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Topic: Coin Validation misunderstands fungibility and could destroy bitcoin - page 2. (Read 29395 times)

hero member
Activity: 772
Merit: 501
It is also a ridiculous approach.  If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins.  The certificates should be non-transitive they attest to the identity of the user, not the coins.

+1

If they take Adam's advice and change their approach, they will have proven that they're not out to harm Bitcoin. If they don't, then it's evident they don't care about Bitcoin.
legendary
Activity: 1064
Merit: 1000
Unfortunately, to enact that vision original Bitcoin wallet software needed to use pay-to-ip-address to fetch a new address for every transaction. Pay to IP had issues and so it was largely replaced with addresses. Convenience and ignorance, distractions like vanity addresses caused people to begin constantly reusing addresses. Wallet software was release that made avoiding reuse hard or nearly impossible.  The vision of privacy through pseudonymous addresses has been broken, Bitcoin has lost its privacy. The result is that white/green/black/red/etc listing addresses is not technologically impossible in our ecosystem today.
When is Blockchain.info going to implement BIP32? They are the single worse offender when it comes to promoting address reuse.

Create pressure on reddit....
legendary
Activity: 1456
Merit: 1081
I may write code in exchange for bitcoins.
Almost everything I've read on Forbes about bitcoins has been misguided or wrong.
sr. member
Activity: 279
Merit: 250
This is what I thought too, but now I am looking closer and it appears that Forbes may have misrepresented the tech. Read Alex's reddit posts from the previous day: http://www.reddit.com/user/alex_waters :

He probably is spinning PR or focusing on short-term implementation plans to avoid discussing the longer term plans discussed in the article.  If you read it with the PR-interpretation mindset its not so good.  

Whatever his intentions, he is not thinking through the implications or just selfishly doesnt care for quick buck reasons,  I dont know him so I cant tell.  Either way I think this will not end well.  I've been in the privacy tech / crypto business for 15 years, its quite common to encounter and have to navigate around people of all stripes: well meaning, neutral, dont care, and anti-privacy.  Even the ones that are neutral or well meaning often dont think about the long or even mid-term implications of what they are doing.  Thinking about implications is complex, requires concentration, deep understanding across many fields, and may conflict with short term objectives (ie rush something ill-thought-out but  "pragmatic" to get something out the door).  Sometimes making a buck even conflicts with user interests, or even the survival of the system.  Some of these people might even show concern and genuine remorse afterwards when it predictably blows up (to their genuine surprise because they didnt think more than the first chess move.)  Most probably though they'll be onto their next venture and pretend it never happened or more likely not even make the connection between their actions and the outcome.

The technology space is littered with implications from ill considered decisions.  Eg web pages are not signed, and jscript is not signed; a single server key is used for combined tunnel auth/encryption but no transferable signature on the content.  So people can hack servers and modify and replace code and steal eg jscript bitcoin wallets.

These things matter because architecture defines the internet.

Quote from: alex_waters
“We don’t want to be the sheriff of the Bitcoin community. We just want to create an ecosystem of clean addresses.”

So first they want to identify clean addresses (from the forbes article).

Quote from: alex_waters
Please stop confusing "clean coins" with KYC'd Bitcoin addresses.

And then they want to distance themselves from clean addresses (from reddit).

So whats a clean address?  Its one that according to them has not got taint on it according to some threshold they decide against some blacklist.  Seems squarely what we are talking about.
Thats my interpretation.  Waters or the other people at CoinValidation are welcome to clarify.

Quote from: jedunnigan
It is beginning to sound a bit more like what you proposed Adam.

The KYC part yes, the clean coins I am not so sure - they really do seem to think longer term that tracing coins is somehow a useful thing to do, which can only harm fungibility.  We may need a priority deployment of CoinJoin option into multiple clients before they get far with that.

DarkWallet could probably do with some funding help also.

Adam


Thank you for that thoughtful analysis. There are clearly mixed signals being sent; given their limited response it appears that they may purposely disseminating varying information to create a smoke screen while they speak with the DHS.

Either way, like you I am deeply concerned and the community response to this will make or break this moment. Interesting times ahead; this is good that this is happening now, we need to face these hurdles.
legendary
Activity: 1400
Merit: 1013
Unfortunately, to enact that vision original Bitcoin wallet software needed to use pay-to-ip-address to fetch a new address for every transaction. Pay to IP had issues and so it was largely replaced with addresses. Convenience and ignorance, distractions like vanity addresses caused people to begin constantly reusing addresses. Wallet software was release that made avoiding reuse hard or nearly impossible.  The vision of privacy through pseudonymous addresses has been broken, Bitcoin has lost its privacy. The result is that white/green/black/red/etc listing addresses is not technologically impossible in our ecosystem today.
When is Blockchain.info going to implement BIP32? They are the single worse offender when it comes to promoting address reuse.
staff
Activity: 4284
Merit: 8808
Most bitcoiners are against address censorship. Software solutions are the defense and need to be built.
The strongest defense is complete immunity.

