reasonably small value and accounts/passports/fidelity bonds used to prevent or block scraping attacks in which someone tries to enumerate the entire set by submitting lots of queries.It should be obvious that this scheme is not intended to resist a maximally coercive government. Bitcoin itself cannot work inside a totalitarian police state because a currency must be widely accepted to be useful, and thus people must publicly advertise that they accept it. An unconstrained government can just fine, jail or kill anyone who advertises that they accept Bitcoin.Instead this scheme is designed to be an acceptable proposal to existing western governments that are somewhat democratic. It balances the desire to fight crime with the need for privacy and blocking abuse by the state. In practice, all democracies recognize this balance is important and (try to) constrain what the police can do.One failure mode is that governments may try to mandate police produced superblacklists that merge things the user cares about stopping with things the user doesnt - given a match, its impossible to know what the reason for blacklisting was, and given the requirement for everyone to use it, auditing compliance is fairly easy using sting operations.There isnt any good solution to this beyond the people demanding that the blacklists be fine grained (i.e. one for drug offences, one for theft, one for corruption, etc). Its hard to argue against such a setup because it only adds information to the system: having undifferentiated blacklists is tantamount to admitting that some laws dont enjoy wide support but you want to enforce them anyway. Its a position thats trivially reduced to I dont believe in democracy, which is a difficult position for a politician to hold over the long run.

Zeilap



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Full MemberActivity: 154Merit: 100 Re: Decentralised crime fighting using private set intersection protocols March 23, 2013, 11:00:12 PM #2 )



Suppose someone obtains some coins through a drug deal, and I don't care about that, so I happily accept his drug money for some other service. When I later try to spend that drug money, a large number of people refuse to accept, so I'm forced to use clean money for that transaction. This essentially means that the drug money is unspendable, and hence worthless, or simply worth less than clean money. I decide I'm not making that mistake again, so even though it's against my political principles, I refuse to accept drug money in future. I'm now one more person who has cut off anyone using drug money.



Combine the above with the fact that the majority of people don't want any trouble at all - even when completely innocent, and so will choose not to accept money on any of the blacklists run by governments, and you end up with a situation where your money is worth the most if it's not on any of the blacklists.



People in general are lazy, stupid and only willing to fight for their political beliefs when they personally are being persecuted, so I think the idea that we'll have some happy equilibrium representing what the majority believe in will not happen.

The problem I see is that users will converge on a set of blacklists whether they agree with the reason for blacklisting or not. Here's how (so you can explain what I've missedSuppose someone obtains some coins through a drug deal, and I don't care about that, so I happily accept his drug money for some other service. When I later try to spend that drug money, a large number of people refuse to accept, so I'm forced to use clean money for that transaction. This essentially means that the drug money is unspendable, and hence worthless, or simply worth less than clean money. I decide I'm not making that mistake again, so even though it's against my political principles, I refuse to accept drug money in future. I'm now one more person who has cut off anyone using drug money.Combine the above with the fact that the majority of people don't want any trouble at all - even when completely innocent, and so will choose not to accept money on any of the blacklists run by governments, and you end up with a situation where your money is worth the most if it's not on any of the blacklists.People in general are lazy, stupid and only willing to fight for their political beliefs when they personally are being persecuted, so I think the idea that we'll have some happy equilibrium representing what the majority believe in will not happen.

Mike Hearn





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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 23, 2013, 11:03:56 PM #3 Quote Suppose someone obtains some coins through a drug deal, and I don't care about that, so I happily accept his drug money for some other service. When I later try to spend that drug money, a large number of people refuse to accept, so I'm forced to use clean money for that transaction. This essentially means that the drug money is unspendable, and hence worthless, or simply worth less than clean money.

If the only people who think that crime is acceptable are you and the drug dealer, then yes, you're hosed. But then you should be hosed because the group consensus is that this behaviour is very bad and should be stopped.



For something like selling some weed, probably you can find other people who don't care. The money isn't quite as convenient as regular money and that would be reflected in, perhaps, you charging a higher cost to accept blacklisted coins (that is another action you can take beyond reporting, refusing or ignoring). But ultimately by the time it hits someone who does care, you might be three or four hops along in the trading chain and then the cost to the police to recursively figure out who got the money from who (and get warrants, etc) is so high that it's not worth it anymore and they move on to fry bigger fish.



Your example might be more applicable to crimes with a much stronger group consensus, like trading hard-core child porn. If the only people who think that crime is acceptable are you and the drug dealer, then yes, you're hosed. But then yoube hosed because the group consensus is that this behaviour is very bad and should be stopped.For something like selling some weed, probably you can find other people who don't care. The money isn't quite as convenient as regular money and that would be reflected in, perhaps, you charging a higher cost to accept blacklisted coins (that is another action you can take beyond reporting, refusing or ignoring). But ultimately by the time it hits someone whocare, you might be three or four hops along in the trading chain and then the cost to the police to recursively figure out who got the money from who (and get warrants, etc) is so high that it's not worth it anymore and they move on to fry bigger fish.Your example might be more applicable to crimes with a much stronger group consensus, like trading hard-core child porn.

Mike Hearn





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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 12:16:47 AM #5 I don't know of any other proposals to use PSI protocols for crime fighting, but the general idea of taint has been around for a while. And yes this post is written and researched by me. I try and find ways extensions to Bitcoin could impact on society, in particular, to solve common objections to the concept of crypto-currency.

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Full MemberActivity: 196Merit: 100 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 01:06:10 AM #7 do you hear the words coming out of your mouth??? taint the blockchain...are you fucking nuts? letting people get to pick and choose who can or cant use their money? ummm..cause we dont like you? I think this goes against the whole principle of btc.



" Even if the government runs that blacklist" ...wow.







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Hero MemberActivity: 897Merit: 1007advocate of a cryptographic attack on the globe Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 03:15:30 AM #9 Quote from: zif33rs on March 24, 2013, 01:06:10 AM do you hear the words coming out of your mouth??? taint the blockchain...are you fucking nuts? letting people get to pick and choose who can or cant use their money? ummm..cause we dont like you? I think this goes against the whole principle of btc.



" Even if the government runs that blacklist" ...wow.









These technologies should be anticipated and discussed because if feasible it is likely they will be built eventually. He did not suggest adding this to the protocol itself. It would be an additional service provided on top of Bitcoin. The technical considerations are interesting ones and this is worth discussing even if one disagrees for political reasons. These technologies should be anticipated and discussed because if feasible it is likely they will be built eventually. He did not suggest adding this to the protocol itself. It would be an additional service provided on top of Bitcoin. The technical considerations are interesting ones and this is worth discussing even if one disagrees for political reasons. "The difference between a castle and a prison is only a question of who holds the keys."

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Hero MemberActivity: 812Merit: 1000 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 03:21:45 AM #10 Quote from: Largo on March 24, 2013, 12:32:09 AM



Or maybe you should quit working on bitcoin, makes me sad to hear something like this from a bitcoin dev



Maybe we should also add RFID chips to paper money and keep databases of 'bad paper notes' so criminals can only trade between themself so their money isnt worth as much as 'clean money' anymore.Or maybe you should quit working on bitcoin, makes me sad to hear something like this from a bitcoin dev



The proposed my Mike technology is potentially making Bitcoin less perfect currency because it is an attack on one important property which is necessary for money. I refer here to fungibility



It will anyway be countered by more advanced mixers and in the end will not be effective and will only increase amount of dust in the blockchain.







