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Are there tools/databases out that keep track of stolen Bitcoins and where they end up? It seems like it would be in the interest of the exchanges to share this

Are there tools/databases out that keep track of stolen Bitcoins and where they end up? It seems like it would be in the interest of the exchanges to share this information and blacklist coins originating from a theft. They should also allow users to check incoming transactions against this blacklist and reject them if they choose. I suppose you'd end up with a black market of tainted Bitcoin, but that's better than just allowing thieves to immediately exchange stolen coins for another currency or legitimate services/products.

javert 14y ago
To answer your first question: It's pretty easy to track where bitcoins go. People have tools that visualize this (I've seen them). I don't know of one off the top of my head I can point you to, though. To answer your second question: This idea has been discussed at length on bitcointalk.org by a lot of people. The idea is known as "tainting." There are a lot of problems with making it work in practice, so the concensus seems to be "don't go there." To give you a sample of the (IMHO valid) objections: For one thing, it's difficult to verify which coins really should be tainted. (How do you know someone claiming certain coins should be tainted is trustworthy?) For another thing, tainting creates two "competing" bitcoin currencies, black coins and white coins. Finally, there is no central authority, so it would be challenging (though perhaps not impossible) to come to a "general concensus" on who should be in charge of declaring coins tainted.