Within the design of Bitcoin today we cannot (yet) have the kind true anonymity which would make Bitcoin completely immune to censorship. Instead, Satoshi envisioned a system of pseudonymous addresses (Bitcoin.pdf (section 10: Privacy)) where your non-anonymity was inconsequential because the addresses were meaningless.

Unfortunately, to enact that vision original Bitcoin wallet software needed to use pay-to-ip-address to fetch a new address for every transaction. Pay to IP had issues and so it was largely replaced with addresses. Convenience and ignorance, distractions like vanity addresses caused people to begin constantly reusing addresses. Wallet software was release that made avoiding reuse hard or nearly impossible.  The vision of privacy through pseudonymous addresses has been broken, Bitcoin has lost its privacy. The result is that white/green/black/red/etc listing addresses is not technologically impossible in our ecosystem today.

But, no biggie, we can fix that. Tools like BIP32 let third parties generate fresh, never before used addresses for you without your help, etc.  Of course, this has been possible before, but there was no immediate benefit to fixing your privacy for the bulk of the users— who aren't paranoid enough to worry about their privacy. But to stop the colored lists we need the _default_ behavior of nearly everyone to be behavior that will make those lists ineffective. Only by changing what most users do can we gain immunity.

Thats why I think it's a good step forward that we now have a large mining pool (Eligius) experimentally giving priority to transactions which use never-before-used addresses. Now people who were squishy on the benefits of privacy and immunity to censorship (and the resulting loss of fungiblity) can get a concrete benefit from switching their software or practices to ones which improve everyone's privacy.
legendary
Activity: 896
Merit: 1006
First 100% Liquid Stablecoin Backed by Gold
Coin Validation strikes to the heart of what Bitcoin is and that is who really owns your money/coins/assets.  The Bitcoin method which is anathema to the modern financial system requires no third party to validate your ownership rights.  It can be said that with such validation you don't truly own your money/coins/assets which benefits the current money controllers elite at the expense of users.  This proposal is a veiled attempt disguised as crime prevention to bring Bitcoin back down into the current system.  Not a surprise.  Bitcoin is either a monetary revolution or a ponzi trading card fad.  If it is a revolution then it is simply incompatible with the old system.  Jim Crow laws were separate but equal too.  I guess colored coins is an appropriate moniker then.
sr. member
Activity: 321
Merit: 250
hear.  hear.    In fact, I wish that the 0.9 release had been focused on getting real anonymity into the system rather than a bunch of merchant tools.

coinjoin, privacy and fungibility need to be our priorities.  Mixing should be automatic and the common case, not the exception.

When that is solidly in place, then we can think about more tools for mass adoption.

I hope the dark wallet people get their system up fast, and also provide a nice API for developers.

Quote
I encourage anyone with technical skills to put their thinking caps on to find ways to increase fungibility in the short term like CoinJoin, coin control in wallets, helping less technical people migrate to better wallets, educating people about privacy practices that defend fungibility.  And longer term privacy technologies like zero coin, homomorphic encrypted value and committed (hidden) transactions.
legendary
Activity: 4760
Merit: 1283

Yes, that is what I am implying, but with the caveat it really depends on one's frame of reference.

Mike has been clear for years that a desirable solution is one with fairly fine-grained control of who uses the system and how, and a distributed system is obviously not a good way to achieve this.  This is not necessarily an invalid point of view.  I just strongly dis-agree that it is the right way to go.  It would damage the real utility of the solution in my conception of things.


I agree that preservation of the distributed model should be the main long term goal. But this will have to be dictated by the limits of the tools we can use at a given point in time; without the development of SPV, alot of the real world utility would be missing from the picture right now. There is serious practical impediment to people downloading gigabytes of blockchain data to their phones, and Mike's work has bridged around the problem. But we can, of course, re-popularise full mobile nodes when technology catches up. The work-around will have served it's purpose, and supported a valuable bit of uptake and usability right when it was needed. We can hardly begrudge Mike for that.

I don't downplay Mike's work on this at all.  It was highly impressive and much needed.  Especially the database re-implementation which I believe he at least had a lot to do with.  That, in particular, was badly needed, but I kind of got the impression that it was mostly out of frustration because nobody else was doing it and he wanted the system to thrive so it could move on to the next stage.  The one we are looking down the barrel of now in fact.