The proposed my Mike technology is potentially making Bitcoin less perfect currency because it is an attack on one important property which is necessary for money. I refer here to fungibility http://en.wikipedia.org/wiki/Fungibility It will anyway be countered by more advanced mixers and in the end will not be effective and will only increase amount of dust in the blockchain. -

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Full MemberActivity: 196Merit: 100 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 03:53:53 AM #12 Look...I am neither young nor dumb enough to not realize that there WILL be regulations...and I am for the rule of Law. Criminals just plain suck. At least career criminals do in my mind. Everyone makes mistakes tho. What happens to those people? Added to a blacklist...for...say a DUI. Now that persons coin is not worth as much because they are a credit risk? That being said I dont think whitelists and blacklists will sell very well to the masses anyway. Who is to say what is put on such lists and by whom? Some as yet to be named central authority? Yes...these concepts do need to be discussed. I fear something like this would lead to stratification and classification of individuals.



I am still trying to wrap my head around the whole bitcoin concept to be completely honest...I have this feeling that it will be the catalyst for a brighter future for mankind and I am humbled and honored to be a witness.

Let's not fuck it up.



zif

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aka snapsunnyLegendaryActivity: 1078Merit: 1003 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 04:13:37 AM #13 Who do we appoint to operate said blacklists? And how do we enforce them? If nobody cared about setting their clients up to reject flagged coins, it wouldn't matter. It would have to be enforced by law for it to catch on, as the vast minority which chooses a couple of flags will find it very troubling when Jack wants to send Sally some coins but Sally can't accept his money when it's tainted by a flag passed down by 20 people who don't care for flagged coins. So Sally would either have to turn her flags off temporarily to trade with her good friend Jack, or tell Jack off.



Now lets say blacklist operators are privately owned (which they cannot be, for nobody will pay for this service, so they will have to be subsidized) Privately owned blacklist operator owner Sandy agrees that if you slip her a small fee, she'll scrub your coins off (by deleting their flags) Now you have clean coins, ready to make a drug purchase all over again. Uh oh! Time to invoke a law: coin scrubbing is now illegal. The blacklist operators continue to decline as their non-businesses conduct non-business, and the general public continues to pay for them to perform a service of figuring out which coins need flags and why. By the time any court can figure out what theft has officially happened (or any crime involving the coin, really) the coins could be passed down several, several times, either to mules, or actual people. So the guy holding the tainted coin attempts to pass it down, but the next guy has all his flags checked, not because he gives two bits about crime, but because he doesn't want someone else's tainted coin that is now completely worthless. Ensue a downward spiral of money being rendered useless and people finding it harder and harder to conduct business as they realize they're holding onto hot money.



Now let's assume half of a society has their flags on, and are not accepting tainted coin. This creates a subculture, the same one we've always had, which is perfectly a-okay in trading their tainted coin for criminal goods. We can now call these coins blackcoins: the coins which are blacklisted. It's like black market credit, at that point. Unless people are forced to refuse flagged coins, they won't, or won't always. You still have a system for people to commit criminal acts, and as long as a large portion of the population is okay with using the blacklisted coins as tender, they will continue to be used. At least until Sandy lowers her prices.



A system such as this will go against everything Bitcoin is designed for: privacy, and freedom. Privacy and freedom mean, however you feel about crime, that it is private, and free. It cannot be used as a tool to fight crime and remain completely functional. Assigning a system such as this to Bitcoin would be the same effect as banning guns; the coin isn't committing any crimes, and should not be held suspect. If Sally wants to buy headphones from Jack, she shouldn't have to worry if her money was suspected of being used to hire a hitman several years prior. Doll over a few years, and all 21 million eventually become tainted--do they reset the flags? And if they do, why bother with the system? It's an inconvenience, and will hinder trade in the hopes of moral correctness. Digital Painting, Illustration, Character Art

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Hero MemberActivity: 836Merit: 1000bits of proof Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 06:07:29 AM #14 Quote from: Mike Hearn on March 24, 2013, 12:16:47 AM I don't know of any other proposals to use PSI protocols for crime fighting, but the general idea of taint has been around for a while. And yes this post is written and researched by me. I try and find ways extensions to Bitcoin could impact on society, in particular, to solve common objections to the concept of crypto-currency.

Thank you Mike! You addressed a very valid obstacle to adaption and present danger to our investment. We have to show the way otherwise we will be shown and possibly wont like it.



Since block chain traversing algorithms are not feasible on an SPV or a server trusting client, this flagging might be service(s) that customer could consult. Mining pools might also differentiate themselves by mining "clean" blocks according to their definition of purity. Thank you Mike! You addressed a very valid obstacle to adaption and present danger to our investment. We have to show the way otherwise we will be shown and possibly wont like it.Since block chain traversing algorithms are not feasible on an SPV or a server trusting client, this flagging might be service(s) that customer could consult. Mining pools might also differentiate themselves by mining "clean" blocks according to their definition of purity.

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Hero MemberActivity: 728Merit: 500 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 08:36:50 AM #15 How do you separate good and bad and what levels of tainted coins is acceptable? Why wouldn't someone just go collect some very tainted coins, and then dust a many good addresses.



Problem really is that once you have transaction the coins are yours. And if client's flag it the receiving address is also bad. Tough luck if you didn't use fresh one... I just see too many problems and issues...



Tracking the stuff is all fine, but not-accepting them is hard and destructive...

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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 09:51:53 AM #16



Who is appointed to run the blacklists? Nobody in particular. That's the point. It is or can be a form of community self policing. Silk Road could run a blacklist. The police could run a blacklist. In the eyes of the system they'd be equals. Who pays for them? Depends on the kind of issue we're talking about, right? Any time you have a community that wants some kind of self-policing, there could be such a thing. I doubt it'd be expensive to run. If you want some kind of ultra-libertarian completely privatised police force you could use assurance contracts to pay for them.

Nobody in particular. That's the point. It is or can be a form of community self policing. Silk Road could run a blacklist. The police could run a blacklist. In the eyes of the system they'd be equals. Who pays for them? Depends on the kind of issue we're talking about, right? Any time you have a community that wants some kind of self-policing, there could be such a thing. I doubt it'd be expensive to run. If you want some kind of ultra-libertarian completely privatised police force you could use assurance contracts to pay for them. How do we enforce them? We don't. It's up to the users to decide what to do when a transaction is flagged. Rejection is not necessary, you can as well just accept the coins and then inform someone else who can follow up/investigate. If you think the whole system is bullshit, then just don't check any lists or ignore any flaggings if you do. Problem solved.

