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Dumb question: why can’t crypto currencies and exchanges place the ransom tokens on some kind of blocklist, thereby forever tainting those coins? As I understan

Dumb question: why can’t crypto currencies and exchanges place the ransom tokens on some kind of blocklist, thereby forever tainting those coins? As I understand, the rise of “privacy wallets” has greatly increased the anonymity of such transactions. But, at the end of the day, don’t we always have a ledger of the coin ids? I’m curious how the coins actually get laundered back into cash.

theragra 5y ago
Read up on monero. Transactions in Monero are almost always untraceable.
throwkeep 5y ago
Coinbase and other exchanges do that actually, when they find that an address belongs to a hacker.
Aperocky 5y ago
Dumb question 2: How do you taint tokens when a "coin" is divided arbitrarily? As in, there are no minimum unit of a "coin"?
- chrismorgan 5y ago
  Since it’s a ledger, the coins can’t be poisoned, but you can poison the addresses (in traceable blockchains like Bitcoin, at least). At the bluntest level, refuse to transact with addresses that have received money from poisoned addresses, transitively. In practice you probably want to apply somewhat more nuanced rules, or the poison is far too likely to spread to the innocent. It could even be weaponised, by a poisoned address deliberately sending small amounts to addresses that it wishes to poison, since you can’t refuse to receive a transaction. (Incidentally also, there is a minimum unit, at least in all currencies that I know of; Bitcoin, for example, goes to eight decimal places. But yeah, each unit doesn’t have physical identity like bank notes do. Infinite divisibility is bad for efficiency as it means your data types have unbounded memory usage, so you’d need to put together a bunch of rules about how far you actually can divide things, and it’s just not worth it.)
  - Aperocky 5y ago
    > since you can’t refuse to receive a transaction. Yeah I think this break your hypothesis. Every single major account will just end up poisoned. Easily done by finding the addresses with most coins and sending them fractions of coins from tainted account. Tesla will be the first.
    - chrismorgan 5y ago
      It doesn’t break the concept of poisoning, just the naive, trivial implementation of it. Major players in any sort of payment systems will absolutely be doing things like this, just with more complex rules and supporting analysis.
matheusmoreira 5y ago
Because of fungibility. Bitcoin is not fungible because the full transaction history of every single bitcoin is available publicly. This means you can discriminate against specific coins because they were at some point involved in undesirable activity. Exchanges already reject these tainted coins. Even using a mixing service for privacy's sake is enough to taint them. On the other hand, we have fungible coins such as Monero. It's impossible to tell where the coins are coming from so there's no way to discriminate based on the source of the coin. Their only option is to stop trading XMR as a whole. On the Monero blockchain it's not even possible to find people's wallet addresses. Interestingly, on the US treasury sanctions list a transaction hash appears as if it was an address: https://www.treasury.gov/ofac/downloads/sdnlist.txt https://www.treasury.gov/ofac/downloads/sdnlist.txt > Digital Currency Address - XMR 5be5543ff73456ab9f2d207887e2af87322c651ea1a873c5b25b7ffae456c320; Note the lack of the 0x prefix. Here's the transaction on the block explorer: https://localmonero.co/blocks/search/5be5543ff73456ab9f2d207887e2af87322c651ea1a873c5b25b7ffae456c320 https://localmonero.co/blocks/search/5be5543ff73456ab9f2d207...
lawn 5y ago
> don’t we always have a ledger of the coin ids? Monero hides the sender, receiver and the transaction amount from the public. While it's not a perfect system (ring signatures being the main weakness), it's extremely difficult to trace and you can for instance sell them on Kraken directly for cash.
gregn610 5y ago
Numberphile did a episode[0] on this, there's legal precedent from 1816 called Clayton's case[1]. Basically tainting with FIFO. [0](https://www.youtube.com/watch?v=UlLN0QERWBs https://www.youtube.com/watch?v=UlLN0QERWBs) [1](https://en.wikipedia.org/wiki/Devaynes_v_Noble https://en.wikipedia.org/wiki/Devaynes_v_Noble)

theragra 5y ago

Read up on monero. Transactions in Monero are almost always untraceable.

throwkeep 5y ago

Coinbase and other exchanges do that actually, when they find that an address belongs to a hacker.

Aperocky 5y ago

Dumb question 2: How do you taint tokens when a "coin" is divided arbitrarily? As in, there are no minimum unit of a "coin"?

chrismorgan 5y ago
Since it’s a ledger, the coins can’t be poisoned, but you can poison the addresses (in traceable blockchains like Bitcoin, at least). At the bluntest level, refuse to transact with addresses that have received money from poisoned addresses, transitively. In practice you probably want to apply somewhat more nuanced rules, or the poison is far too likely to spread to the innocent. It could even be weaponised, by a poisoned address deliberately sending small amounts to addresses that it wishes to poison, since you can’t refuse to receive a transaction. (Incidentally also, there is a minimum unit, at least in all currencies that I know of; Bitcoin, for example, goes to eight decimal places. But yeah, each unit doesn’t have physical identity like bank notes do. Infinite divisibility is bad for efficiency as it means your data types have unbounded memory usage, so you’d need to put together a bunch of rules about how far you actually can divide things, and it’s just not worth it.)
- Aperocky 5y ago
  > since you can’t refuse to receive a transaction. Yeah I think this break your hypothesis. Every single major account will just end up poisoned. Easily done by finding the addresses with most coins and sending them fractions of coins from tainted account. Tesla will be the first.
  - chrismorgan 5y ago
    It doesn’t break the concept of poisoning, just the naive, trivial implementation of it. Major players in any sort of payment systems will absolutely be doing things like this, just with more complex rules and supporting analysis.

matheusmoreira 5y ago

Because of fungibility. Bitcoin is not fungible because the full transaction history of every single bitcoin is available publicly. This means you can discriminate against specific coins because they were at some point involved in undesirable activity. Exchanges already reject these tainted coins. Even using a mixing service for privacy's sake is enough to taint them. On the other hand, we have fungible coins such as Monero. It's impossible to tell where the coins are coming from so there's no way to discriminate based on the source of the coin. Their only option is to stop trading XMR as a whole. On the Monero blockchain it's not even possible to find people's wallet addresses. Interestingly, on the US treasury sanctions list a transaction hash appears as if it was an address: https://www.treasury.gov/ofac/downloads/sdnlist.txt https://www.treasury.gov/ofac/downloads/sdnlist.txt > Digital Currency Address - XMR 5be5543ff73456ab9f2d207887e2af87322c651ea1a873c5b25b7ffae456c320; Note the lack of the 0x prefix. Here's the transaction on the block explorer: https://localmonero.co/blocks/search/5be5543ff73456ab9f2d207887e2af87322c651ea1a873c5b25b7ffae456c320 https://localmonero.co/blocks/search/5be5543ff73456ab9f2d207...

lawn 5y ago

> don’t we always have a ledger of the coin ids? Monero hides the sender, receiver and the transaction amount from the public. While it's not a perfect system (ring signatures being the main weakness), it's extremely difficult to trace and you can for instance sell them on Kraken directly for cash.

gregn610 5y ago

Numberphile did a episode[0] on this, there's legal precedent from 1816 called Clayton's case[1]. Basically tainting with FIFO. [0](https://www.youtube.com/watch?v=UlLN0QERWBs https://www.youtube.com/watch?v=UlLN0QERWBs) [1](https://en.wikipedia.org/wiki/Devaynes_v_Noble https://en.wikipedia.org/wiki/Devaynes_v_Noble)