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The us needs to release and update a list of criminal bitcoin accounts. Any bitcoin coming from these accounts should be poisonous and any account ever receivin

by hajile 6y ago

The us needs to release and update a list of criminal bitcoin accounts. Any bitcoin coming from these accounts should be poisonous and any account ever receiving coins tracked back to that account should be fined plus repay the bitcoin value (receiving stolen property). The scammers can hide, but their bitcoin money can be tracked forever and interacting with the real world in significant sums requires giving up anonymity. It seems very easy for wallets to access a database and alert their user that they're about to purchase tainted bitcoins.

seppel 6y ago
How to destroy bitcoin is two easy steps.
- hajile 6y ago
  That ledger is already public. Every government in the world is guaranteed to track users. The illusion of anonymity is dangerous. If bitcoin dies because it's only used by thieves, extortionists, and cartels, then it deserves to die. I don't think the majority of transactions are of that sort though.
  - luckylion 6y ago
    > That ledger is already public. Every government in the world is guaranteed to track users. The illusion of anonymity is dangerous. That's not the point. Any bitcoin coming from these accounts should be poisonous and any account ever receiving coins tracked back to that account should be fined plus repay the bitcoin value (receiving stolen property). is what would destroy bitcoin.
GuB-42 6y ago
So I can just buy one "poisoned" bitcoin and send a tiny fraction of it to every public address I can find. Now the entire network is poisoned. Criminals use a variety of money laundering techniques, such as "tumblers": big buckets where you put in both legitimate and illegal transactions and get back an unidentifiable mix of both. But I'm sure a lot more cleverness is happening.
- hajile 6y ago
  Sure you can, but there are two points worth mentioning. The network could and should be built to adapt to such potential attacks. Spamming transactions (essentially a ddos attack) should be banned anyway. Accidental receipt of stolen goods isn't a crime if you immediately turn them over to the police. People could forward all those coins over to a law enforcement account and receive no penalties while the sender would lose money without gaining anything. This too could be automated.
- dgrin91 6y ago
  This is actually not such a big problem. Bitcoin's accounting methodology uses something called UTXOs (unspent transaction outputs). It gets complex fast, but short version is that if you send me some bad bitcoins, I can separate the good bitcoins from the bad. The problem you mention comes up in the other direction - I am a money launderer and I have some bad BTCs. I can use the UTXO system to mix it with good BTCs I control, creating questionable BTCS. This is is why there was recently news of bitcoin mixers being fined: https://cointelegraph.com/news/us-financial-watchdog-fines-early-bitcoin-mixer-60m-for-money-laundering https://cointelegraph.com/news/us-financial-watchdog-fines-e...
- cesarb 6y ago
  > So I can just buy one "poisoned" bitcoin and send a tiny fraction of it to every public address I can find. Now the entire network is poisoned. Only if these tiny fractions are actually used. When you send something to a Bitcoin address, what you are actually doing is creating an unspent transaction output which can only be spent by that Bitcoin address. Nothing prevents the wallet software from ignoring that tiny fraction and instead using a larger unspent transaction output to the same address, which would result in a smaller transaction (one input instead of two, since the tiny fraction most probably wouldn't be enough for the transaction).
gruez 6y ago
My reply to this, from an earlier thread: https://news.ycombinator.com/item?id=24847579 https://news.ycombinator.com/item?id=24847579 edit: fix wrong link
dgrin91 6y ago
The US already does this. Its called OFAC (Office of Foreign Assets Control) and they maintain a list of bitcoin (and other) addresses linked to malicious activity. They are the ones actually doing the work to lock down bank accounts when you hear 'US sanctions 5 people from country X', but this bitcoin stuff is a natural fit for them. I think they mainly focus on terrorist and state sponsored stuff, but at least in principle its there.
- hajile 6y ago
  I didn't google, but I thought they monitored and prevented banks from interacting, but not everybody in general. There needs to be widespread buy-in from many countries at a granular level for it to be particularly successful. Otherwise bitcoin makes it too easy to turn day-trading into laundering.
  - dgrin91 6y ago
    Correct, OFAC only works for people who abide by it (mostly banks). But how do you get your idea working? The whole point of bitcoin and crypto is that its decentralized. Even if governments bought in, they cant stop individuals
    - hajile 6y ago
      Bitcoin is digital, but the stuff bought with bitcoin is not. This "analog hole" is trackable. Sooner or later, someone is going to want to convert bitcoin into some other currency or buy something from a business. Businesses are required to reveal things like bitcoin on their taxes. I'd wager that a large amount of traffic is easily trackable based on cellular data. Imagine you try to buy something and are greeted with "The US government has forbidden access to your account due to it containing bitcoin involved in criminal activity. Go to blah.gov to see what you can do to unfreeze your account and try again". You go there and find out you have to turn over X bitcoin to unfreeze your account and maybe get a recommendation to get a wallet app that can alert you before you get bad bitcoin. After just one time, most people will move to something that makes sure it never happens again which will trickle down into bitcoin to bitcoin transfers too and stop these illegal transfers in their tracks. Extorters will move to other means of payment which will either be easy to track (physical payment or traditional money transfer) or some super-volatile coin where they're very unlikely to get a meaningful payout.

