Topic: "Dirty Deals in Smoke-Filled Rooms" J. Ranvier discusses a Mike Hearn proposal - page 2. (Read 3697 times)

The old block's coinbase is unusable. The new replacement block get a coinbase.
The exact coinbase hasn't been reallocated, but 25 BTC have been taken from one miner, and 25BTC have been given to another.
The financial result is the same as if the original BTC were reallocated, even if the technical details are different.

This is why I've always been against tainting or blacklisting coins. Transactions must be cast in stone (assuming no orphaning etc), this is fundamental. If there is a theft, then there is a theft. But the coinbase is subtly different...isn't it?

I guess what I'm trying to understand is this: Finney attacks as a service are an entirely predictable reality. What response should there be? Is Mike's proposal any more likely to be abused than a mining pool providing double spends as a service?

If a block gets orphaned, then its associated coinbase is simply unusable.  Nothing was re-assigned.  

If you create a mechanism where outputs assigned to a particular bitcoin address can be moved without an ECDSA signature produced by the corresponding private key, then this is coin confiscation.  The legitimacy of the blockchain ledger would be severely shaken (and IMO eventually destroyed).   

Speaking specifically of the coinbase only, that isn't really true, is it?
Miners can already attempt to deliberately orphan a block, which would have the same effect of removing the coinbase allocation.

I don't think many people would argue that we shouldn't fight crime.  By all means, if a miner operates an out-of-band double-spend service and knowingly aides people in defrauding others, then they've committed a crime.  Most jurisdiction around the world have laws to deal with fraud.  

Do I think the protocol should be changed?  Absolutely not!  My resolve here is hardened by my belief that any heterogeneity added to the protocol would actually make it less secure for everyone.  Not only would it not help with fraud, IMO it would actually make fraud easier.    

Bitcoin is powerful because it is useful.  It is therefore useful both for good and for bad, by definition.  Any attempt to make it less useful for bad will also make it less useful for good.  

The proposal is theft of coins.

The Bitcoin protocol right now has no built in mechanism via which a third party can reassign a balance.

If such a mechanism is ever added to Bitcoin, then Bitcoin is worthless. It doesn't matter how little they promise to use it (at first).

When it comes to the question of, "under what circumstances can miners vote to confiscate funds on the blockchain," the difference between "never" and "rarelty" is infinitely greater than the difference between "rarely" and "frequently". Biitcoin only has value if the answer to the question is "never".

Thanks Peter, that's some useful info. I don't fully understand the issue, but that post certainly helps.

There is already opportunity for bad behaviour. I still think Mike is right here. The same forces (market and other) which prevent miners from engaging in bad behaviour now would still apply. I fail to see how Bitcoin would be considered a success with a majority of dishonest miners.

One of Mike Hearn's proposed "solutions" to reduce the success rate, P_0-confirm, of 0-confirm double-spend attempts is to add heterogeneity to the block-acceptance criteria (instead of "longest chain wins" it would now be "longest chain wins except when the longest chain was made by a miner deemed to be fraudulent).  

Ironically, it was heterogeneity in the mempool-acceptance criteria that increased P_0-confirm in the first place.  In particular, it was certain miners deciding that "to make bitcoin 'better,' we will reject TXs from on-chain gambling sites."  But Peter Todd recently demonstrated that this heterogeneity can be gamed to increase the chances that a fraudulent 0-confirm TX is confirmed.  Instead of working on the problem (decrease heterogeneity by education and social pressure), Mike has proposed adding more heterogeneity to "fix" it.

What will happen if certain miners choose not to mine on the new blocks generated by "fraud miners"?  Some will follow the old rules (longest chain) and some will follow the new rules.  What's worse is that the new rules for defining a "fraud miner" can't really be codified, so there will be block-acceptance heterogeneity even between those that adopt Mike's proposal.  The end result will be a greater orphan rate and an increase in the success rate of 1-confirm double spends.  

TL/DR: Peter Todd showed how to game mempool-acceptance criteria heterogeneity to increase P_0-confirm; if Mike's proposal is implemented, someone else will show how to game block-acceptance criteria heterogeneity to increase P_1-confirm.


Mike's other proposal (reassigning coinbase transactions) is coin confiscation.  It would set the following precedent: "control of an address belongs to he who controls its private key except when those bitcoins were acquired in a way that is deemed fraudulent."

