Topic: Eventually the FUNGIBILITY issue of bitcoin will make headlines ... - page 9. (Read 10581 times)

Yes and there is an enormous difference in difficulty and practicality (and also likely effectiveness) between doing that and querying a database of risk scores fed from a public blockchain (and other sources). Big data is upon us and the data in Bitcoin isn't even that big.

Which of course explains why as you say nobody analyzes paper money but Coinbase and apparently Bitpay and probably others are certainly analyzing the blockchain. That and legal differences (I think already covered on this thread or maybe elsewhere recently).

well, it depends on how much effort goes into it.
one can lift fingerprints off the #20 bill, analyze chemical residue on it, etc., however, apart from criminal cases, nobody does this.
In my opinion, it is somewhat imperative for bitcoin to become fungible and to incorporate some tech to do it at the protocol level.
Trace Mayer was talking about this: apparently Messrs Back and Maxwell were ready to introduce this before all this blocksize nonsense came about.

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Why in a world would anyone ever started blacklisting coins? What's the point of this? This is like you go and check every dollar bill for cocain and stop using every single one that has cocain traces on it. Not to mention the ones that were used to pay for prostitution or some other crime. There would be no dollar bills left if we started doing this.

Only the people that would want to harm and even destroy Bitcoin would start blacklisting coins.

The two are in practice almost identical unless you are giving identifying information only to a privileged party (bank, government, etc.) in which case fungibility may exist at the discretion of that entity, or fungibility is enforced (by law). The former is certainly not the case in Bitcoin and likely never will be. The latter is theoretically possible but unlikely. If the units have a visible and distinct history that has at least the possibility for them to become non-fungible since actors may attach importance to properties of that history.

This has already happened in Bitcoin with actors such as Coinbase and apparently now Bitpay identifying coins by a "good" or "bad" history. Whether this will become more or less common is a matter of speculation, not the properties of the system itself. That the properties of the system can give rise to these issues is proven by experience.

Stop conflating two very different issues. Privacy/traceability != fungibility

The problem with having a transparent blockchain is the lack of fungibility. This is way gmaxwell is working hard on features like confidential transactions. We NEED to improve the anonymity on Bitcoin before it goes mainstream. You don't want people's money being rendered useless because of a lottery based on the origin of said money (if its legit or if it has a trace of some criminal activity which you had no idea and no control of).

Pretend a well-known thief was committed via bitcoins to the tune of millions of dollars (I know, it's a stretch, but let's pretend nonetheless). The crime was reported to authorities, thus anybody having direct information pertaining to the crime but fails to report their findings would, in fact, be committing a crime themselves. Follow me so far?

Enter BitPay.

Tainted coins were presented to BitPay (read: I present to you evidence of a very bad crime), but they turn the customer away (read: Thanks, but we don't want no part of this). At this point, BitPay is privy to evidence related to a major heist. It's bad enough if they just let the entity go with a "Thanks, but no thanks!" as per their new public stance on the taint issue, but they now would put their very existence in jeopardy if they opted to not report the evidence to the proper authorities themselves. But, if they do report each and every suspected instance to the authorities, as they must, that would 100% be badder for them and Bitcoin, the latter self-explanatory, while the former would consist of doling out resources so to not be in foul with authorities spanning the globe (not just in the US). Demanding resources that BitPay has demonstrated they no longer have.

BitPay just announced to the world that they would not accept tainted coinage. Genius! Now that they have demonstrated to authorities that they possess the means to help track criminals, they've put themselves in positions to 100% having to follow through with each and every suspected transaction by not only rejecting the coins, but turning in the suspects sans letting them know that that's the case, for you don't tell suspects that they're goin' be reported. YOU JUST DO IT!

And that's how you destroy your venerable brand in ONLY a few short days. Again, GENIUS!

Again, absolutely wrong, you will be able to spend them anywhere or with anyone that uses Bitcoin.

If merchants support such a blacklist then it's likely they are not actually using or accepting BTC.

Bitcoin is perfectly fungible, the government though would like you to believe otherwise.

I still don't see the argument being a valid one, when one says, "hey if my coins won't be accepted any where, let's just mix them with a bunch of other coins so they won't be SO bad."  It's like putting gold into a cement mixer, where shit is dumped on top... over the course of time what's going to come out is shit covered gold, which no one will want to accept before you wash it off.

It would help if you were a big time miner and minted your own fresh coins, where you develop some kind of way to mix your own coins with your brand new ones... other than that particular instance, I don't see mixers or stuff of the like being very helpful.

I see it as a much bigger issue than the block size debate.

The block size debate is based on what user's hiring bitcoin to increase the block size? Who is willing to pay for bitcoin to increase its block size and for what reason?

Is there demand for this by new merchants I'm not aware of?

I honestly think the implementation of "confidential transactions" or something that very closely mimics monero's fungibility would be more worthwhile.

I agree at some point the block size needs to increase but I don't believe it is the biggest problem that bitcoin faces.

Watch this video where Trace Mayer outlines a better focus the community should have right now and tell me what you think:

https://www.youtube.com/watch?v=uHXfEJD6DUk

We aren't even at full blocks and it has taken years to get nowhere in the "debate/discussion" of blocksize.

I agree with Trace mayer when he says that the bitcoin block size debate is a waste of time, money, talent, and resources.

Like I've said I don't see it as a big issue. There are certainly more important things to worry about like the blocksize debate which we need to seek a consensus in order to move ahead. But I certainly see the fungibility part getting blown out of proportion and then exploited. Tiny issue become a big one.

Monero is Monero. That is a feature. But having looked at bitcoin, I'm sure there is way by the developers to work something on it... which I think they are be in the position to comment, not me.

So does this mean you think bitcoin developers will never implement a truly private and untraceable functionality (unlinkability and untraceability between addresses)?

Monero does a pretty good job of this from what I have seen and experienced.

And in no way am I trying to erode people's trust in bitcoin, just merely discussing the potential pitfalls when talking about fungibility.

Now that is something new that I haven't thought of. Unless you are in the business of sabotaging bitcoin's reputation that could be seen as potential new area to focus on, in order to erode people's trust that they have on bitcoin.

Now let's review back on the potential loophole. Fungibilty... If you consider the issue on tainted coins you received without yourself knowing the history behind it, 'Yes' there's no denial that will be a problem. But however, on the flipside, it will not become an issue as long as coins get properly mixed and you are dealing only with reputable person. But chances it can still happen to you being victimized is still there.

Bitcoin can never be a perfect system, fiat neither but hey, those who are into the exploits business will use that to their full advantage.

I'm afraid it will indeed be a big problem in the future just because every coin can be tracked through the blockchain. Fiat does not have this problem, unless you steal it from a cash truck and your fiat gets a good splash of paint on it..

How will you know what coins you will be paid with? Impossible. After you receive some supposedly linked coins, you will never be able to spend them? Quite a problem.

It'll last longer after the layoffs

This is what I am getting at.

If this exists then it should be solved if possible. If bitcoin does not solve it, something else will (or has).

Well you can send coins on the blockchain in a permissionless way.

That is doable.

Satoshi never said it was a perfect system for interconnecting with the existing financial systems and with government oversight etc.

If there were any changes that everybody liked in XT, they'd get merged into core.