Topic: [LEAKED] Private Bitcoin Foundation Discussions On Blacklisting, more (ZIP dump) - page 17. (Read 61199 times)

Maybe it is a fabrication, maybe not, I don't care much. I don't think blacklists will go anywhere because people are mixing their coins for privacy reasons anyway to avoid data mining by vendors, so coins connected to crime already spread through everyone's hands.

Have you read anything at all that I just posted? And if you didn't believe me, have you read through all the posts in the leak? What you just said is a complete fabrication supported by zero evidence.

Reversing Tx   WTF.. Come on, this would kill BTC right away..  

The power of BTC is a lot in this concept that a Tx cannot be reversed.. BTC are based on trust and reputation.. Please dont kill the revolution that BTC is !

Proof-of-sacrifice has nothing to do with asset forfeiture. It's an idea I came up with last year, which was subsequently developed further by myself and Mike Hearn among others for various applications. It's just a way of making a (potentially) anonymous crypto-identity expensive to obtain, which is useful for things like controlling spam on (pseudo-)anonymous discussion forums or making it possible to have anonymous financial services. For instance BitMessage could have used it in favor of direct proof-of-work.

Proof-of-sacrifice has nothing to do with asset forfeiture. It's an idea I came up with last year, which was subsequently developed further by myself and Mike Hearn for various applications. It's just a way of making a (potentially) anonymous crypto-identity expensive to obtain, which is useful for things like controlling spam on (pseudo-)anonymous discussion forums. For instance BitMessage could have used it in favor of direct proof-of-work.

OP: Please correct your post.

The following is a dump of full HTML files (identifying parts removed) of private Bitcoin Foundation discussions on Bitcoin blacklisting, transaction reversing, and create a new proof of work called "proof of sacrifice" for asset forfeiture.

imho any amount of backlash against such ridiculous ideas is justified, to show that this is a no-no.
otherwise it will be like ACTA that is brought up again and again under different names.

and discovering that lobbyists are infiltrating the bitcoin foundation is worth a shitstorm of massive proportions too.

This is a simple and very elegant formulation.

When I travel my dogs stay at a local boarding kennel that charges me 3% extra to pay with a credit card to cover the fees.  (They should charge me more for the chargeback risk, but apparently that is not a big problem for that merchant.)

I can choose to carry enough cash to pay for the boarding, or pay extra for the convenience of not having to lug wads of paper around that have been who-knows-where before ending up in my pocket.

Similarly, with Bitcoin, the buyer can choose to pay with something convenient like a credit card—where available—or enjoy a discount from a merchant who is willing to accept Bitcoin.

How could something that simple be controversial?

no names = out of context.

Some regulators in the USA have apparently expressed concern that irreversible transactions undermine consumer protection.

In this position I will argue that Bitcoin allows consumers to choose between irreversible and dispute mediated transactions. Furthermore I will argue that this flexibility is a significant win for consumers, resulting in cheaper and more reliable transactions, higher quality protection and superior results for the economy.



Definition. Consumer protection mechanisms have over time become widely adopted across many jurisdictions and payment networks. They are the mechanism by which consumers are insulated against non-delivery by a merchant (whether malicious or accidental), as well as hacking and outright fraud. Additionally, they protect honest merchants by preventing competitors gaining an unfair market advantage via dishonest or other deemed unacceptable behaviours.

Chargebacks. A chargeback is a common form of dispute mediation implemented in credit card networks. Chargebacks allow consumers to dispute a charge on their account and if successful, get it reversed. Typically this results in the merchant having the money taken back out of their account, and possibly fined or being ejected from the card network. Chargebacks can occur for a variety of reasons, such as non delivery of goods, being billed for a service that was not wanted, resolution of administrative errors and unacceptably low quality. However the most common reason is use of stolen credit card details. Merchants are allowed to fight chargebacks and win the dispute in approximately 40% of cases.