We don't. It's up to the users to decide what to do when a transaction is flagged. Rejection is not necessary, you can as well just accept the coins and then inform someone else who can follow up/investigate. If you think the whole system is bullshit, then just don't check any lists or ignore any flaggings if you do. Problem solved. What if everyone ends up with tainted coins? Taint can be removed because when it passes through the hands of a nexus that is known to take some kind of useful action on a blacklist hit, they can add their own outputs to the whitelist and the graph traversal stops there. Eg, if somebody steals coins and sends them to Mt. Gox, then Mt. Gox can go ahead and file a police report and then add their own outputs to their nexus whitelist. Wallets stop searching at that point because you trust Mt. Gox to "clear the taint". So it isn't possible for taint to last forever (you'd eventually have to stop searching due to resource usage anyway, even if you don't hit a nexus).

Taint can be removed because when it passes through the hands of a nexus that is known to take some kind of useful action on a blacklist hit, they can add their own outputs to the whitelist and the graph traversal stops there. Eg, if somebody steals coins and sends them to Mt. Gox, then Mt. Gox can go ahead and file a police report and then add their own outputs to their nexus whitelist. Wallets stop searching at that point because you trust Mt. Gox to "clear the taint". So it isn't possible for taint to last forever (you'd eventually have to stop searching due to resource usage anyway, even if you don't hit a nexus). How can this be used against the innocent? If a blacklist routinely ends up including outputs that are not associated with any kind of real criminal activity (as judged by the person/entity checking it), then it'd make sense to just stop using it. Remember, this is a community based solution. Nobody has the power to centrally stop or block transactions. If your salary ends up on a blacklist intended for identifying money used in the child porn trade, and you're innocent, then you should be able to make a loud noise through the press, etc, and people would realize that this list is being abused. So they'd stop checking it.

Vladimir says, people would just use coin mixing and the system wouldn't work. Yes, indeed, tx graph obfuscation breaks such an approach. At least if they don't take each other into account. It'd be up to the user community to trade those things off. For instance, you could engage in a mix but only accept old coins that don't appear in any of your blacklists.



But there's something to consider - we all benefit from a stable society that isn't overrun by murderers and thieves. If you're deliberately impeding legitimate investigations into real crimes, whether it be by the police or otherwise, you're really just undermining the source of your own wealth. I think most people would understand that.



Here's an example. Let's say there's a blacklist called the emergency response list. It's used only in the most serious and time critical cases. The operator is the police and they ask subscribers to inform them immediately on encountering a hit. Bob the executive comes home from work early one day and discovers his girlfriend in bed with another guy. Enraged, he grabs a hammer and smashes both their skulls in. Realising what he's done he goes on the run. The girlfriends mother comes round an hour later and discovers the crime scene. She phones 911 and says that her daughter is dead along with another man, and Bob has disappeared.



The police ask the mother who Bob's employer is, and they then phone up the employer and ask them for the output set used to pay Bob's last salary. Those outputs are added to the emergency response list. Bob goes into a gas station and tries to refill his getaway car, when he pays the shopkeepers terminal flags the transaction. Bob still gets his gas but once he's out the door, the shopkeeper phones up the police and reports the guys location.



What about someone else who Bob paid money to? Their coins are also tainted. They're in a fashionable chain of restaurants and when they try to pay the bill, their transaction is flagged too! The restaurant owner also calls the police and describes the guy at the table, the response is "ah nope, that's not him", the bill is paid and the guy goes on his way - moderately inconvenienced for a few minutes, but not hopelessly so. What's more, because the restaurant chain is big, well known, and has policies for what blacklists they check and what they do, they are a nexus. When the chain pays its waiters at the end of the day it puts the salary outputs onto its own whitelist and then when the waiter spends his money, nothing is flagged. There are a few misconceptions in the comments, maybe not everyone fully understood what I was getting at.Vladimir says, people would just use coin mixing and the system wouldn't work. Yes, indeed, tx graph obfuscation breaks such an approach. At least if they don't take each other into account. It'd be up to the user community to trade those things off. For instance, you could engage in a mix but only accept old coins that don't appear in any of your blacklists.But there's something to consider - we all benefit from a stable society that isn't overrun by murderers and thieves. If you're deliberately impeding legitimate investigations into real crimes, whether it be by the police or otherwise, you're really just undermining the source of your own wealth. I think most people would understand that.Here's an example. Let's say there's a blacklist called the emergency response list. It's used only in the most serious and time critical cases. The operator is the police and they ask subscribers to inform them immediately on encountering a hit. Bob the executive comes home from work early one day and discovers his girlfriend in bed with another guy. Enraged, he grabs a hammer and smashes both their skulls in. Realising what he's done he goes on the run. The girlfriends mother comes round an hour later and discovers the crime scene. She phones 911 and says that her daughter is dead along with another man, and Bob has disappeared.The police ask the mother who Bob's employer is, and they then phone up the employer and ask them for the output set used to pay Bob's last salary. Those outputs are added to the emergency response list. Bob goes into a gas station and tries to refill his getaway car, when he pays the shopkeepers terminal flags the transaction. Bob still gets his gas but once he's out the door, the shopkeeper phones up the police and reports the guys location.What about someone else who Bob paid money to? Their coins are also tainted. They're in a fashionable chain of restaurants and when they try to pay the bill, their transaction is flagged too! The restaurant owner also calls the police and describes the guy at the table, the response is "ah nope, that's not him", the bill is paid and the guy goes on his way - moderately inconvenienced for a few minutes, but not hopelessly so. What's more, because the restaurant chain is big, well known, and has policies for what blacklists they check and what they do, they are a nexus. When the chain pays its waiters at the end of the day it puts the salary outputs onto its own whitelist and then when the waiter spends his money, nothing is flagged.

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Hero MemberActivity: 812Merit: 1000 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 10:05:32 AM

Last edit: March 24, 2013, 10:29:24 AM by Vladimir #17 Mike, this is not black and white. And I do not think any side of the argument has a clearly winning argument. Yes your scenario is understandable and "Bob the Murderer" is a bad guy and cops shall go after him and apprehend him etc... Nobody wants to save his behind. But now replace "Bob the murderer" by "Bob the Human Rights activist" who pissed off "Mallory the Drone herder" and in similar scenario Bob is being taken out together with the gas station and its owner by a drone.



I personally would prefer if some aspects of society such as money remained neutral and cops instead of spying on everyone would just do their job without unlimited Orwellian powers.



But again this is political and philosophical issue. Technically your proposal is sound and even in spirit of Bitcoin decentralization. If such solution is available it is up to the society to figure out how to use it and how to not.





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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 11:11:53 AM #19 Yes. The assumption is that if Bob is really a human rights activist, then he either won't get blacklisted (because that kind of nonsense would result in people quickly abandoning the list), or he'll be able to persuade whoever he trades with not to report him. That lack of central control is key.



I don't know if it's really worth trying to implement such a scheme but whether we like it or not, Bitcoin is born into a world run by people who strongly believe in "follow the money" as a crime fighting technique. And if the people with an agenda are able to scare the other people into thinking Bitcoin means unstoppable crime waves then it's going to end up banned, simple as that. And then you won't be able to use it either.



That's why it's important to have credible proposals that meet-in-the-middle with acceptable compromises for everyone.

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LegendaryActivity: 1106Merit: 1045 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 11:55:37 AM

Last edit: March 24, 2013, 12:51:13 PM by retep #22 Quote from: Carlton Banks on March 24, 2013, 11:21:30 AM "A pack of wolves and a flock of sheep voting on what's for dinner" is the phrase that immediately springs to mind. You forget how easily these systems are exploited, and assume that ordinary human beings are clinically rational automatons.



