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There is a misleading, or more correctly put, wrong, statement here about bitcoin transactions not being final. They are final. https://bitcoin.stackexchange.

There is a misleading, or more correctly put, wrong, statement here about bitcoin transactions not being final. They are final. https://bitcoin.stackexchange.com/questions/88289/what-is-transaction-finality https://bitcoin.stackexchange.com/questions/88289/what-is-tr...

topher200 5y ago
From the beginning of TFA: > An extreme example which proves the point: the cryptocurrency enthusiast community largely believes that code is law, “not your keys, not your coins”, etc. Many crypto enthusiasts would say that the Bitcoin protocol does not prohibit reversing transactions but provides a security guarantee which suggests that the likelihood of a reversal after an hour is infinitesimal. > And yet: someone sent $70 million worth of Bitcoin in 2016, and that transaction was partially voided, with the reversal being worth slightly more than $70 million due to Bitcoin volatility. This didn’t happen an hour later; it happened in 2022. How? > The answer is nowhere in the Bitcoin whitepaper or any codebase. A full recounting of it is outside the scope of this anecdote, but it rhymes with “If you and the United States federal government disagree whether a transaction is final, you are wrong.” That is true for notorious Bitcoin thefts, but also true for wire transfers, conveyances of real estate, credit card payments, and graverobbing. “Possession is nine-tenths of the law,” so the saying goes, but the state can conjure as many tenths as required if it is motivated to.
- DennisP 5y ago
  "How" is easy: they were storing their private key in an online account and the government found it. Nothing in Bitcoin was reversed. The government confiscated their funds in the same way that criminals steal any other bitcoins with poorly-secured keys. Just follow the link in the TFA if you want to verify that.
  - jonas21 5y ago
    That's exactly the point. If you define the universe to include only Bitcoin, then yes, transactions are final. But if you define the universe to include the real world, then the answer is no, not really -- governments will almost always find a way to reverse the transaction, whether it's seizing your private key, or holding you in contempt of court until you divulge it.
    - repomies69 5y ago
      It is not "reversing the transaction", it is just seizure. If you have spent the Bitcoin on a lamborghini, government will confiscate the lambo. Criminals however typically spend the stolen money on hookers and drugs. Seizure or confiscation has nothing to do with "reversing the transaction", calling it that is just stupid, mixing terms unnecessarily is just unnecessary and confusing here.
    - tshaddox 5y ago
      The transaction was final though, in the real world. The fact that the government can physically find your private key (or physically compel you to give it to them) and use it to make new transactions is irrelevant. All you're pointing out is that after you receive money in a transaction you can later participate in a different transaction using that same money.
      - wewtyflakes 5y ago
        To the entity holding the coins, whether it is a single Bitcoin transaction as per the protocol of Bitcoin, or multiple transactions, makes no difference... ultimately they will or wont be holding a certain number of Bitcoins. To then say, "well technically that was _two_ transactions" seems irrelevant, since to the entity (no longer) holding the coins, things have been effectively reversed. I think may just be highlighting a disconnect between the writer of the article using the term transaction as understood by a layperson, and people who want to use the term transaction as per specific meaning of a particular protocol.
        tshaddox 5y ago
        > To the entity holding the coins, whether it is a single Bitcoin transaction as per the protocol of Bitcoin, or multiple transactions, makes no difference... ultimately they will or wont be holding a certain number of Bitcoins. But to the entity who received the coins, it also doesn't matter where the coins went after someone took them by force. If you get paid for a day's work in cash and a robber steals it on your way home, you wouldn't say that your work payment transaction was reversed or that it hadn't been finalized up to the point of the robbery.
kobieyc 5y ago
Yeah, major wtf by this author. Clearly didn't do their homework.
- deleted 5y ago
  [deleted]
Qworg 5y ago
If you saw the "technosociolegal" position at the top, you'd appreciate a broader perspective. Why is the couple who held the bitcoin from the hack being prosecuted? How were those funds being unwound if the transaction is final? If all of the exchanges were to denylist coins from a hack, do they actually exist or have they been taken away?
- DennisP 5y ago
  Nothing was "unwound." The government found the criminals' private key, which they were unwisely storing in an online account. That allowed the government to make a new transaction, moving the funds wherever they liked. From the link in the article: > special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency https://www.justice.gov/opa/pr/two-arrested-alleged-conspira...
  - lxgr 5y ago
    > Nothing was "unwound." The government found the criminals' private key, which they were unwisely storing in an online account. That allowed the government to make a new transaction, moving the funds wherever they liked. This is how "unwinding" works in almost all payment systems: Creating a second transaction to (partially or fully) offset the effects of the original one.
    - DennisP 5y ago
      Fine, but the government has no special power over Bitcoin in this regard. If they hadn't found the key, they wouldn't have been able to issue that transaction, and any common thief who found the key could have done what they did.
      - lxgr 5y ago
        The relevant meta-point here is that the government is uniquely positioned to come into possession of most keys that it wants (or more indirectly, render them useless by including them on sanction/embargo lists).
tsatsawayy 5y ago
I think that's the point that the author is trying to make. If the federal government disagrees with the bitcoin blockchain, then the blockchain is wrong. It doesn't really matter what the code says, or what bits are inscribed somewhere. Finance and ownership are ultimately enforced by armies, not computer programs. This is one reason why some people think that cryptocurrencies are playing with fire. It's also why major exchanges won't make it easy to cash out laundered bitcoins to USD.
- beaned 5y ago
  > If the federal government disagrees with the bitcoin blockchain, then the blockchain is wrong It isn't, though. The record is kept, and in fact the government needs to submit to the blockchain's laws to move any coin around.
  - lxgr 5y ago
    > The record is kept It is kept in the same sense that you can draft a contract declaring you the owner and supreme ruler of the moon. > in fact the government needs to submit to the blockchain's laws to move any coin around No, it's the opposite: Everybody moving around coins has to submit to applicable laws – or face the consequences of violating them.
    - beaned 5y ago
      I don't think you understand how the Blockchain works or what the proper concept of a finalized payment is. The government cannot undo a Bitcoin transaction. If the keys are accessible, they can seize the coin and create a new transaction to redistribute according to the law. If the keys are not accessible, then they are totally powerless to do anything at all. The government submits to the blockchain's rules the same way everyone else does. That's kind of the point.
      - deleted 5y ago
        [deleted]
      - 5y ago
zaphar 5y ago
There has been at least one fork that reversed bitcoin transactions. They are in no way final in practice even if the "spec" claims that they are.
- int_19h 5y ago
  The resulting fork isn't Bitcoin, though, so no Bitcoin transactions are reversed in this manner.
  - zaphar 5y ago
    Actually the non-bitcoin fork is the one that didn't reverse the transactions. Bitcoin proper is the one that did reverse them if memory serves. I'll grant that sometimes memory does not serve though and I'm just too lazy to grab the citation right now.
    - smitop 5y ago
      I think you're thinking about this incident? https://en.bitcoin.it/wiki/Value_overflow_incident https://en.bitcoin.it/wiki/Value_overflow_incident In that case, ~9 hours of transaction history were reversed because of a transaction that resulted in an overflow in the main (and I think only at the time) Bitcoin client allowing the creation of unlimited Bitcoin.