No, that's incorrect.

Right now, there is no way for the miners to dishonestly pick off mining rewards from each other. To create that opportunity for bad behaviour, then claim that abuse of the mechanism that enabled it means "Bitcoin is dead" is an incredibly poor argument.

And as Mike accurately points out, if a majority of miners are dishonest, Bitcoin has failed. Game over.

There's no place for "just" in that sentence. The coinbase is the 25 BTC mining reward, you're suggesting that allowing the other miners to vote on taking a miner's block reward away is an okay way to proceed. Competing miners, who couldn't possibly have any more of a conflict of interest. It's an obvious poor idea.

The majority miners can use it to squeeze their competition. And non-miners with alot of influence can use it to force people to comply with whatever transaction/address lists they determine. Arbitrary mechanisms give way to arbitrary uses, IOW.

quoting myself for I still don't get this.

Just to chime in - the Bitcoin dev mailing list is THE place to discuss ideas relating to really quite technical issues, at least in the first instance. The blog article is a perfect example of why.

Secondly - if I read it correctly, this doesn't affect the fungible nature of Bitcoin, does it? It does not allow for arbitrary blocking of transactions or theft of coins, nor does it "taint" an ouput. Is this understanding correct? Does it not just allow for reallocation of the coinbase?

I agree with Mike on a couple of points - if zero confirmation transactions become sufficiently untrustable, people will not use the Bitcoin network to buy their latte or their Subway sandwich, they will rely on a third party service like Coinbase, so that the transactions can be instant, but off-chain. This isn't necessarily a bad thing, but it does provide a market incentive which would detract from Bitcoin's decentralised aims.

The second point - the provision of Finney attacks as a service is a necessary attack on the Bitcoin network. It is an attack to which the network should be able to adapt to cope with. Yes, you are not obliged to accept zero-confirmation transactions, but see the first point.

It's hard to define, but 'I know it when I see it.'  More importantly, my justice system does.


My justice system (here in the U.S.)  Duh!  We are a democracy which (eventually) adheres to the will of the people, and we currently have the worlds dominant monetary system which pretty much proves that we are doing things better than anyone else.  And if it does not, it doesn't matter anyway because that is how control of the solution will naturally fall once the protocol supports it...if not before.   They don't call us 'the leaders of the free world' for nothing, and it is unarguable that 'you could do worse.'

Any suggestion that the U.S. central governmnet authorities are not the most well prepared to define crime is to silly to pay much attention to, and any suggestion that something could make this reality change in the future is some sort of a wild 'conspiracy theory.'


Something tells me that that will be the case with you until it isn't.

This is the epitome of crying wolf. Mike, like many people before him, proposed an idea. That idea was was dissected finding most of its faults. That's all that happened. There were no "Dirty Deals in Smoke-Filled Rooms", the mailing list is public and anyone can propose an idea there. Since the development mailing list is full of people who actually understand how Bitcoin works on a technical level it's the best place to propose changes to Bitcoin as you'll get responses from people who actually know what they're talking about. On this forum you would get a bunch of emotionally charged responses from people who have never seen a line of Bitcoin code.

You can join the mailing list here: https://lists.sourceforge.net/lists/listinfo/bitcoin-development

Mike's controversial idea is neither the first nor the last that will likely not make it on this forum for the simple reason that such ideas will die very quickly on the mailing list. Only the ones that gain traction will eventually be discussed here, just search the payment protocol proposal for an example.


 What is crime? Who gets to define it? A lot of people, including myself, consider Bitcoins neutrality to be a fundamental part of the protocol.

Good input.

It's never wrong to fight crime. But something that's a crime somewhere might not be a crime somewhere else, and somebody needs to decide who's a criminal, and that somebody has the power.

Introducing any kind of confiscation into the bitcoin protocol, no matter how 'well meant' it is, is plain wrong.

Bitcoin can be used to buy anything anyone is willing to sell for bitcoins. Crime in this world is not new. It has flourished and the black markets of this world is huge. And most of the trades are done with traditional money.

Bitcoin is not what needs to be attacked, what needs to be attacked or changed is the fabric of society. And Bitcoin can contribute to that cause, but not if it becomes corrupted.