Mike has been advocating for removing the blocksize limit, which even he thinks can lead to there being only a few hundred, and as little as a dozen, validating nodes handling Bitcoin. Implement blacklists on that tiny number of validating nodes and you now have Bitcoin under central control, and opposing that control will be extremely expensive to downright impossible.



Not to mention how with small blocksizes the lack of privacy inherent in Bitcoin - every transaction goes on the public blockchain after all - puts you on an equal footing with big businesses and governments in monitoring and auditing the actions of other Bitcoin users. On the other hand, with large blocks you can't afford the computer equipment required to run a validating node, and thus while you have no ability to to monitor the network and follow the movement of funds but they do.



EDIT: s/will lead/can lead/



Quote from: malevolent on March 24, 2013, 11:31:24 AM Quote from: psy on March 24, 2013, 10:26:07 AM

Now Mike Hearn with this post.



Can I say these 2 dudes are now officially creeping me out without you guys calling me paranoid?

First Jeff Garzik says to the WSJ: "We want to work with authorities".Now Mike Hearn with this post.Can I say these 2 dudes are now officially creeping me out without you guys calling me paranoid?

This is sad. ''He who sacrifices freedom for security deserves neither''



I wouldn't be surprised if Bitcoin was to be forked, with some people continuing to use normal Bitcoin and some following Mke's steps in using its castrated counterpart, preferably with in-built tools aiding the State in controlling its minions' monies.

This is sad. ''He who sacrifices freedom for security deserves neither''I wouldn't be surprised if Bitcoin was to be forked, with some people continuing to use normal Bitcoin and some following Mke's steps in using its castrated counterpart, preferably with in-built tools aiding the State in controlling its minions' monies.

Well removing the blocksize limit is a fork, and more to that, it's not a technical "bug-fix" fork like is happening on May 15th - it will radically change what Bitcoin is.



re: Jeff Garzik, I can't speak for him, but personally I would be happy making a similar statement myself. But there is a big difference between working with authorities and educating them about how Bitcoin works and what the vulnerabilities are and introducing brand new vulnerabilities into the system itself. Mike has been advocating for removing the blocksize limit, which even he thinks can lead to there being only a few hundred, and as little as a dozen, validating nodes handling Bitcoin. Implement blacklists on that tiny number of validating nodes and you now have Bitcoin under central control, and opposing that control will be extremely expensive to downright impossible.Not to mention how with small blocksizes the lack of privacy inherent in Bitcoin - every transaction goes on the public blockchain after all - puts you on an equal footing with big businesses and governments in monitoring and auditing the actions of other Bitcoin users. On the other hand, with large blocks you can't afford the computer equipment required to run a validating node, and thus while you have no ability to to monitor the network and follow the movement of funds but they do.EDIT: s/will lead/can lead/Well removing the blocksize limit is a fork, and more to that, it's not a technical "bug-fix" fork like is happening on May 15th - it will radically change what Bitcoin is.re: Jeff Garzik, I can't speak for him, but personally I would be happy making a similar statement myself. But there is a big difference between working with authorities and educating them about how Bitcoin works and what the vulnerabilities are and introducing brand new vulnerabilities into the system itself. BTC: 1FCYd7j4CThTMzts78rh6iQJLBRGPW9fWv PGP: 7FAB114267E4FA04

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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 12:18:40 PM #24 retep, please don't put words in my mouth. I have never said I think there will be a few hundred or a dozen validating nodes, where did you get that from? Nobody knows how many there will end up being, but on a global scale I'd expect hundreds of thousands if not more.



Regardless, the entire point of this proposal is it is not state control. It's a system based on majority consensus, just like Bitcoin. malevolent clearly hasn't read what I wrote because there's no fork of Bitcoin needed. Checking blacklists is an optional extra layer on top.



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LegendaryActivity: 2842Merit: 2273 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 01:28:09 PM #26 Quote from: Mike Hearn on March 24, 2013, 12:18:40 PM

Regardless, the entire point of this proposal is it is not state control. It's a system based on majority consensus, just like Bitcoin.



No Mike, it's nesting an undefined number of majority consensus systems within Bitcoin, and these will be based on the moral judgements of potentially pernicious actors. The whole point of Bitcoin is to de-politicise money, and you're attempting to argue for an overlay that explicitly politicises transaction acceptance. Continue with this, and you will end up arguing in favour of a different protocol to the one that users want. Majority consensus does not make for a good solution to every problem, hence voting rights being rescinded from the mentally deranged. No Mike, it's nesting an undefined number of majority consensus systems within Bitcoin, and these will be based on the moral judgements of potentially pernicious actors. The whole point of Bitcoin is to de-politicise money, and you're attempting to argue for an overlay that explicitly politicises transaction acceptance. Continue with this, and you will end up arguing in favour of a different protocol to the one that users want. Majority consensus does not make for a good solution to every problem, hence voting rights being rescinded from the mentally deranged. Vires in numeris

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LegendaryActivity: 1316Merit: 1005 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 02:05:19 PM #28 Quote from: Mike Hearn on March 24, 2013, 11:11:53 AM That's why it's important to have credible proposals that meet-in-the-middle with acceptable compromises for everyone.



This is a trend toward mediocrity, diluting what's good about the system. It's as bad as gold derivatives.



So long as none of this enters the protocol itself, it may be very difficult to gain widespread usage of such blacklists - or hard to act upon. May it remain disused and ignored for as long as possible. This is a trend toward mediocrity, diluting what's good about the system. It's as bad as gold derivatives.So long as none of this enters the protocol itself, it may be very difficult to gain widespread usage of such blacklists - or hard to act upon. May it remain disused and ignored for as long as possible.

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Hero MemberActivity: 888Merit: 1000 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 02:28:38 PM #29 What about someone else who Bob paid money to? Their coins are also tainted. They're in a fashionable chain of restaurants and when they try to pay the bill, their transaction is flagged too! The restaurant owner also calls the police and describes the guy at the table, the response is "ah nope, that's not him", the bill is paid and the guy goes on his way - moderately inconvenienced for a few minutes, but not hopelessly so. What's more, because the restaurant chain is big, well known, and has policies for what blacklists they check and what they do, they are a nexus. When the chain pays its waiters at the end of the day it puts the salary outputs onto its own whitelist and then when the waiter spends his money, nothing is flagged.



Is that all that would happen? Wow. People calling the cops on me cause someone gave me tainted coins and I used them.



I do not like this idea





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Full MemberActivity: 150Merit: 100Thank you! Thank you! ... Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 02:39:22 PM #30



https://bitcointalk.org/index.php?topic=85433.0



Following these principles merely serves to destroy the important property of Fungibility which all currencies should have. Any attempts to move in this direction should continue to be rejected for this reason alone. This concept has been discussed at length before and vigorously rejected:Following these principles merely serves to destroy the important property of Fungibility which all currencies should have. Any attempts to move in this direction should continue to be rejected for this reason alone.