topher200 5y ago

From the beginning of TFA: > An extreme example which proves the point: the cryptocurrency enthusiast community largely believes that code is law, “not your keys, not your coins”, etc. Many crypto enthusiasts would say that the Bitcoin protocol does not prohibit reversing transactions but provides a security guarantee which suggests that the likelihood of a reversal after an hour is infinitesimal. > And yet: someone sent $70 million worth of Bitcoin in 2016, and that transaction was partially voided, with the reversal being worth slightly more than $70 million due to Bitcoin volatility. This didn’t happen an hour later; it happened in 2022. How? > The answer is nowhere in the Bitcoin whitepaper or any codebase. A full recounting of it is outside the scope of this anecdote, but it rhymes with “If you and the United States federal government disagree whether a transaction is final, you are wrong.” That is true for notorious Bitcoin thefts, but also true for wire transfers, conveyances of real estate, credit card payments, and graverobbing. “Possession is nine-tenths of the law,” so the saying goes, but the state can conjure as many tenths as required if it is motivated to.

DennisP 5y ago
"How" is easy: they were storing their private key in an online account and the government found it. Nothing in Bitcoin was reversed. The government confiscated their funds in the same way that criminals steal any other bitcoins with poorly-secured keys. Just follow the link in the TFA if you want to verify that.
- jonas21 5y ago
  That's exactly the point. If you define the universe to include only Bitcoin, then yes, transactions are final. But if you define the universe to include the real world, then the answer is no, not really -- governments will almost always find a way to reverse the transaction, whether it's seizing your private key, or holding you in contempt of court until you divulge it.
  - repomies69 5y ago
    It is not "reversing the transaction", it is just seizure. If you have spent the Bitcoin on a lamborghini, government will confiscate the lambo. Criminals however typically spend the stolen money on hookers and drugs. Seizure or confiscation has nothing to do with "reversing the transaction", calling it that is just stupid, mixing terms unnecessarily is just unnecessary and confusing here.
  - tshaddox 5y ago
    The transaction was final though, in the real world. The fact that the government can physically find your private key (or physically compel you to give it to them) and use it to make new transactions is irrelevant. All you're pointing out is that after you receive money in a transaction you can later participate in a different transaction using that same money.
    - wewtyflakes 5y ago
      To the entity holding the coins, whether it is a single Bitcoin transaction as per the protocol of Bitcoin, or multiple transactions, makes no difference... ultimately they will or wont be holding a certain number of Bitcoins. To then say, "well technically that was _two_ transactions" seems irrelevant, since to the entity (no longer) holding the coins, things have been effectively reversed. I think may just be highlighting a disconnect between the writer of the article using the term transaction as understood by a layperson, and people who want to use the term transaction as per specific meaning of a particular protocol.
      - tshaddox 5y ago
        > To the entity holding the coins, whether it is a single Bitcoin transaction as per the protocol of Bitcoin, or multiple transactions, makes no difference... ultimately they will or wont be holding a certain number of Bitcoins. But to the entity who received the coins, it also doesn't matter where the coins went after someone took them by force. If you get paid for a day's work in cash and a robber steals it on your way home, you wouldn't say that your work payment transaction was reversed or that it hadn't been finalized up to the point of the robbery.

