Bitcoin Violates Principle of Fungibility

SebastianJu

legendary

Activity: 2674

Merit: 1083

Legendary Escrow Service - Tip Jar in Profile

Quote from: smoothie on September 25, 2015, 03:50:35 PM

Quote from: blablaace on April 08, 2015, 03:47:25 PM

stolen funds can always be laundered easily enough

Yes you could mix stolen coins, but at the end of the day someone somewhere is going to get tainted coins. Perhaps not the thief or scammer.

Most probably not the thieves or scammers. They would know how to wash these coins. And they could do it in a way that they would not reveal their identity.

This tainting idea would only hit the innocent bitcoiners hard. Scammers would not be affected. Or maybe some stupid ones would be.

smoothie

legendary

Activity: 2492

Merit: 1473

LEALANA Bitcoin Grim Reaper

Quote from: brg444 on September 25, 2015, 03:52:49 PM

Quote from: smoothie on September 25, 2015, 03:50:35 PM

Quote from: blablaace on April 08, 2015, 03:47:25 PM

stolen funds can always be laundered easily enough

Yes you could mix stolen coins, but at the end of the day someone somewhere is going to get tainted coins. Perhaps not the thief or scammer.

There is no such things as tainted coins.

Let's define "tainted coins".

Coins that can be linked to a theft or scam.

Now there is such thing as that because if businesses/exchanges decide not to accept those coins as "legitimate"...now you have tainted coins.

It may not be ACTUALLY tainted, but the fact that coins came from a particular address of a scam/theft ...does imply they can be viewed as TAINTED.

remember evolution and btc-e? Just a precedent that was set.

Didn't MTGOX do the same thing with bitcoinica?

brg444

hero member

Activity: 644

Merit: 504

Bitcoin replaces central, not commercial, banks

Quote from: smoothie on September 25, 2015, 03:50:35 PM

Quote from: blablaace on April 08, 2015, 03:47:25 PM

stolen funds can always be laundered easily enough

Yes you could mix stolen coins, but at the end of the day someone somewhere is going to get tainted coins. Perhaps not the thief or scammer.

There is no such things as tainted coins.

smoothie

legendary

Activity: 2492

Merit: 1473

LEALANA Bitcoin Grim Reaper

Quote from: blablaace on April 08, 2015, 03:47:25 PM

stolen funds can always be laundered easily enough

Yes you could mix stolen coins, but at the end of the day someone somewhere is going to get tainted coins. Perhaps not the thief or scammer.

blablaace

sr. member

Activity: 350

Merit: 250

stolen funds can always be laundered easily enough

SebastianJu

legendary

Activity: 2674

Merit: 1083

Legendary Escrow Service - Tip Jar in Profile

Quote from: chmod755 on April 08, 2015, 01:01:17 PM

Quote from: SebastianJu on April 08, 2015, 12:36:57 PM

Which exchange holds back tainted coins? I didnt hear from any.

AFAIR some exchanges ask you to provide personal information (ID, proof of residence) before releasing tainted coins back to you or allowing you to trade them.

Might be similar to banks where someone wants to pay its money in but one of the serial number matches one of a bank robbery or so. Though i guess at the end only stupid persons will be found that way. Real gangster most probably know how to wash that money. It should be the same for Bitcoin. So i guess again only the innocent will be catched.

chmod755

legendary

Activity: 1554

Merit: 1021

Quote from: SebastianJu on April 08, 2015, 12:36:57 PM

Which exchange holds back tainted coins? I didnt hear from any.

AFAIR some exchanges ask you to provide personal information (ID, proof of residence) before releasing tainted coins back to you or allowing you to trade them.

ensurance982

hero member

Activity: 518

Merit: 500

Trust me!

Well that's only partly true. First, you can still decide whether to accept certain coins. Also, the same is true for regular FIAT money, money used in illegal activities may be denied, also you could perform a chemical analysis on regular bills or coins!

SebastianJu

legendary

Activity: 2674

Merit: 1083

Legendary Escrow Service - Tip Jar in Profile

Which exchange holds back tainted coins? I didnt hear from any.

It was discussed but im not aware of anyone losing coins because of that.

Though it might be a good idea when exchanges keep an eye on coins that are from criminal cases though that only would work if a scammer would use such exchange to wash them. So i wonder if anybody would be found that way.

If coins would be withheld then everybody would be at risk getting tainted coins someday.

Furio

legendary

Activity: 938

Merit: 1000

BTC | LTC | XLM | VEN | ARDR

Quote from: inBitweTrust on April 07, 2015, 11:47:02 AM

I don't follow...The same could be said about the lack of fungibility with fiat money associated with crimes. Some of the same problems and solutions with laundering fiat exist with bitcoin. Additionally, Fiat has a bigger problem because it is tainted at inception when it is created or minted to those who understand the inherent fraud that is occurring.