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MemberActivity: 113Merit: 10 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 03:12:15 PM #32 Mike, this is vigilantism at it's utter worst. It would drive people away from Bitcoin faster than you can say, "we're taking 10% for all accounts over 100k Euros and 6% for all accounts under 100k Euros", noone can ever be certain the coins they currently hold will be accepted under a system like this. It also completely ruins the fungibility of Bitcoins that makes it such a good form of money.



We have courts and agencies in each country to deal with crimes committed on sovereign soil, this is their problem, not the Bitcoin network's. No person should EVER have to prove their innocence in order to spend their money. To think that it is the network's moral responsibility to ostracise payments based on an arbitrary and nebulous consensus is manifestly absurd. This kind of dangerous interference subverts due process in the country where the crime is being committed and would completely undermine the trust people have in the value of Bitcoin as a store of value.



Since when did we get the right to assign ourselves the position of multinational and morally righteous financial police?

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Full MemberActivity: 196Merit: 100Another block in the wall Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 04:34:09 PM #37 Lets see....



Mike wants Bitcoin to be more appealing to mass adoption by giving Governments options.



But isn't that pointless since Cryto-currency is open-source?



How can this be implemented on all alt-coins to fight AML? In Cryptography we trust.

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LegendaryActivity: 1708Merit: 1005nmc:id/phelix Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 05:22:05 PM #38 Quote from: Zeilap on March 23, 2013, 11:00:12 PM converge on a set of blacklists whether they agree with the reason for blacklisting or not. Here's how (so you can explain what I've missed )



Suppose someone obtains some coins through a drug deal, and I don't care about that, so I happily accept his drug money for some other service. When I later try to spend that drug money, a large number of people refuse to accept, so I'm forced to use clean money for that transaction. This essentially means that the drug money is unspendable, and hence worthless, or simply worth less than clean money. I decide I'm not making that mistake again, so even though it's against my political principles, I refuse to accept drug money in future. I'm now one more person who has cut off anyone using drug money.



Combine the above with the fact that the majority of people don't want any trouble at all - even when completely innocent, and so will choose not to accept money on any of the blacklists run by governments, and you end up with a situation where your money is worth the most if it's not on any of the blacklists.



People in general are lazy, stupid and only willing to fight for their political beliefs when they personally are being persecuted, so I think the idea that we'll have some happy equilibrium representing what the majority believe in will not happen.



The problem I see is that users willon a set of blacklists whether they agree with the reason for blacklisting or not. Here's how (so you can explain what I've missedSuppose someone obtains some coins through a drug deal, and I don't care about that, so I happily accept his drug money for some other service. When I later try to spend that drug money, a large number of people refuse to accept, so I'm forced to use clean money for that transaction. This essentially means that the drug money is unspendable, and hence worthless, or simply worth less than clean money. I decide I'm not making that mistake again, so even though it's against my political principles, I refuse to accept drug money in future. I'm now one more person who has cut off anyone using drug money.Combine the above with the fact that the majority of people don't want any trouble at all - even when completely innocent, and so will choose not to accept money on any of the blacklists run by governments, and you end up with a situation where your money is worth the most if it's not on any of the blacklists.People in general are lazy, stupid and only willing to fight for their political beliefs when they personally are being persecuted, so I think the idea that we'll have some happy equilibrium representing what the majority believe in will not happen.

No, it would not converge. Should something like this ever reach a critical mass it will grow like cancer. The cleaner the coins the better so everybody tries to subscribe to as many lists as possible and goes down as many levels as possible.



This is a very bad idea.



Should it ever take foot there will soon be a new system to replace Bitcoin that is more anonymous and immune to this kind of control. No, it would not converge. Should something like this ever reach a critical mass it will grow like cancer. The cleaner the coins the better so everybody tries to subscribe to as many lists as possible and goes down as many levels as possible.This is a very bad idea.Should it ever take foot there will soon be a new system to replace Bitcoin that is more anonymous and immune to this kind of control. blockchained.com ■ bitcointalk top posts ■ bitcointalk top posts

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Sr. MemberActivity: 461Merit: 250 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 05:40:18 PM #39 I'm curious about how people here would react if it became clear that a government ban on Bitcoin was being considered for the reasons Mike mentioned, and your political action wasn't likely to change this outcome. Would you be willing to compromise and participate in such a self-policing proposal? Would you thumb your nose at the authorities, and let them ban it? Or would you perhaps go along with this for Bitcoin, but while participating in an underground fork (which avoids the chaos of transactions being valid on both chains somehow) whose focus was on extreme technical countermeasures to censorship and surveillance? Or some other option?

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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 06:05:12 PM #41 Quote from: wareen on March 24, 2013, 03:42:18 PM Think about it this way: would you argue that it is justified to require all Internet communication to be personalized and enforcing crime blacklists at the TCP level?



This already happens. What do you think SpamHaus is? That's right - a community run IP blacklist.



Spam RBLs are a good example of what I'm talking about. They were created because in most parts of the world spamming is either not a crime, or not an enforced one, but the internet community needed to beat spammers or have email become completely worthless. So you started getting private blacklist operators and email servers check some subset of these blacklists.



Did some of the fears expressed on this thread become true? A little bit. Yes, spam RBLs reduced the "fungibility" of IP space because you might request some IPs and then discover they were already abused by their previous owners, so now not all IPs are created equal. SpamHaus and friends do sometimes blacklist people who are "innocent" or at least walking the line.



But at the same time, a lot of the more paranoid concerns never came true. Blacklists that were too aggressive and included too many innocent parties DID end up getting a poor reputation and being abandoned (I've seen this happen). Governments never seized control of the RBLs to censor email, even though they could have. Getting IP addresses didn't turn into a nightmare of endless blacklist checking. People did not abandon email en masse and it did not become a centralized system.



More importantly, because the internet community came up with its own solutions for fighting spam there wasn't much justification for governments stepping in and coming up with their own ideas, which would have been a disaster. If that'd happened you could pretty much expect an AML type solution for online communication, in which running an email server required licensing, ID verification of users, etc. Urgh.



Quote This will lead to everyone applying the most restrictive blacklists with the fastest and least false negative prone approval process possible before accepting any payment.

They're incentivised in other direction by actually receiving money, right?



I think a lot of people have missed that one of the available actions is just to report a flagged transaction but carry on with it anyway. That way you get the money, the other guy gets to spend it, but there's some paper trail should somebody want to follow up. This is how AML actually works today anyway, banks don't have to reject suspicious transactions, they just report them.



Quote Just have a look at how much debate there is over the scammer label in this forum and how time consuming these debates are. Do you really think each and every merchant will take the time to listen to your life story before accepting your payment? Who is going to pay for that time and effort? Also this merchant will have to convince their supplier as well to take the money, etc.

That's not how it works. Let's say this forum operates a scammer blacklist and you and your money end up in it. OK, now when you try and spend that money, the other guy sees a message saying the money came from a scam. Firstly, that's probably a good thing - they're now informed whereas previously they weren't. Maybe they know your story and don't think the tag was deserved so they just go ahead and accept the transaction. Maybe they don't and decide they don't want to deal with scammer, OK, that's what the blacklist is for.



If they re-spend the money, it'll get reflagged again to the next guy. Maybe he doesn't know the underlying story and doesn't care, he just doesn't want any hassle so he refuses the payment.