I'm luke-warm about the SPV, but not because it isn't good work.  It just works against my personal philosophies of how I would like to see Bitcoin evolve.

If having Mike Hearn talking to the Washington control freaks is the bulwark we need between us and them for the medium term, then I'd rather it was someone who will do a believable job like he will, than someone doing a bad job of faking it. Unless he is actually Satoshi just enacting an elaborate gameplan  Grin. Because he may as well be, the reality is that we can innovate our way out of whatever corner the government tries to paint us into, the discussions that have come out of this listing business have convinced me of that.


My point is that there is absolutely nothing new about Mike's proclivities here.  It matches perfectly with pretty much everything else he's said and done since I've been paying attention.  At least that is my read on things, and I pretty much always call it as I see it.

legendary
Activity: 3430
Merit: 3080
Yep, and Mike Hearn really does not understand all this, despite his capabilities as a software engineer and systems designer. Show yourself, Mike. It's trial by fire time, you're gonna have to get this out of the way.
...

Baloney.

Mike has shown probably the highest level grasp of the system and foresight about things then almost anyone to date.  Much beyond Gavin's, for instance.  This dates back to before my interest in the system which happened in mid 2011.

Early on in some thread which was musing about how to destroy Bitcoin, I posited that an effective way might be to grow it and burn it out of it's (happily still) current phase as a distributed system.  Everything tells me that Mike's efforts have been to promote this outcome.  Unfortunately or fortunately depending on one's outlook, this is not going well.  The system is naturally moving to an 'off-chain' form because that is how it remains safe and scalable.  The low and defensible transaction rate remains sufficient to service the load even without 'excessive' fees.


I can't tell from how you've worded this whether or not you're implying that Mike Hearn is actively seeking to undermine Bitcoin. Clarify.


Yes, that is what I am implying, but with the caveat it really depends on one's frame of reference.

Mike has been clear for years that a desirable solution is one with fairly fine-grained control of who uses the system and how, and a distributed system is obviously not a good way to achieve this.  This is not necessarily an invalid point of view.  I just strongly dis-agree that it is the right way to go.  It would damage the real utility of the solution in my conception of things.



I agree that preservation of the distributed model should be the main long term goal. But this will have to be dictated by the limits of the tools we can use at a given point in time; without the development of SPV, alot of the real world utility would be missing from the picture right now. There is serious practical impediment to people downloading gigabytes of blockchain data to their phones, and Mike's work has bridged around the problem. But we can, of course, re-popularise full mobile nodes when technology catches up. The work-around will have served it's purpose, and supported a valuable bit of uptake and usability right when it was needed. We can hardly begrudge Mike for that.

If having Mike Hearn talking to the Washington control freaks is the bulwark we need between us and them for the medium term, then I'd rather it was someone who will do a believable job like he will, than someone doing a bad job of faking it. Unless he is actually Satoshi just enacting an elaborate gameplan  Grin. Because he may as well be, the reality is that we can innovate our way out of whatever corner the government tries to paint us into, the discussions that have come out of this listing business have convinced me of that.
legendary
Activity: 4760
Merit: 1283
Yep, and Mike Hearn really does not understand all this, despite his capabilities as a software engineer and systems designer. Show yourself, Mike. It's trial by fire time, you're gonna have to get this out of the way.
...

Baloney.

Mike has shown probably the highest level grasp of the system and foresight about things then almost anyone to date.  Much beyond Gavin's, for instance.  This dates back to before my interest in the system which happened in mid 2011.

Early on in some thread which was musing about how to destroy Bitcoin, I posited that an effective way might be to grow it and burn it out of it's (happily still) current phase as a distributed system.  Everything tells me that Mike's efforts have been to promote this outcome.  Unfortunately or fortunately depending on one's outlook, this is not going well.  The system is naturally moving to an 'off-chain' form because that is how it remains safe and scalable.  The low and defensible transaction rate remains sufficient to service the load even without 'excessive' fees.


I can't tell from how you've worded this whether or not you're implying that Mike Hearn is actively seeking to undermine Bitcoin. Clarify.


Yes, that is what I am implying, but with the caveat it really depends on one's frame of reference.

Mike has been clear for years that a desirable solution is one with fairly fine-grained control of who uses the system and how, and a distributed system is obviously not a good way to achieve this.  This is not necessarily an invalid point of view.  I just strongly dis-agree that it is the right way to go.  It would damage the real utility of the solution in my conception of things.

staff
Activity: 4284
Merit: 8808
We have a legitimate requirement for transparency
Transparency is completely orthogonal. There is nothing preventing you from keeping transcripts of your own transactions, along with the signatures with the relevant keys to show that they are yours and present them to whomever you want.