My thoughts exactly, the fact that it's tainted isn't recognisble by an exchange, so I don't follow your story, If I use "tainted" bitcoin, I never get a warning from Bittrex Grin

neoneros

sr. member

Activity: 462

Merit: 250

I can draw your avatar!

Quote from: calchuchesta on April 08, 2015, 05:46:13 AM

Thats why im paranoid about using bitcoin before running coins throught a mixer, but then again how can u be sure that the mixer coins are legit??

You cannot be sure. That is why you mix, it does not clean the coins, it just obfuscates the transactions, the coin does not change. it is like sharing the tab with your friends, one of them has tainted money, you all put it in a big pile on the table, but because you have put too big a bill in it, you take the tainted money back as change for your share in the pile.

Cruxer

full member

Activity: 184

Merit: 100

Bitcoin FTW!

Quote from: Paleus on April 07, 2015, 11:38:46 AM

Bitcoin fungibility has been called into question, and it is becoming glaringly obvious that this poses a threat to the stability and long-term usage of such currency. Exchanges want nothing to do with these stolen funds, and therefore, lessen their value in relation to otherwise identical cryptocurrency units.

I hope this will not be the case. People have common sense, and they shouldn't ever agree to treat each bitcoin diffirently

medUSA

legendary

Activity: 952

Merit: 1005

--Signature Designs-- http://bit.ly/1Pjbx77

Quote from: Paleus on April 07, 2015, 11:38:46 AM

Bitcoin fungibility has been called into question, and it is becoming glaringly obvious that this poses a threat to the stability and long-term usage of such currency. Exchanges want nothing to do with these stolen funds, and therefore, lessen their value in relation to otherwise identical cryptocurrency units.

The ledger on the blockchain just makes it easy to trace the source of the coins, and it is just as easy to sever the link too with mixers. Fungibility is not violated on a massive scale. Even when some people prefer virgin coins or untainted coins, it will not make bitcoin less stable, because the cost of making them "usable" again is low and fast.

calchuchesta

member

Activity: 124

Merit: 11

Thats why im paranoid about using bitcoin before running coins throught a mixer, but then again how can u be sure that the mixer coins are legit??

coinpr0n

hero member

Activity: 910

Merit: 1000

I appreciate the article and ideas being raised. But I think those companies that do implement black- or red-listing of addresses should be boycotted. I would also (probably) encourage boycotting of services that deny their customers freedom to use Bitcoin for particular services like gambling in Coinbase's case. Or in the very least make it very clear to those signing up to use their service.

chmod755

legendary

Activity: 1554

Merit: 1021

If you suspect that a customer is paying with stolen money or trying to launder money you have to request further information about the source of the money regardless of the payment type. In this case it was known that the money was involved in crimes - of course the Bitcoins are worth the same, but the client should've been refused for being a criminal. AFAIR BTC-e allowed them to trade the coins tho.

Bitcoin is just more convenient to track for law enforcement and businesses.

GTO911

hero member

Activity: 672

Merit: 500

Diginomics is a pay for article shit site

A short time back, they had a same article about fungibility. In that article they had talked about currencies with higher fungibility. In this paid article they just have Darkcoin/Dash being shown as a competitor to Bitcoin

Lets create a biased paid media blacklist

HI-TEC99

legendary

Activity: 2772

Merit: 2846

Quote from: Ron~Popeil on April 07, 2015, 05:21:30 PM

I have not heard of any coins refused by anyone due to "taint." If you had a coin that had at some point been through a wallet belonging to silk road et al you can still buy stuff at overstock or reserve travel at expedia and you could still buy things with it in the market place here.

Btc-e refused to deal with some coins from evolution.

Coinfire had a story about it.

Quote

In a surprise move, BTC-e has suspended withdrawals from the cryptocurrency exchange in an effort to stop coins from the Evolution theft being exchanged and withdrawn.

http://coinfire.io/2015/03/21/btc-e-suspends-withdraws-to-stop-stolen-coin-dump/

They updated it to say btc-e had no further comments to make.

Quote

Update: BTC-e admins have reached out to Coin Fire to state that withdrawals have been re-enabled and that they have no further comments regarding the situation moving forward regarding this or any other security issue. The staff member originally speaking with Coin Fire has informed our team to speak with the administrators only moving forward and reiterated that the exchange has no comment.

Ron~Popeil

sr. member

Activity: 406

Merit: 250

I have not heard of any coins refused by anyone due to "taint." If you had a coin that had at some point been through a wallet belonging to silk road et al you can still buy stuff at overstock or reserve travel at expedia and you could still buy things with it in the market place here.

GigaBit

hero member

Activity: 1666

Merit: 513

Leading Crypto Sports Betting & Casino Platform

Fiat violates the principle of the Gold standard!!
Yeah, they always try to divert you from the facts...
Gold ain't fungible, neither are cryptos, both aren't money or violate fungibility rules.
I rather have money that breaks the rules and remains out of one entity's control.

Topic: Bitcoin Violates Principle of Fungibility (Read 1565 times)