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«Taints can be enforced» You can't. You would need to control 100% of miners.

by mrb 5y ago

simonebrunozzi 5y ago
You can, in practice, by forcing exchanges like Coinbase, Binance, Kraken, etc, to refuse tainted coins. Their value in the market would instantly go down.
- mrb 5y ago
  If you don't control miners you have to do something even harder: You would need to control or force 100% of exchanges, 100% of merchants, in fact 100% of all participants in the Bitcoin network to reject tainted coins. See how this can't work? The tainted coins remain usable everywhere and anywhere that doesn't track tainted coins. The owner of such coins only has to find a SINGLE such party to be able to launder the coins. And then what? The poor shmuck who wasn't aware they received tainted coins, eg. an online store in Oceania, would get scolded by The Tainted Coins Authority who would maybe decide, after investigation, he was a victim, and would "untaint" the coins. Multiply these incidents by a thousand per day. Unworkable. Who funds all this effort? And who actually would be "The Tainted Coins Authority"? It sounds just like a centralized thing that pretty much all Bitcoin exchanges & participants are against.
  - wahern 5y ago
    You're confusing the technical aspects of Bitcoin--concensus on which entity possesses a Bitcoin--with someone's ability to derive value from that possession. If the government passes a law that says nobody is allowed to transfer a US $100 note with serial 123-456-789, then if it catches you transferring the note, it can penalize you. It doesn't need to void the transfer that changed possession as technically defined by the system. It needn't care about what happens to that particular note, it only cares about your behavior. And through controlling your behavior (as all laws do, good and bad), it can ultimately effect how the system is used, even the parts not directly under its control or authority. For a variety of reasons it's very cost prohibitive to enforce such a system for paper fiat. But most of those costs disappear in a transactional system that is inherently electronic, online, and real-time. There are still costs--like needing to maintain and make available a blacklist, and compliance costs for both users and legal authority--but they're still unfathomably cheaper than requiring and enforcing verification when passing a bill to a clerk at a grocery store. FWIW, forgery of paper currency also imposes costs. The street value of a US $100 bill is actually worth slightly less than 5 x $20 bills. But the cost is very small because enforcement is difficult. A bank may refuse deposit of a forged note, but a store can almost as easily pass it on directly to another payee as when it received it. The more places you can easily utilize and enforce verification, then the more difficult it is to pass on forged bills, diminishing the value of forging bills in the first place. And this happens even if forged bills can be and are still exchanged among some subset of people. Unsurprisingly, this ease of verification is precisely what makes Bitcoin so seemingly useful. You can't forge Bitcoin because provenance is easy (i.e. relatively cheap) to track and enforce. But fundamentally that ease of identification cuts both ways--easy to detect forgery, but even easier to match a Bitcoin against a blacklist registry. And if its cheap for you to make the match, then there's less inherent cost to burdening someone with a legal mandate to make that verification. (And it's even easier to verify compliance because the government could regularly taint a Bitcoin, test passing it on, and track it as it goes through the system. Everybody who accepts it is busted, at least up to the last entity that didn't verify the legal identity of a payee, but you can impose even costlier fines in that case, which we actually do today--ever apply for a mortgage recently?)
    - mrb 5y ago
      I don't know what version of my post you read, but I just did a major edit rewriting 90% of it.
  - meheleventyone 5y ago
    This already happens with “stolen” NFTs each marketplace blacklists them. There’s only a few popular platforms. You can obviously still trade in them off platform but a lot of value is lost due to that.

«Taints can be enforced» You can't. You would need to control 100% of miners.

by mrb 5y ago

«Taints can be enforced» You can't. You would need to control 100% of miners.

You can, in practice, by forcing exchanges like Coinbase, Binance, Kraken, etc, to refuse tainted coins. Their value in the market would instantly go down.

mrb 5y ago
If you don't control miners you have to do something even harder: You would need to control or force 100% of exchanges, 100% of merchants, in fact 100% of all participants in the Bitcoin network to reject tainted coins. See how this can't work? The tainted coins remain usable everywhere and anywhere that doesn't track tainted coins. The owner of such coins only has to find a SINGLE such party to be able to launder the coins. And then what? The poor shmuck who wasn't aware they received tainted coins, eg. an online store in Oceania, would get scolded by The Tainted Coins Authority who would maybe decide, after investigation, he was a victim, and would "untaint" the coins. Multiply these incidents by a thousand per day. Unworkable. Who funds all this effort? And who actually would be "The Tainted Coins Authority"? It sounds just like a centralized thing that pretty much all Bitcoin exchanges & participants are against.
- wahern 5y ago
  You're confusing the technical aspects of Bitcoin--concensus on which entity possesses a Bitcoin--with someone's ability to derive value from that possession. If the government passes a law that says nobody is allowed to transfer a US $100 note with serial 123-456-789, then if it catches you transferring the note, it can penalize you. It doesn't need to void the transfer that changed possession as technically defined by the system. It needn't care about what happens to that particular note, it only cares about your behavior. And through controlling your behavior (as all laws do, good and bad), it can ultimately effect how the system is used, even the parts not directly under its control or authority. For a variety of reasons it's very cost prohibitive to enforce such a system for paper fiat. But most of those costs disappear in a transactional system that is inherently electronic, online, and real-time. There are still costs--like needing to maintain and make available a blacklist, and compliance costs for both users and legal authority--but they're still unfathomably cheaper than requiring and enforcing verification when passing a bill to a clerk at a grocery store. FWIW, forgery of paper currency also imposes costs. The street value of a US $100 bill is actually worth slightly less than 5 x $20 bills. But the cost is very small because enforcement is difficult. A bank may refuse deposit of a forged note, but a store can almost as easily pass it on directly to another payee as when it received it. The more places you can easily utilize and enforce verification, then the more difficult it is to pass on forged bills, diminishing the value of forging bills in the first place. And this happens even if forged bills can be and are still exchanged among some subset of people. Unsurprisingly, this ease of verification is precisely what makes Bitcoin so seemingly useful. You can't forge Bitcoin because provenance is easy (i.e. relatively cheap) to track and enforce. But fundamentally that ease of identification cuts both ways--easy to detect forgery, but even easier to match a Bitcoin against a blacklist registry. And if its cheap for you to make the match, then there's less inherent cost to burdening someone with a legal mandate to make that verification. (And it's even easier to verify compliance because the government could regularly taint a Bitcoin, test passing it on, and track it as it goes through the system. Everybody who accepts it is busted, at least up to the last entity that didn't verify the legal identity of a payee, but you can impose even costlier fines in that case, which we actually do today--ever apply for a mortgage recently?)
  - mrb 5y ago
    I don't know what version of my post you read, but I just did a major edit rewriting 90% of it.
- meheleventyone 5y ago
  This already happens with “stolen” NFTs each marketplace blacklists them. There’s only a few popular platforms. You can obviously still trade in them off platform but a lot of value is lost due to that.