For  instance, there's been asset confiscations now, in the crisis that takes place in Ukraine, some Russian officials have had their assets frozen by the USG. Afaik, the USG kills innocent people with drone attacks very frequently. How many americans have had their assets frozen because of this?

Who is to decide who's committing a crime, and who's money is to be frozen?

While Hearn might be a young man, a product of his environment, and not realizing what he's actually proposing, what he's proposing is the opposite of what Satoshi's orginal intentions were, Hearn need to learn this.

If we wanted to, we could introduce hammers that were dismantled until the user put his thumb on a finger print scanning device, and locked the hammer head into place. Unless the user was registered in the 'allowed hammer users' database, the hammer would not be usable, the shaft and the head would be disconnected. I can see many arguments for such a decision: Thiefs uses hammers to break into houses. Some people kill other people with a hammer. Some kill animals with the hammer. You could tear down your neighborhood fence if you didn't like it, with your hammer.

After all, to prevent crime, all hammers would need to be used only by registered users, and all usage would be recorded, and the same with all other tools and services that could be used for any crime. Ideally we would need to have a drone following every human around the clock to ensure they're not up to anything bad.

The point is that most tools are neutral, and it is the user that decide what it's used for, not the tool itself. Bitcoin is not evil by nature, even though some people will use it for evil purposes, just like they would use oil, gold, USD etc. for the same purpose.

Laws and regulations are essentially a product of what politicians running a country decides upon, often heavily influenced by industry groups and other parties that corrupt the ruling politicians.

Bitcoin is supposed to be something new, something fresh. And it's even more traceable than cash.

If you withdraw 5K USD from your account, and you pay a carpenter that money, he will most likely use it for grocery purchases, and to pay off other service men, in fact that money is quickly spread, and there's no trail of where it went. The trail ends at the ATM when the customer of the carpenter withdrew the money.

If you deposit money to an exchange, you most likely need to be indentified to exchange it for bitcoins. The exchange knows your identity, and so does the bank from where you sent the money to the exchange. And the exchange keeps a record of your transactions on the block chain, essentially forming a link between the money transfer and the blockchain. Any law enforcement can follow that trail. So if the user uses those bitcoins for anything nefarious, it could be traced back to him by an agency having enough resources.

Yet, many scream that Bitcoin is the ideal tool for crime, just like the Internet was the ideal tool for crime in its infancy. It would only be used for pedophiles and criminals.  And those people do use, it but so do billions of people who're not doing any crimes.

Look how the Internet has transformed the world, and how global trade has become, and how important the Internet is for international business. What makes you think it will be anything different with bitcoin? No need to sign up for an account and give all your ID papers to a third party. You download a piece of software, and that's it. You can then send you money to anyone in the world with an internet connection.

You can work with a web designer in indonesia, a programmer in romania and pay them in btc, your webpage can sell a service or items that can be bought from all over the world, be it physical or digital. The bitcoins your receive from the customers can again be used in real world shops and online stores to buy items you need in your daily day, such as groceries and more.

It's something entirely new when it comes to payments online. Forget about all the old systems with draconical rules. If you want to send 1K USD worth of BTC to someone in your family anywhere in the world, how's that the business of anyone but yourself and your family? Forget about waiting a week to have your wire processes from Ireland to New Zealand , a week - you got to be kidding me! Or if your name is something like the name of someone on a watch list, the transfer might even be stopped pending investigation. The government don't care - the bank don't care - but you fucking care - because that money is supposed to be used for your kid attending university on an exchange program! It's your money and you should be allowed to use it exactly as you see fit, nobody has a business meddling with your monetary transactions.

See what the Internet has done, and imagine what a free flow of monetary transactions can do to the world. Imagine all the time spent earlier for travelling to a bank, waiting in a que, having your papers delivered, signing papers, and then waiting for a week or so to get your debit or credit-card, and then to add insult to the story, you have to wait for days when making an international transfer, and it even has to be reported to your government.

Bitcoin cuts through all that crap and is really usable. Download a program, and you're set to go. Of course there might be issues in terms of mass adoption currently, but it's the start of something great, and it has already grown a lot, and it is started to be taken seriously by many companies and governments.

Start meddling with this freedom, and we're soon back to square one.