You aren't hosed. You can "clean" those coins via a nexus. In other words, you take your probable-proceeds-of-scamming money and send it to a nexus who then goes ahead and takes some reasonable action, like recording who you are so if an investigation takes place in future there's some kind of trail to follow. Then they mark those outputs as clean in their whitelist and send them back to you. Now you can spend them without problem because the next guys wallet walks backwards, sees that the coins passed through a nexus and thus that it's all sorted.



Quote There is some hidden agenda, isn't it?

Forum posts hardly count as a hidden agenda



By the way, for those frothing at the mouth about "censorship", that's something which is done by the state. Private individuals cannot censor each other. They can only decide whether to trade or not to trade.



Quote from: d'aniel I'm curious about how people here would react if it became clear that a government ban on Bitcoin was being considered for the reasons Mike mentioned, and your political action wasn't likely to change this outcome. Would you be willing to compromise and participate in such a self-policing proposal? Would you thumb your nose at the authorities, and let them ban it? Or would you perhaps go along with this for Bitcoin, but while participating in an underground fork (which avoids the chaos of transactions being valid on both chains somehow) whose focus was on extreme technical countermeasures to censorship and surveillance? Or some other option?

As usual d'aniel nails it.



Way too many posters here seem to have a naive belief that Bitcoin is indestructable. Governments cannot do anything against it because ...... peer to peer!!!1!



But that isn't true. It is completely trivial for a government to squash Bitcoin out of existence with the stroke of a pen. All they have to do is say, of course you can accept and use coins! We just need you to take a few small measures to help us fight the terrorists. You can start by filling out this 100 page form, and registering with your local regulator. By the way, they will charge a fee of several thousand dollars to consider your application. After a few months they will evaluate your risk to the system and decide on the level of surety bond required, normally half a million dollars will do. Don't forget to do this in every state where you might have a counterparty!



An outlaw currency is not even useful to outlaws. So that would be the end of Bitcoin.



The absolute best way to bring this scenario about is to engage in a dick-waving contest with the police. How many politicians got elected by promising to be soft on crime? Zero. It never happens. So if the police go to your local representatives and say, "it feels like half of our investigations come to a dead end because the scammers are using Bitcoin" suddenly the idea of just regulating it out of existence will seem like an awfully good one to the decision makers, especially if 90% of the electorate just hasn't heard about Bitcoin or doesn't care yet.



That's why it's important for Bitcoin users to recognise that one day we might be asked, "what's your solution?" and an answer of "we don't have one" will result in regulation. And no amount of bitching or posting cute quotes from historical figures will change it. This already happens. What do you think SpamHaus is? That's right - a community run IP blacklist.Spam RBLs are a good example of what I'm talking about. They were created because in most parts of the world spamming is either not a crime, or not an enforced one, but the internet community needed to beat spammers or have email become completely worthless. So you started getting private blacklist operators and email servers check some subset of these blacklists.Did some of the fears expressed on this thread become true? A little bit. Yes, spam RBLs reduced the "fungibility" of IP space because you might request some IPs and then discover they were already abused by their previous owners, so now not all IPs are created equal. SpamHaus and friends do sometimes blacklist people who are "innocent" or at least walking the line.But at the same time, a lot of the more paranoid concerns never came true. Blacklists that were too aggressive and included too many innocent parties DID end up getting a poor reputation and being abandoned (I've seen this happen). Governments never seized control of the RBLs to censor email, even though they could have. Getting IP addresses didn't turn into a nightmare of endless blacklist checking. People did not abandon email en masse and it did not become a centralized system.More importantly, because the internet community came up with its own solutions for fighting spam there wasn't much justification for governments stepping in and coming up with their own ideas, which would have been a disaster. If that'd happened you could pretty much expect an AML type solution for online communication, in which running an email server required licensing, ID verification of users, etc. Urgh.They're incentivised in other direction by actually receiving money, right?I think a lot of people have missed that one of the available actions is just to report a flagged transaction but carry on with it anyway. That way you get the money, the other guy gets to spend it, but there's some paper trail should somebody want to follow up. This is how AML actually works today anyway, banks don't have to reject suspicious transactions, they just report them.That's not how it works. Let's say this forum operates a scammer blacklist and you and your money end up in it. OK, now when you try and spend that money, the other guy sees a message saying the money came from a scam. Firstly, that's probably a good thing - they're now informed whereas previously they weren't. Maybe they know your story and don't think the tag was deserved so they just go ahead and accept the transaction. Maybe they don't and decide they don't want to deal with scammer, OK, that's what the blacklist is for.If they re-spend the money, it'll get reflagged again to the next guy. Maybe he doesn't know the underlying story and doesn't care, he just doesn't want any hassle so he refuses the payment.You aren't hosed. You can "clean" those coins via a nexus. In other words, you take your probable-proceeds-of-scamming money and send it to a nexus who then goes ahead and takes some reasonable action, like recording who you are so if an investigation takes place in future there's some kind of trail to follow. Then they mark those outputs as clean in their whitelist and send them back to you. Now you can spend them without problem because the next guys wallet walks backwards, sees that the coins passed through a nexus and thus that it's all sorted.Forum posts hardly count as a hidden agendaBy the way, for those frothing at the mouth about "censorship", that's something which is done by the state. Private individuals cannot censor each other. They can only decide whether to trade or not to trade.As usual d'aniel nails it.Way too many posters here seem to have a naive belief that Bitcoin is indestructable. Governments cannot do anything against it because ...... peer to peer!!!1!But that isn't true. It is completely trivial for a government to squash Bitcoin out of existence with the stroke of a pen. All they have to do is say, of course you can accept and use coins! We just need you to take a few small measures to help us fight the terrorists. You can start by filling out this 100 page form, and registering with your local regulator. By the way, they will charge a fee of several thousand dollars to consider your application. After a few months they will evaluate your risk to the system and decide on the level of surety bond required, normally half a million dollars will do. Don't forget to do this in every state where you might have a counterparty!An outlaw currency is not even useful to outlaws. So that would be the end of Bitcoin.The absolute best way to bring this scenario about is to engage in a dick-waving contest with the police. How many politicians got elected by promising to be soft on crime? Zero. It never happens. So if the police go to your local representatives and say, "it feels like half of our investigations come to a dead end because the scammers are using Bitcoin" suddenly the idea of just regulating it out of existence will seem like an awfully good one to the decision makers, especially if 90% of the electorate just hasn't heard about Bitcoin or doesn't care yet.That's why it's important for Bitcoin users to recognise that one day we might be asked, "what's your solution?" and an answer of "we don't have one" will result in regulation. And no amount of bitching or posting cute quotes from historical figures will change it.

Mike Hearn





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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 06:41:42 PM #45 Yeah, so to be clear, there are no extensions or changes to Bitcoin necessary for this. So it'd never be required to use the system. It's an optional thing that people can take part in if they want to help raise the bar for criminals.



A lot of posts are of the form, "but eventually governments will mandate the use of a blacklist!". Reality check, they already do (see, the SDN list) and those blacklists apply regardless of what currency you use to trade. So you're worried about an eventuality that is already here. The system I've proposed is in every respect better than what is actually deployed by governments today - it has better respect for civil liberties, is more decentralized, etc.