The distinction is that you control that, it's not something being broadcast to the entire world... to every thief, every competitor, every nosy neighbor, every ex-spouse, etc.

The highly public transaction record in Bitcoin is unprecedented in financial systems. It is a weakness, but one that can be patched around, and not a virtue.
legendary
Activity: 3430
Merit: 3080
Yep, and Mike Hearn really does not understand all this, despite his capabilities as a software engineer and systems designer. Show yourself, Mike. It's trial by fire time, you're gonna have to get this out of the way.
...

Baloney.

Mike has shown probably the highest level grasp of the system and foresight about things then almost anyone to date.  Much beyond Gavin's, for instance.  This dates back to before my interest in the system which happened in mid 2011.

Early on in some thread which was musing about how to destroy Bitcoin, I posited that an effective way might be to grow it and burn it out of it's (happily still) current phase as a distributed system.  Everything tells me that Mike's efforts have been to promote this outcome.  Unfortunately or fortunately depending on one's outlook, this is not going well.  The system is naturally moving to an 'off-chain' form because that is how it remains safe and scalable.  The low and defensible transaction rate remains sufficient to service the load even without 'excessive' fees.



I can't tell from how you've worded this whether or not you're implying that Mike Hearn is actively seeking to undermine Bitcoin. Clarify.
hero member
Activity: 588
Merit: 500
For anyone in doubt as to what these guys are angling for.  Look how within hours of their first public appearance they are being solicited into the inner chamber at Mordor.  Opt-in, my arse.  Their endgame is personal fame and profit via endorsement and imposition through governments.

Quote
Matthew Mellon ‏@asliceofmellon
#coinvalidation meeting with Homeland Senate Comittee regarding Bitcoin http://instagram.com/p/gtm7bdvQHE/

https://twitter.com/asliceofmellon/status/401122715605934080

legendary
Activity: 4760
Merit: 1283
Yep, and Mike Hearn really does not understand all this, despite his capabilities as a software engineer and systems designer. Show yourself, Mike. It's trial by fire time, you're gonna have to get this out of the way.
...

Baloney.

Mike has shown probably the highest level grasp of the system and foresight about things then almost anyone to date.  Much beyond Gavin's, for instance.  This dates back to before my interest in the system which happened in mid 2011.

Early on in some thread which was musing about how to destroy Bitcoin, I posited that an effective way might be to grow it and burn it out of it's (happily still) current phase as a distributed system.  Everything tells me that Mike's efforts have been to promote this outcome.  Unfortunately or fortunately depending on one's outlook, this is not going well.  The system is naturally moving to an 'off-chain' form because that is how it remains safe and scalable.  The low and defensible transaction rate remains sufficient to service the load even without 'excessive' fees.

legendary
Activity: 3430
Merit: 3080
We will  survive and  get stronger. Bitcoin is an idea. Nothing is stronger than ideas that are necessary for both freedom and liberty. 

Novel use of cryptography will save us yet again. It will take many forms, and may be alot of work in some cases. But this brand of toothpaste will not go back in the tube.
legendary
Activity: 1134
Merit: 1008
CEO of IOHK
We will  survive and  get stronger. Bitcoin is an idea. Nothing is stronger than ideas that are necessary for both freedom and liberty. 
sr. member
Activity: 476
Merit: 250
All I can say is that if we (the bitcoin community) survive this very serious threat, we will come out the other side much stronger and safer than we ever were before. Here's hoping we do.

This is a test of our abilities to stand together and solve our problems.. a bump in the road, but hopefully it won't make us crash and burn.
legendary
Activity: 1134
Merit: 1008
CEO of IOHK
As a cryptographer who worked for a government agency that shall remain nameless, I agree completely with Adam's statements. Fungibility is a core tenet of our ecosystem and attacks upon it present massive challenges for us.

We need to take this threat seriously and react quickly with both innovation and education.
legendary
Activity: 1002
Merit: 1000
Bitcoin
It is also a ridiculous approach.  If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins.  The certificates should be non-transitive they attest to the identity of the user, not the coins.  They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.

Their technical representatives of Coin Validation should be ashamed.  How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem.  

What they are proposing so far at least as explained by the Forbes article is stupid, dangerous and just wrong.  
Oh man, I'm sooooooo supporting you.



+1

This

Doing any sort of redlisting would destroy the essence of Bitcoin.
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