Topic: Donning tin foil hat concerning multisig transactions (Read 3797 times)

Good points all around.

There is another danger though even if bitcoin rejects the idea of multisig all together.

Govt can always come up with their own network built with multisig in mind where one key always belongs to them.
Make this network hash-compatible with bitcoin and start merge-mining it. Of course people won't know anything about it.
Once govt network gains a lot of power, they can suppress any activity on bitcoin network via merged mining
exactly how Luke-Jr did it with CoiledCoin.

So the the only way we can fight it is not by suppressing multisig because it's irrelevant, but gain more support from the masses before govt does.
This year they will be busy with elections, so we have to hurry up and propel bitcoin to the Moon
I think Bitcoin magazine would do a great job here.

I see the confusion.  I apparently used a poor choice of words to express myself before. 

I understand that there is not really a permanent "brand" on the bitcoin transactions.  I was using the term "brand" to signify a chain of government signatures, and didn't explain myself well enough.  Let me drop the term "brand", and make another stab at explaining what I was driving at.

Suppose we have a transaction that requires two signatures, A and B, where each signature is held by different individuals: person(A) and person(B).  Each of those individuals has veto-power over spending the bitcoins represented by the transaction.  Because of that, either individual can impose whatever restrictions he wants before agreeing to sign.  One possible draconian restriction that person(A) could insist on is the requirement that the coins be sent only to transactions that person(A) can sign.  If person(B) doesn't like that, tough.  Person(A) doesn't have to sign if his conditions aren't met.  Of course, if person(A) doesn't have sufficient protection, person(B) can just beat the hell out of person(A) to force him to sign.

Because of this, an entity that has signed a multisig transaction can potentially leverage his veto-power to gain leverage on subsequent transactions.  In the hands of a government, that leverage can be very strong.  That is all I'm saying.

In any case, I believe that Gavin answered my basic question about this, when he said that multisig transactions do actually allow for the possibility of this happening, even though he thinks it to be unlikely to ever happen.  I am satisfied with that and don't need to belabor the point any further.

The cost to the govt of checking that all citizens are wearing shoes on their heads at all times is prohibitive.  The cost to the govt of checking that one of their keys is present in every Bitcoin transaction is not.

Very unlikely they would ever care about taxing alpaca socks, but if this hypothetical did happen the barrier to entry is probably just the Treasury Dept. asking AT&T to kindly let them borrow the fiberoptic line they installed for the NSA, then send out requests to ISPs for the identity behind every IP address that originates a transaction without a govt key.

Coins aren't branded with signatures in some permanent way. There is no difference between sending coins by signing with one sig or with two. If you get sent coins that used to be encumbered by A or (B or C or D) or (D and E) it makes no difference, whatever the inputs were have no bearing on what the outputs can be.

In general though if the government passes a law requiring us to wear shoes on our heads it isn't safe to assume people will actually wear shoes on their heads.

You need something more convincing than "the government will tell us to hand our money over". Getting our gold money took generations, and now we have so many more advantages.

Yes.  There will only ever be 21 million bitcoins.  This point I concede.

It doesn't matter what governments want. We will want law enforcement to protect us from using bitcoin to harm us, but beyond that goverment will no longer be able to print money. They will take the tax money we give them for the services we need and no more.

I will be happy to STFU, as soon as someone explains where the flaw in my logic lies.  If this is not an actual possibility, I truly want to know.

Please enlighten me.

You have literally zero idea what you are talking about so Standard Transaction Federal Union.

Banks are essentially an extension of the government.  So, I could see a government placing trust in a bank to keep/manage the government keys since they have control of the banks anyway.


You feeling good about it or agreeing to it is irrelevant.  Here's the basic way I see this happening:

1) You pay your taxes in bitcoin to whatever government you are a citizen.  The bitcoins you use to pay your taxes may be single signature or multisig, it doesn't matter.  They will accept any kind of bitcoins whatsoever.  In fact, they would prefer you sent them bitcoins that weren't multisig so that they could then "brand" them with their own signature, thereby increasing their influence over the system.

2) You file your taxes and declare how much of a tax return the government owes you.

3) The government generates a multisig transaction containing the number of coins needed to pay your tax return.

4) The government sends you one of the two signatures to that transaction along with an ID card to identify yourself when you want to spend the coins.

5) At this point, you have two options.  You can either spend the coins in a government approved transaction, or you can choose to not spend the coins ever.  The government doesn't care, because they consider your tax return paid in full, whether you like it or not.

6) If you choose to spend the coins, the government has veto-power over where and how you can spend them.  They use this veto-power to ensure that the person receiving the coins accepts them with a multisig transaction in which the government has a signature.  If the recipient refuses, the government refuses to let you spend them.  In essence, once a bitcoin is "branded", it will forever remain branded regardless of how many transactions it goes through.

