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As a crypto-outsider I wonder what would happen if the transaction hashes of these robberies we're being flagged as robberies? Doesn't the blockchain allow for

As a crypto-outsider I wonder what would happen if the transaction hashes of these robberies we're being flagged as robberies? Doesn't the blockchain allow for tracking of any sufficient transactions and thus allow for descendants of flagged transactions to be prohibited from ever being converted into real currency again? I guess, the "leverage" in this case would be that any platform/exchange/etc. that wants to go "official" (eg. IPO, or paying capital gains taxes) will have a problem if there are flagged funds in their books. (Sorry, if this sounds ridiculously stupid for crypto guys)

walls 9y ago
Who is the 'judge' in these cases responsible for updating the blacklist? How do you verify certain coins were stolen as opposed to an angry/regretful buyer?
- bb88 9y ago
  In the real world, you'd file a police report and then tell your bank. And let the bank put a hold on the transaction. That way if it was buyer's remorse you would have committed a crime by filing a police report in the first place.
  - bdcravens 9y ago
    In the cryptocurrency world, involving a central authority really doesn't work.
    - bb88 9y ago
      Is that a bug or a feature? Edited to add: There is this idea of trust in centralized and decentralized currencies, and they're both different. In the centralized currency I can trust that if someone was ripped off there's recourse, However, in a decentralized one I cannot trust there's recourse?
      - bdcravens 9y ago
        Definitely a feature. Bitcoin is a response to centralization; decentralization is its raison d'être
        bb88 9y ago
        To me, it just seems like if a decentralized currency is the future, fraud protection might be a necessary component before people jump on board en masse. Otherwise stories like this make crypto currency look like the wild west.
      - nokcha 9y ago
        It's a fundamental architectural decision that has both advantages and disadvantages. It means that there is no single point of failure, but it also means that it's difficult or impossible for the system to remedy things such as theft.
        skybrian 9y ago
        Yes, and even the "no single point of failure" thing is overrated. For people using cryptocurrency to try to do things (as opposed to the system perpetuating itself), there are lots of risks caused by irreversibility.
      - bdcravens 9y ago
        > in a decentralized one I cannot trust there's recourse? Bingo. How you acquire, secure, and use your currency should come from the trustless nature (of course, speculation and Bitcoin as a "better Visa" has tainted perspective which is why hacks and thefts are common) That said, most physical assets have no recourse either, aside from legal recourse. Same as Bitcoin.
        bb88 9y ago
        > That said, most physical assets have no recourse either, aside from legal recourse. Same as Bitcoin. But bitcoin is electronic. And many asset transactions done electronically (credit card, checks, bank transfers) do have some form of recourse. Even with cash, one can record the serial numbers of your bills and give those to the FBI if they're stolen. In fact, it's pretty common for high end bill counters to offer this capability.
bdcravens 9y ago
In the case of major hacks, the exchanges are already doing something along this line internally; it's just not baked into the protocol.
- sneak 9y ago
  It's also ridiculously easy to DoS. I've heard stories of exchanges freezing funds that were two hops away from gambling sites. Now, buy something with a gambling withdrawal and watch exchanges freeze the merchant's account.
nokcha 9y ago
The problem is that thieves will often quickly mix the stolen coins with untainted coins. So, there will be a large number of descendants of "tainted" transactions, the majority of which are held by completely innocent people. A real-life analogy would be taking stolen gold nuggets to an unknowing goldsmith who melts them together with gold nuggets from other customers and gives back freshly minted gold pieces.
- saalweachter 9y ago
  That practice would stop immediately if there was some risk to the non-criminals/other criminals, to lose there money by mixing it, wouldn't it?
  - always_good 9y ago
    Can you pitch an example of this risk that wouldn't make the currency useless (like too risky to have anyone else hold it or arbitrate it) or ridiculous (KYC-style constraints)? What is the mechanism of punishing the tainted the money going to be and the mechanism for deciding which money is tainted?
    - saalweachter 9y ago
      Oh, there's like twelve problems with trying to implement colored coins; I'm just saying the existence of mixers isn't one of them.

walls 9y ago

Who is the 'judge' in these cases responsible for updating the blacklist? How do you verify certain coins were stolen as opposed to an angry/regretful buyer?

bb88 9y ago
In the real world, you'd file a police report and then tell your bank. And let the bank put a hold on the transaction. That way if it was buyer's remorse you would have committed a crime by filing a police report in the first place.
- bdcravens 9y ago
  In the cryptocurrency world, involving a central authority really doesn't work.
  - bb88 9y ago
    Is that a bug or a feature? Edited to add: There is this idea of trust in centralized and decentralized currencies, and they're both different. In the centralized currency I can trust that if someone was ripped off there's recourse, However, in a decentralized one I cannot trust there's recourse?
    - bdcravens 9y ago
      Definitely a feature. Bitcoin is a response to centralization; decentralization is its raison d'être
      - bb88 9y ago
        To me, it just seems like if a decentralized currency is the future, fraud protection might be a necessary component before people jump on board en masse. Otherwise stories like this make crypto currency look like the wild west.
    - nokcha 9y ago
      It's a fundamental architectural decision that has both advantages and disadvantages. It means that there is no single point of failure, but it also means that it's difficult or impossible for the system to remedy things such as theft.
      - skybrian 9y ago
        Yes, and even the "no single point of failure" thing is overrated. For people using cryptocurrency to try to do things (as opposed to the system perpetuating itself), there are lots of risks caused by irreversibility.
    - bdcravens 9y ago
      > in a decentralized one I cannot trust there's recourse? Bingo. How you acquire, secure, and use your currency should come from the trustless nature (of course, speculation and Bitcoin as a "better Visa" has tainted perspective which is why hacks and thefts are common) That said, most physical assets have no recourse either, aside from legal recourse. Same as Bitcoin.
      - bb88 9y ago
        > That said, most physical assets have no recourse either, aside from legal recourse. Same as Bitcoin. But bitcoin is electronic. And many asset transactions done electronically (credit card, checks, bank transfers) do have some form of recourse. Even with cash, one can record the serial numbers of your bills and give those to the FBI if they're stolen. In fact, it's pretty common for high end bill counters to offer this capability.

bdcravens 9y ago

In the case of major hacks, the exchanges are already doing something along this line internally; it's just not baked into the protocol.

sneak 9y ago
It's also ridiculously easy to DoS. I've heard stories of exchanges freezing funds that were two hops away from gambling sites. Now, buy something with a gambling withdrawal and watch exchanges freeze the merchant's account.

nokcha 9y ago

The problem is that thieves will often quickly mix the stolen coins with untainted coins. So, there will be a large number of descendants of "tainted" transactions, the majority of which are held by completely innocent people. A real-life analogy would be taking stolen gold nuggets to an unknowing goldsmith who melts them together with gold nuggets from other customers and gives back freshly minted gold pieces.

saalweachter 9y ago
That practice would stop immediately if there was some risk to the non-criminals/other criminals, to lose there money by mixing it, wouldn't it?
- always_good 9y ago
  Can you pitch an example of this risk that wouldn't make the currency useless (like too risky to have anyone else hold it or arbitrate it) or ridiculous (KYC-style constraints)? What is the mechanism of punishing the tainted the money going to be and the mechanism for deciding which money is tainted?
  - saalweachter 9y ago
    Oh, there's like twelve problems with trying to implement colored coins; I'm just saying the existence of mixers isn't one of them.