kobieyc 5y ago

Yeah, major wtf by this author. Clearly didn't do their homework.

deleted 5y ago
[deleted]

Qworg 5y ago

If you saw the "technosociolegal" position at the top, you'd appreciate a broader perspective. Why is the couple who held the bitcoin from the hack being prosecuted? How were those funds being unwound if the transaction is final? If all of the exchanges were to denylist coins from a hack, do they actually exist or have they been taken away?

DennisP 5y ago
Nothing was "unwound." The government found the criminals' private key, which they were unwisely storing in an online account. That allowed the government to make a new transaction, moving the funds wherever they liked. From the link in the article: > special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency https://www.justice.gov/opa/pr/two-arrested-alleged-conspira...
- lxgr 5y ago
  > Nothing was "unwound." The government found the criminals' private key, which they were unwisely storing in an online account. That allowed the government to make a new transaction, moving the funds wherever they liked. This is how "unwinding" works in almost all payment systems: Creating a second transaction to (partially or fully) offset the effects of the original one.
  - DennisP 5y ago
    Fine, but the government has no special power over Bitcoin in this regard. If they hadn't found the key, they wouldn't have been able to issue that transaction, and any common thief who found the key could have done what they did.
    - lxgr 5y ago
      The relevant meta-point here is that the government is uniquely positioned to come into possession of most keys that it wants (or more indirectly, render them useless by including them on sanction/embargo lists).

tsatsawayy 5y ago

I think that's the point that the author is trying to make. If the federal government disagrees with the bitcoin blockchain, then the blockchain is wrong. It doesn't really matter what the code says, or what bits are inscribed somewhere. Finance and ownership are ultimately enforced by armies, not computer programs. This is one reason why some people think that cryptocurrencies are playing with fire. It's also why major exchanges won't make it easy to cash out laundered bitcoins to USD.

beaned 5y ago
> If the federal government disagrees with the bitcoin blockchain, then the blockchain is wrong It isn't, though. The record is kept, and in fact the government needs to submit to the blockchain's laws to move any coin around.
- lxgr 5y ago
  > The record is kept It is kept in the same sense that you can draft a contract declaring you the owner and supreme ruler of the moon. > in fact the government needs to submit to the blockchain's laws to move any coin around No, it's the opposite: Everybody moving around coins has to submit to applicable laws – or face the consequences of violating them.
  - beaned 5y ago
    I don't think you understand how the Blockchain works or what the proper concept of a finalized payment is. The government cannot undo a Bitcoin transaction. If the keys are accessible, they can seize the coin and create a new transaction to redistribute according to the law. If the keys are not accessible, then they are totally powerless to do anything at all. The government submits to the blockchain's rules the same way everyone else does. That's kind of the point.
    - deleted 5y ago
      [deleted]
    - 5y ago

zaphar 5y ago

There has been at least one fork that reversed bitcoin transactions. They are in no way final in practice even if the "spec" claims that they are.

int_19h 5y ago
The resulting fork isn't Bitcoin, though, so no Bitcoin transactions are reversed in this manner.
- zaphar 5y ago
  Actually the non-bitcoin fork is the one that didn't reverse the transactions. Bitcoin proper is the one that did reverse them if memory serves. I'll grant that sometimes memory does not serve though and I'm just too lazy to grab the citation right now.
  - smitop 5y ago
    I think you're thinking about this incident? https://en.bitcoin.it/wiki/Value_overflow_incident https://en.bitcoin.it/wiki/Value_overflow_incident In that case, ~9 hours of transaction history were reversed because of a transaction that resulted in an overflow in the main (and I think only at the time) Bitcoin client allowing the creation of unlimited Bitcoin.