Maybe one day society will give up on the idea of fighting crime through finance. I wouldn't cry about such an outcome - it's complicated and has all kinds of issues. But there is a 40+ year track record of doing so, hundreds of thousands of people who do it full time, etc. That isn't going to change overnight.









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LegendaryActivity: 1100Merit: 1000 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 06:53:31 PM #46 Quote from: Mike Hearn on March 24, 2013, 06:41:42 PM Yeah, so to be clear, there are no extensions or changes to Bitcoin necessary for this. So it'd never be required to use the system. It's an optional thing that people can take part in if they want to help raise the bar for criminals.



A lot of posts are of the form, "but eventually governments will mandate the use of a blacklist!". Reality check, they already do (see, the SDN list) and those blacklists apply regardless of what currency you use to trade. So you're worried about an eventuality that is already here. The system I've proposed is in every respect better than what is actually deployed by governments today - it has better respect for civil liberties, is more decentralized, etc.



Maybe one day society will give up on the idea of fighting crime through finance. I wouldn't cry about such an outcome - it's complicated and has all kinds of issues. But there is a 40+ year track record of doing so, hundreds of thousands of people who do it full time, etc. That isn't going to change overnight.





Mike, despite any good intentions on your part, any intent of changing any Bitcoin fundamentals will ever be seen as a betrayal by the majority of Bitcoin community. And fungibility is one of that most appreciated fundamentals. Mike, despite any good intentions on your part, any intent of changing any Bitcoin fundamentals will ever be seen as a betrayal by the majority of Bitcoin community. And fungibility is one of that most appreciated fundamentals. If you don't own the private keys, you don't own the coins.

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LegendaryActivity: 2842Merit: 2273 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 07:05:43 PM #49 And trying to appear reasonable about pursuing something that is not reasonable just makes you look even more manipulative, Mike. You will end up with "torches and pitchforks" situation, directed entirely at you, and while I don't advocate making you or anyone else into a pariah, I wouldn't be especially inclined to stand in their way either.



Drop it, or people may prefer to drop you, however useful you are to the dev team. A divisive character with divisive viewpoints is just that, and it's not good for the community or the project. Vires in numeris

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Full MemberActivity: 248Merit: 104 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 07:11:53 PM #50 Quote from: Mike Hearn on March 24, 2013, 06:41:42 PM

A lot of posts are of the form, "but eventually governments will mandate the use of a blacklist!". Reality check, they already do





Just because they do now doesn't mean it is good, or should be done this way in the future, the whole point of bitcoin is to make it decentralized, and under nobodies control. What you are suggesting will destroy bitcoin. We need to make bitcoin transactions even more anonymous instead of giving in to government control.



I have no idea how you are on the development team, you are proposing really horrible things that would make bitcoin no better than regular currencies. Just because they do now doesn't mean it is good, or should be done this way in the future, the whole point of bitcoin is to make it decentralized, and under nobodies control. What you are suggesting will destroy bitcoin. We need to make bitcoin transactions even more anonymous instead of giving in to government control.I have no idea how you are on the development team, you are proposing really horrible things that would make bitcoin no better than regular currencies.

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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 07:18:22 PM #51 Quote from: malevolent on March 24, 2013, 06:58:16 PM

You are US-centric here, half the nodes are outside the US and probably more than half of all users are outside the US. I can wipe my ass with those 100 page forms

Unfortunately most countries have similar laws. Not as extreme or bureaucratic as in the US, thank goodness. By the way, I'm a Brit who lives in Switzerland.



One reason every country has AML laws is that they're forced to through threat of sanctions That's why simply saying, hey, let's try and dismantle the system ... it's a huge risk because your chance of convincing everyone, everywhere simultaneously that they've been doing it wrong for 40 years is very low.



Quote Bitcoin can be used over TOR, not sure about I2P ...



Yes you can go fully underground. But then how do you exchange Bitcoins against the money you earn with your salary? How do you buy anything from a normal business? If your income is in Bitcoins earned via a hidden service how do you pay your rent?



Trying to build an entirely separate parallel economy that never touches the real one isn't going to work. That really would destroy Bitcoin!



Quote from: Carlton Banks And trying to appear reasonable about pursuing something that is not reasonable just makes you look even more manipulative, Mike. You will end up with "torches and pitchforks" situation, directed entirely at you, and while I don't advocate making you or anyone else into a pariah, I wouldn't be especially inclined to stand in their way either.



Yes, how dare I appear reasonable! It doesn't get worse than that! Watch as I quake in fear in front of the almighty Carlton Banks!



I think some people here need to get real - nobody gives a shit what some random anonymous forum user posts, because talk is cheap and anonymous talk is free. See, when Vladimir posts, I read carefully because he has actually stood up in the past and set up real Bitcoin businesses, under his real name where people can find him. He's made himself accountable and taken risks for the project. When d'aniel posts, I read carefully because even though I don't know who he/she is, I find his/her posts to be highly insightful.



When Carlton Banks or mik3 posts? Who cares. They do no work. They don't take any risks. Their posts contain no new insights. They have no credibility and might as well not have posted at all. Unfortunately most countries have similar laws. Not as extreme or bureaucratic as in the US, thank goodness. By the way, I'm a Brit who lives in Switzerland.One reason every country has AML laws is that they're forced to through threat of sanctionsThat's why simply saying, hey, let's try and dismantle the system ... it's a huge risk because your chance of convincing everyone, everywhere simultaneously that they've been doing it wrong for 40 years is very low.Yes you can go fully underground. But then how do you exchange Bitcoins against the money you earn with your salary? How do you buy anything from a normal business? If your income is in Bitcoins earned via a hidden service how do you pay your rent?Trying to build an entirely separate parallel economy that never touches the real one isn't going to work. That really would destroy Bitcoin!Yes, how dare I appear reasonable! It doesn't get worse than that! Watch as I quake in fear in front of the almighty Carlton Banks!I think some people here need to get real - nobody gives a shit what some random anonymous forum user posts, because talk is cheap and anonymous talk is free. See, when Vladimir posts, I read carefully because he has actually stood up in the past and set up real Bitcoin businesses, under his real name where people can find him. He's made himself accountable and taken risks for the project. When d'aniel posts, I read carefully because even though I don't know who he/she is, I find his/her posts to be highly insightful.When Carlton Banks or mik3 posts? Who cares. They do no work. They don't take any risks. Their posts contain no new insights. They have no credibility and might as well not have posted at all.

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VIPFull MemberActivity: 198Merit: 100 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 07:26:31 PM #52



I bet if we had a discussion about legalizing child pornography here because of the ultimate existence of Tor and other services, people would be much more receptive to the theory and willing to discuss it, despite how disgusting the concept would be to so many people. Why can't the logic apply here? This thread is just being hijacked by vocal anti-intellectual forum users. How many people effectively calling Mike a statist conspirator even know what game theory is and how it applies here? This idea doesn't advance the libertarian utopia you all want, but it's still worth considering because governments will eventually consider imposing these types of restrictions anyway. We should think of reasons why it can't work, or any tangential discussions which have implications for Bitcoin's acceptance. Mike clearly loves Bitcoin and isn't suggesting something which would be imposed on others.