Identity theft. Because credit cards can be charged only with details that must be given to online merchants to make a purchase, theft of these details is extremely common. Although ultimately caused by the "pull" design of credit card systems, merchants end up paying the price - transactions caused by theft of credentials result in an automatic win by the consumer.

Friendly fraud. The combination of chargebacks and lax card security can result in serious abuse. So called "friendly fraud" is where ordinary consumers initiate fraudulent or grossly unfair chargebacks. Because card networks compete harder to obtain users than merchants, they have little incentive to resolve this problem. An example would be that the porn industry has much higher chargeback rates (and thus fees) than normal, due to consumers legitimately purchasing pornography and then claiming it wasn't them when caught by their partners.

Professional fraud. Some payment providers have inadequate dispute mediation procedures in place. For example, PayPal requires proof of postage from a seller or else the buyer automatically wins any dispute. This leads to a common scam in which a fraudster purchases an item from a seller online, pays via PayPal and then picks it up in person from the victims front door. Hours after the fraudster has left, the payment is reversed and because no postage was involved, the victim loses both the goods and the money.

Financing of terrorism. The chargeback structure combined with the dominance of a handful of payment networks yields little incentive to create better security or dispute mediation procedures. Criminals know this and exploit that fact. Stolen credit card details can cost as little as $3.50 on the black market. Once obtained by "carders" they can be pumped for money. Because the identity details are all stolen anti-money laundering requirements do not help with finding the perpetrators. This was used to great effect by an al-Qaeda cell investigated as part of Operation MAZHAR. Over $3 million was raised for the Iraqi insurgency via carding.

Additional costs. One reason that credit card transactions are so expensive is the cost of dealing with fraudulent chargebacks. Many businesses implement their own risk analysis systems and review procedures above and beyond those provided by banks and card networks, because they find it to be the only way of controlling fraud rates. Even so, large losses are inevitable, and those losses are passed on via price rises and fees.



Bitcoin and consumer protection. Bitcoin was explicitly designed to learn from the mistakes of existing payment networks. Bitcoin does not implement chargebacks. By default, transactions are irreversible, but if buyer and seller agree they can include a third party dispute mediator into a suspended transaction. This mediator is not an escrow agency and does not hold the money at any point. Rather, in the case of dispute they can select a winner. If there is no dispute, they need do nothing at all and the payment will be cleared as normal. The use of this technique is rare in 2013 due to the lack of easy to use graphical interfaces for it, however simplicity will likely improve in due course.

Flexibility and specialisation. By separating the act of settling a dispute from the act of processing a payment, Bitcoin allows buyers and sellers to agree on any mutually satisfying choice of mediator. By avoiding the need to trust the mediator to hold the money, the market for mediation services becomes more competitive and fluid. Specialised trades can be mediated by individual domain experts or small businesses. Ordinary every day trades, like selling some second hand goods in person, can be handled by larger companies that may be able to have agents on the ground. Over time, mediators will arise that draft their own quality standards, and they will compete on the fairness and justice of their procedures.

Incentives to develop security. Bitcoin is already significantly more secure than existing card networks because you do not hand out any credentials or steal-able identity details to make payments. But by preventing users from pushing the costs of hacking onto merchants (who can do nothing about it), Bitcoin also incentivises the creation of a market for innovative security products that explore the balance between convenience and protection. For example, users may prefer to keep a small amount of money on their smartphone with no password or PIN at all, for quick access. They may place larger sums into specialised hardware devices that are specifically hardened against viruses and hackers. They may choose to deposit their bitcoins with a third party that handles security and indemnifies them against loss. Whatever the consumers preference, there can and will be a product that satisfies them.

Efficiency and low cost. Many transactions in practice do not need a third party mediator because the business itself is capable of satisfactorily resolving disputes. Major supermarket chains, for instance, will typically choose to please all but the most unreasonable customers rather than take the hit to their reputation. By avoiding the often inappropriate and expensive chargeback mechanism these businesses can reduce their overheads and pass those savings on to consumers. The website bitcoinstore.com is a successful example of this - they manage to undercut even Amazon by accepting payments only in Bitcoin thus saving money on fraud management, yet it is difficult to find an unhappy customer.