You don't need to be a criminal to be concerned about facts like these:

- International transfers are often delayed and subject to excessive fees.
- Your account can be closed at will by the bank if they for whatever reason don't think you fit their ideal customer profile.
- The ability to withdraw cash is often limited, and you need to post note in advance and the amount you can withdraw in one go is sometimes limited.
- The government, if they judge you to be a criminal, they can simply instruct the bank to freeze all your assets.
- The government, if entering a special difficult financial position, could simply confiscate a certain amount of your funds or everything. It's not safe. Look at Cyprus. Believe it can't happen again?


Remember:


So, in my opinion let the services and exchanges take care of AML/KYC and leave the bitcoin protocol alone. If there eventually is a fact that bitcoin becomes uscoin, then a lot of people will start using other altcoins.

I feel it worthwhile to point out something which I have before when similar threads have come up:

It is NOT an outrageous idea that 'criminal' are held to account.  It is NOT and outrageous idea that solutions contain design elements which facilitate this.  It is, in fact NOT an outrageous idea that the Bitcoin protocol evolves such elements in order to 'fight crime'.  They would be hugely effective at solving this very real problem.

Because these are not outrageous ideas (and are closer to 'common sense' in fact) there will be a lot of people who subscribe to them.  Both technical and non-technical people.

Everybody involved in development in Bitcoin 'cut his teeth' in some technical field or another.  If someone who is currently involved spent a good portion of his career dealing with regulatory and enforcement issues, there is a good chance that a) he agrees in principle with the frameworks that he's been involved with, and b) is inclined to leverage the same basic methods of facilitating enforcement which have proven effective in other solutions.

Holding the opinion that Bitcoin can and should have 'taint' or 'blacklisting' or be able to be generally controlled and managed in a top-down manner by a small group of entities is NOT either evil or illogical, and it certainly doesn't prove that someone is an NSA agent or whatever.  Nor does it disprove the hypothesis of course.

Stakeholders do, however, need to understand the attitudes and influences of various parties in order to make good decisions about how to allocate their support.  To this end, anything which detracts from visibility into the decision making processes (secrecy, censorship, etc) is highly bothersome to me.

---

As people who have read my rants over the years know, I personally am extremely opposed to solutions involving 'taint' and hold a variety of views about Bitcoin which are not very popular and in direct opposition to the direction which Mike and Gavin with to take (and are taking) things.  I was also among the first to call out Mike and Gavin personally for their attitudes and technical decisions which I feel will be counter to my wishes and I took some amount of abuse for it.

My personal animosity to such solutions are philosophical (it is rhetorically impossible to be 'free' to do only 'good' things) and practical (as a systems analysis point of view such developments will eventually collapse Bitcoin or change it beyond recognition and thus my stake in it will suffer.)

Holding the opinion that certain levels of criminal abuse are an acceptable tradeoff for the kinds of damage (and abuse of different types) that could occur with centralized management of the Bitcoin economy is by no means 'evil' or illogical either.  As with the design of any complex system, there are a lot of trade-offs.  I strongly favor fight crime in other ways than damaging the fungibility of the solution, and especially by doing so at the protocol level.

As much as I agree with what you have to say, I have two things I want to put forth.

1. Core Devs have a greater responsibility, and should therefore in general act more professional imo, esp. the ones who're being paid and have a name and a reputation.
2. Getting bad feedback will not prevent the one who has his heart into something, he will continue no matter what.

But I'll leave it at that, it's subjective opinions after all, but I think much criticism can be handled well if you don't get offensive, but rather appreciate the input and state that you value their concerns.

The more eyes you have on you, the more criticism and feedback you will receive, and although I understand it's easy to be upset at times, esp. when people only point out the bad things, and not the good things, how you handle criticism in general also points a lot to your character. Of course it's not desirable for anyone to get criticism, and a lot of people become defensive very quickly and it might be a natural response, but those intelligent and professional will handle it in a professional manner. From constructive criticism you can grow, and sometimes attacks are just unjust, and then perhaps it's best just to leave it at that.

All individuals involved have their good and bad days. Overwhelmingly, all have done a great deal more good than they have ever been malign. Don't let one more bad proposal from Mike cause you to overreact. Otherwise, those who object to bad ideas might always end up as "the overreaction contingent". And Mike might never suggest any good ideas either, of which he has contributed many.