Controversial discussions are the best discussions.



I think Mike puts too much faith in the ability of people to stop accepting a blacklist if it's being abused. Rather, the blacklists will cascade because it puts the value of your business or coins at risk in future commerce otherwise. At best, through the ability to tailor your coins to trigger the fewest blacklists in certain contexts, the entire system would be balkanized by each country.



Maybe there is a way to democratically reject a blacklist if abuse occurs, so people aren't scared of putting their coins at risk? I bet if we had a discussion about legalizing child pornography here because of the ultimate existence of Tor and other services, people would be much more receptive to the theory and, despite how disgusting the concept would be to so many people. Why can't the logic apply here? This thread is just being hijacked by vocal anti-intellectual forum users. How many people effectively calling Mike a statist conspirator even know what game theory is and how it applies here? This idea doesn't advance the libertarian utopia you all want, but it's still worth considering because governments will eventually consider imposing these types of restrictions anyway. We should think of reasons why it can't work, or any tangential discussions which have implications for Bitcoin's acceptance. Mike clearly loves Bitcoin and isn't suggesting something which would be imposed on others.Controversial discussions are the best discussions.I think Mike puts too much faith in the ability of people to stop accepting a blacklist if it's being abused. Rather, the blacklists will cascade because it puts the value of your business or coins at risk in future commerce otherwise. At best, through the ability to tailor your coins to trigger the fewest blacklists in certain contexts, the entire system would be balkanized by each country.Maybe there is a way to democraticallya blacklist if abuse occurs, so people aren't scared of putting their coins at risk? "With four parameters I can fit an elephant, and with five I can make him wiggle his trunk." John von Neumann

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Hero MemberActivity: 740Merit: 500Hello world! Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 07:37:15 PM #56 Quote from: Mike Hearn on March 24, 2013, 07:18:22 PM Yes, how dare I appear reasonable! It doesn't get worse than that! Watch as I quake in fear in front of the almighty Carlton Banks!



I think some people here need to get real - nobody gives a shit what some random anonymous forum user posts, because talk is cheap and anonymous talk is free. See, when Vladimir posts, I read carefully because he has actually stood up in the past and set up real Bitcoin businesses, under his real name where people can find him. He's made himself accountable and taken risks for the project. When d'aniel posts, I read carefully because even though I don't know who he/she is, I find his/her posts to be highly insightful.



When Carlton Banks or mik3 posts? Who cares. They do no work. They don't take any risks. Their posts contain no new insights. They have no credibility and might as well not have posted at all.



Are you really resorting to ad hominem attacks now? I think you should take a time out for a few days before you post again, for your own sakes.



Then when you have cooled down, I would be very pleased if you read my post from september 2012, where I discuss issues similar to the ones your proposal could result in:



Or maybe you will not deem me worthy of a response, seeing how I value keeping my physical persona detached from my online one? Are you really resorting to ad hominem attacks now? I think you should take a time out for a few days before you post again, for your own sakes.Then when you have cooled down, I would be very pleased if you read my post from september 2012, where I discuss issues similar to the ones your proposal could result in: https://bitcointalk.org/index.php?topic=114372.0 Or maybe you will not deem me worthy of a response, seeing how I value keeping my physical persona detached from my online one? THIS SIGNATURE IS FOR SALE/RENT

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LegendaryActivity: 1526Merit: 1008 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 07:49:55 PM #59 Quote from: eb3full on March 24, 2013, 07:26:31 PM Maybe there is a way to democratically reject a blacklist if abuse occurs, so people aren't scared of putting their coins at risk?



How is the majority just switching off a blacklist different to democratically rejecting it? It's the same thing, no?



Also, remember the whitelisting aspect. Once the coins pass through someone who you trust to have done something reasonable, the taint is gone.



Quote This really shows you the type of person you are Mike, I think the power is getting to your head. What you are saying is that a person who has done things with bitcoin has more say in it than a simple user of it.

What power?



Yes, Bitcoin is ultimately built by people who do things with it. Create businesses, sell goods and services, provide infrastructure, write software, design hardware, etc. Buying some coins and sitting on them exposes you to risk in some sense, but not of the same level as say running an exchange. The guy who runs Mt Gox has to follow rules that can result in him being jailed if anything goes wrong.



Quote Are you really resorting to ad hominem attacks now? I think you should take a time out for a few days before you post again, for your own sakes.

I'm responding to people who aren't doing or posting anything beyond, "zomg mike is an evil statist!" ... and pointing out that these posts don't carry much weight.



Dansker, I already read that thread. The concept of taint isn't new, for sure. But I think the concrete objections in that thread are addressed in this one. For instance, "what happens if coins get tainted after you already accepted them" - no problem. You could report it (to whomever), if you wanted to. Maybe someone will follow up later if it doesn't seem like too little bang for buck. Or you could do nothing, depending on your wish. If you are known to reliably take some useful action when coins get tainted then you are or could be a nexus and others can check your own whitelist, so then you'd effectively clear the taint. It isn't intended to last forever. Indeed it physically can't, the tracing process has limits even without whitelisting.



How is the majority just switching off a blacklist different to democratically rejecting it? It's the same thing, no?Also, remember the whitelisting aspect. Once the coins pass through someone who you trust to have done something reasonable, the taint is gone.What power?Yes, Bitcoin is ultimately built by people who do things with it. Create businesses, sell goods and services, provide infrastructure, write software, design hardware, etc. Buying some coins and sitting on them exposes you to risk in some sense, but not of the same level as say running an exchange. The guy who runs Mt Gox has to follow rules that can result in him being jailed if anything goes wrong.I'm responding to people who aren't doing or posting anything beyond, "zomg mike is an evil statist!" ... and pointing out that these posts don't carry much weight.Dansker, I already read that thread. The concept of taint isn't new, for sure. But I think the concrete objections in that thread are addressed in this one. For instance, "what happens if coins get tainted after you already accepted them" - no problem. You could report it (to whomever), if you wanted to. Maybe someone will follow up later if it doesn't seem like too little bang for buck. Or you could do nothing, depending on your wish. If you are known to reliably take some useful action when coins get tainted then you are or could be a nexus and others can check your own whitelist, so then you'd effectively clear the taint. It isn't intended to last forever. Indeed it physically can't, the tracing process has limits even without whitelisting.

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NewbieActivity: 37Merit: 0 Re: Decentralised crime fighting using private set intersection protocols March 24, 2013, 08:01:10 PM #64



"REALLY worries me to see one of the core developers trying to get support for making blacklists a part of Bitcoin! If Mike wants a currency with blacklists he should go back to working on Google Wallet! I support censorship free currency, not one with authorities trying to freeze my funds!" -jedironpaul



"The road to hell is paved with good intentions. He's just trying to make Bitcoin better, but I'm not sure he realises just how flawed and dumb it is.

"He who sacrifices freedom for security deserves neither".

Since time immemorial we have wrestled with what is good and bad, and legal and illegal. It's not fucking black and white like Mike seems to think. If it was we wouldn't need courts, every circumstance is different." -ferretinjapan



from:



http://www.reddit.com/r/Bitcoin/comments/1awu5j/decentral