Conclusion. By using sophisticated cryptographic technology, Bitcoin separates the act of clearing a payment from the act of mediating disputes. This is a superior approach that will create entirely new ecosystems of entrepreneurial mediation firms that compete on the quality not only of their consumer protection, but also their merchant protection. Innovative security mechanisms will protect users from hacking and theft. Indeed, many examples of such products already exist.

XXXX and XXXX, You probably don't realize it but you're raising hell against a very important member of this community here, on reddit, bitcointalk... This creates a smear campaign, often misinformed and radical. This concerns me a lot. Mike doesn't deserve that, nobody does. You don't need to target a person to oppose to an idea

This should probably be at least one "good conduct" rule if we don't want to lose engaged members one by one as soon as they touch a sensitive subject. We need members that are able to confront sensitive questions. The future is not simple, and things will be much worse if we are disorganized from the inside.

I get you dislike blacklists/tainting/(tracking scheme of the day). I do too. But Mike is right that we should hash out in full detail the pros and cons of the approach. Because when an external party tries to get regulators to push this kind of thing, it would be nice to have reasoned counter arguments at the ready. The coin validation guys are the first, and many others will try in the next few years. They don't need the cooperation of any core devs to do this, they can drag all of us into it.

And if it looks like we can't win that battle, we should know which variant best preserves users' privacy, so that at least we can do effective damage control. It would suck, but we won't make it better by sticking our heads in the sand. Mike's post was a variant of tainting that mostly avoids the fungibility problems. I still thing it's a bad idea, because of just how easily it could be turned back into its nastier cousins, but it's nice to know that we have slightly less crappy options, should it come to that.

I mean look around this subforum. 90% of it is figuring out how to deal with the regulatory nonsense thrown our way. If and when Mike does more than just discussing a sensitive topic (If he writes up a draft position for the foundation that supports some taint variant, for example) then you'll be justified in your complaints.

Fwiw I finally got around to signing up because of this issue, either Mike or the foundation wheren't doing a whole lot to clear up the misunderstanding on bitcointalk and the discusion there is ignoring the fact tracking coins is already possible.

Exactly. Taint (and the calculation thereof) is even a feature on the blockchain.info-Website. Anybody could implement some kind of blacklist/taint feature on a website within a few hours. Since it's possible it should be discussed - independent from one's personal standpoint.

Yes and there's no reason a discussion can't cover both sides, making it accessable to all users and making it more difficult for all.

Thanks to Jon for trying to clear things up on bitcointalk, looks like its impossible over there though as the thread title invites a flame response before any of the discussion (lol) is read.

Can I suggest this is not really about coin tainting, but about organisational politics.  We all would love Bitcoin to be free from the shackles of human opinion.  Unfortunately however brilliant Satoshi’s idea was it needs help from clever and hard-working people in the core dev team to support its growth.

If I might go off piste for a moment.

Let’s say I am a fund manager and I see Barry Silbert’s trust return 200% plus gains in a few weeks,  and think to myself, should I put 0.1 or  even 1% of my managed assets into this thing.  What is the first question I would ask, “who’s in charge” answer “no one”.  Well that’s not really true is it, the core dev team have an enormous responsibility and can guarantee that any change they have to effect will piss substantial sections of the user community off.

May I suggest the foundation prepares itself to be the Mexican pinata for the broader Bitcoin community.  I am not sure if this is already happening, but it needs to bring together the strong voices of the core dev team the foundation board and rapidly growing businesses to build organisational confidence.  If people see that diverse well informed opinions from intelligent actors that have a great deal to loose can come to consensus through a pre-defined and transparent process they may not like the outcomes but can get involved or make a choice to go elsewhere.