by hajile 6y ago

seppel 6y ago

How to destroy bitcoin is two easy steps.

hajile 6y ago
That ledger is already public. Every government in the world is guaranteed to track users. The illusion of anonymity is dangerous. If bitcoin dies because it's only used by thieves, extortionists, and cartels, then it deserves to die. I don't think the majority of transactions are of that sort though.
- luckylion 6y ago
  > That ledger is already public. Every government in the world is guaranteed to track users. The illusion of anonymity is dangerous. That's not the point. Any bitcoin coming from these accounts should be poisonous and any account ever receiving coins tracked back to that account should be fined plus repay the bitcoin value (receiving stolen property). is what would destroy bitcoin.

GuB-42 6y ago

So I can just buy one "poisoned" bitcoin and send a tiny fraction of it to every public address I can find. Now the entire network is poisoned. Criminals use a variety of money laundering techniques, such as "tumblers": big buckets where you put in both legitimate and illegal transactions and get back an unidentifiable mix of both. But I'm sure a lot more cleverness is happening.

hajile 6y ago
Sure you can, but there are two points worth mentioning. The network could and should be built to adapt to such potential attacks. Spamming transactions (essentially a ddos attack) should be banned anyway. Accidental receipt of stolen goods isn't a crime if you immediately turn them over to the police. People could forward all those coins over to a law enforcement account and receive no penalties while the sender would lose money without gaining anything. This too could be automated.
dgrin91 6y ago
This is actually not such a big problem. Bitcoin's accounting methodology uses something called UTXOs (unspent transaction outputs). It gets complex fast, but short version is that if you send me some bad bitcoins, I can separate the good bitcoins from the bad. The problem you mention comes up in the other direction - I am a money launderer and I have some bad BTCs. I can use the UTXO system to mix it with good BTCs I control, creating questionable BTCS. This is is why there was recently news of bitcoin mixers being fined: https://cointelegraph.com/news/us-financial-watchdog-fines-early-bitcoin-mixer-60m-for-money-laundering https://cointelegraph.com/news/us-financial-watchdog-fines-e...
cesarb 6y ago
> So I can just buy one "poisoned" bitcoin and send a tiny fraction of it to every public address I can find. Now the entire network is poisoned. Only if these tiny fractions are actually used. When you send something to a Bitcoin address, what you are actually doing is creating an unspent transaction output which can only be spent by that Bitcoin address. Nothing prevents the wallet software from ignoring that tiny fraction and instead using a larger unspent transaction output to the same address, which would result in a smaller transaction (one input instead of two, since the tiny fraction most probably wouldn't be enough for the transaction).

gruez 6y ago

My reply to this, from an earlier thread: https://news.ycombinator.com/item?id=24847579 https://news.ycombinator.com/item?id=24847579 edit: fix wrong link

dgrin91 6y ago

The US already does this. Its called OFAC (Office of Foreign Assets Control) and they maintain a list of bitcoin (and other) addresses linked to malicious activity. They are the ones actually doing the work to lock down bank accounts when you hear 'US sanctions 5 people from country X', but this bitcoin stuff is a natural fit for them. I think they mainly focus on terrorist and state sponsored stuff, but at least in principle its there.

hajile 6y ago
I didn't google, but I thought they monitored and prevented banks from interacting, but not everybody in general. There needs to be widespread buy-in from many countries at a granular level for it to be particularly successful. Otherwise bitcoin makes it too easy to turn day-trading into laundering.
- dgrin91 6y ago
  Correct, OFAC only works for people who abide by it (mostly banks). But how do you get your idea working? The whole point of bitcoin and crypto is that its decentralized. Even if governments bought in, they cant stop individuals
  - hajile 6y ago
    Bitcoin is digital, but the stuff bought with bitcoin is not. This "analog hole" is trackable. Sooner or later, someone is going to want to convert bitcoin into some other currency or buy something from a business. Businesses are required to reveal things like bitcoin on their taxes. I'd wager that a large amount of traffic is easily trackable based on cellular data. Imagine you try to buy something and are greeted with "The US government has forbidden access to your account due to it containing bitcoin involved in criminal activity. Go to blah.gov to see what you can do to unfreeze your account and try again". You go there and find out you have to turn over X bitcoin to unfreeze your account and maybe get a recommendation to get a wallet app that can alert you before you get bad bitcoin. After just one time, most people will move to something that makes sure it never happens again which will trickle down into bitcoin to bitcoin transfers too and stop these illegal transfers in their tracks. Extorters will move to other means of payment which will either be easy to track (physical payment or traditional money transfer) or some super-volatile coin where they're very unlikely to get a meaningful payout.