This whole process does not require the government to outlaw normal single signature transactions.  Nor does it require them to create their own client that prevents normal bitcoin transactions or fork off an entirely new block-chain.  All it requires is for them to be patient.  Over time, more and more bitcoins would be branded and fall under government control.  Eventually, the vast majority of coins would be branded in this way, giving them sway over pretty much the whole network.

Now, there are both benefits and drawbacks to this.  You will have to decide whether you think the benefits outweigh the costs.  I just thought I should bring it to everyone's attention that multisig transactions open up this possibility.

The trick is that Bitcoin is a brand, people will learn that it is decentralized international and all good, so when the govt says they support bitcoin people will buy into it. Only to learn later that govt took control over it. If govt announces alt-chain well the bitcoin community might start to argue that it is bad and corrupted and that our public chain is better. At least we would keep our ways intact and will be able to continue building the infrastructure.

So the solution seems to be:
1) Get to the masses before govt does. Then people will know that there is open source client as well not just the govt one.
2) Make sure that format of P2SH addresses doesn't make a particular scheme easily recognizable
If the format of (user key + govt key) is easily recognizable from format (user key  + another user key) then the second format can be outlawed.

But if a govt decides to start an alt block chain, would you support it if

or would you?

If the question what is the point for govt to support bitcoin - the answer is to take control over it via multisig.
If the question what is the point for current bitcoin community to support govt-hijacked bitcoin network is because you probably have some investments in bitcoins already and you will loose them if you quit that network.

What would be the incentive to support that blockchain and not ddos it?
[edit] I think you were kidding.

A: I don't think that any of our current news pipes would compare to Mr president Obama telling his dear citizens that our economic situation is swiftly approaching a point of no return and we have just come up with a great idea how to fix it, a new currency - bitcoin!

B: This way they won't be able to destroy bitcoin, in my scenario they will!

A : The problem is that we who know about Bitcoin have significant control over the news pipe. (can't cover this up)
B : They would just start their own chain from scratch or with premined coins .

Well if you consider the scenario when instead of creating its own blockchain govt announces bitcoin to the masses.
They then release their official client (which is originally compatible with bitcoin) and tell people that they can mine for bitcoins to help our economy grow.
Imagine the whole population of US compared to our little community here, no one would even remember us after that.

They do a few tricks however, they make sure that default addresses in their client are multisig with second key belonging to govt.
They also build the mining capability into the client so that people would start mining right away.
The only way to make it compatible with bitcoin network is if the latter supports multisig (which it is going to right about now).
The final step after critical mass was reached they release update to their client (maybe automatically) that outlaws the original addresses.
300 million miners across US would outhash the existing network with new rules turning current bitcoin community into a bunch of outlaws...

The day the evil gov't gets into bitcoin, I am out of it (and into the wild alt-coin west).
I wonder why the poster who like taxes and regulations got in in the first place. 

This may hasten the day that a govt adopts bitcoin as a national currency. Bring it on!

If the govt gains power because people give them the power to control their money, then good for them. But then we will have a lot of people who may decide to jump the fence and run for it. Good for them too.

More people using bitcoins = progress. And at whatever cost.

I have been thinking it would be great to have an alt-coin designed around creating easy to set up currencies for small countries. It would include automatic taxation, inflation, and redistributionist rules. It would be able to contact a central government server so that taxes could automatically be passed to the separate bureaucracies of government. No need for a treasury, this will automatically be passed down the pipeline. Toss in merged mining and miners all around the world will have a little of that country's money, and will help with exports.

Basically you can have "smart" money that will behave according to publicly known rulesets, and with absolute transparency. The country could mint their own bills (or ahem printcoins and they could be deposited in your digital wallet by scanning them (no bank needed). Counterfeiting would be quickly detected, no one would need to control the production of money, and the government can add in whatever nasty little controls that they like.

The perfect stage for a compromise between liberty and authoritarian self-empowerment.

Excellent thread! I agree that having govt-controlled multisig accounts is just about time.
When somebody asks why would people want to give up control to govt, they miss one point.
The point is that most of the people will probably hear about this stuff from govt in a first place.
It's like "have you heard our govt came up with this new currency bitcoin to save us from financial collapse?"
So for them it will be the only way to do business and get their salaries. They wouldn't even know that once bitcoin was free.

The question is whether they will be able to technically outlaw non-govt controlled transactions.
Since P2SH addresses are clearly distinguishable from normal ones, they might just declare original ones illegal,
forcing current businesses to convert