Topic: Mike Hearn, Foundation's Law & Policy Chair, is pushing blacklists right now (Read 84410 times)

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In the mean time, they will arrest and seize the time, reputation, and assets of localbitcoin traders.

If US law makers and enforcement wish to do something then let them, and when they and their partners finally understand the concept of a de-centralised global currency then they might realise that the rest of the world will continue without them.

When a transaction mixes some stolen coins and other coins, the outputs have a certain % of dirt.  This is easy to calculate.

Then those coins, in turn, are used in a transaction, it is also easy to calculate what % of dirt in in those new outputs.

It should be trivial to build an application that can take a list of transaction ids that the user thinks are from illegal activity, and a list of (transaction IDs, output address) that are of interest, perhaps because they are unspent  transactions in a customer's wallet.

The algorithm is pretty simple.  Trace the "not inputs" back until everything is a generation block, or one of the dirty transactions.  Then walk back forward until you are at a transaction ID on the list that is being examined.

I think it's a bad idea to have a redlist for Bitcoins (to track every single coin and what about fractions of a coin). No one is forcing anyone to use Bitcoins and if someone doesn't like that some of them are not clean (were used illegally),  they don't have to use Bitcoins or they can create a alternative coin and call them Cleancoins (CLC) and force them to be used for only legal purposes. What about fiat currencies we use. Probably every country has currency that was used illegally, so maybe we should track every one of them too and redlist the ones that were used illegally. I think it's the crime that needs to be tracked and not everything made unusable that was used in it (what about items, cars, and houses that were used in crimes, maybe we should redlist them too).

But if you squint hard enough then everyone is a money transmitter from blockchain.info to the guy mining with his USB stick.  I understand every agency wants to pad its slush fund budget and regulate everything in sight but what's your feeling on where the line will be drawn eventually?

Agree strongly.  I would likely be a supporter if they had taken that approach or at least saw it as important enough to have a fairly autonomous wing of their operations which focused on such things and collated the results in a coherent manner.

That there are quasi-secret efforts going on which need to be semi-covertly leaked is a giant turn-off to me.  It reminds me a whole lot of how government policy tends to be made in this day and age, and the ill effects such an org structure abound.

BF would have been a lot less controversial, and probably far more effective, if it had limited itself to hiring programmers/QA/etc for the reference client and stayed out of politics and other non-technical areas.

So you acknowledge that attacking the neutrality of Bitcoin is attacking Bitcoin itself? Did you change your mind on the whole red/black/white listing thing?

That would put some minds at rest.

My off-hand suggestion would be to 'know your members' and be clear that the DOX would be handed to law enforcement as part of an investigation driven by the Foundation itself in the event of a scam.

Actually, if I were setting policy I would only allow anonymity in unusual circumstances (for those using Bitcoin Foundation membership as a seal for business purposes.)  Inevitably, the reason for anonymity is to allow the option to take the customer's money and run whether that was the initial goal or just an operational decision which proved desirable at some point.

Self regulation?  How would that work mechanically? Help pick the fruit.

The low hanging fruit here might be to try to figure out how NOT lend assistance to frauds and scams (e.g., Inputs.io) by allowing them to use the Bitcoin Foundation as a seal of approval as they rope in suckers.

After that then maybe spend some effort scratching a friend's back...subsidized by donator's funds presumably.  OTOH, I could see the potential for useful case law coming out of such an adventure.  As for Causius Coins, they've already served their main useful purpose of providing stock photos for the media to use in stories about Bitcoin.

I think it would be cool if Snowden joined the Foundation. Re: "how is it going", I haven't done anything on this beyond starting this debate/discussion/flamewar. However if you look around the forums you will find other people who are building block chain analysis or coin tracking systems. Go annoy them instead.


I think it's a stretch to consider him a money transmitter to be honest, but the designation is so vague you can see how they arrived at it if you squint. A more pertinent question is, why would a criminal use his service? I can see no reasons. He only takes Bitcoins, so for A to move money to B, routing it through Mike doesn't make any difference blockchain-wise. It just adds large costs.

It'd be nice if at some point FinCEN moved from a mechanical application of the rules to a more targeted use of their time: it seems very unlikely to me that a Mexican drug cartel is buying up physical Bitcoins, so all they're achieving here is shutting down an American entrepreneur. I know there are people at the Foundation (like Jon and Patrick) who would like to help Mike and are working on it.

FWIW; if you happen to be American, you should write your congresscritter about a National Medal of Freedom for Edward Snowden.

Time for an update. How is that red-black-yellow-whatever listing going, Mike?

+1

Codifying that consensus would then not be too onerous.  Focusing on the justifiable constraints of regulatory activities will be a win.

In contemplation of FinCEN's request vs Casascius.  It is perhaps a fine line.
It is MTB because Caldwell arguably could still have the private key, and there is not a mechanism for him to provably not have it?
Thus the requests for trustworthiness?

Any follow up questions and answers should be published to the original Committee Hearing web page (unless they are issues of "National Security" or involve confidential business  trade secrets ).
http://www.hsgac.senate.gov/hearings/beyond-silk-road-potential-risks-threats-and-promises-of-virtual-currencies

And a final transcript of the hearings including submitted testimony which is often more detailed then the spoken testimony can be found on the US Government Printing Office Website at
http://www.gpo.gov/fdsys/search/home.action  by searching

"Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies"

I wouldn't expect to see the published testimony before sometime in February.

I think that is already the consensus - peer to peer transactions between two entities directly do not involve money transmission. As far as I know that's not even being debated.

The problems start when there's a third party sitting in the middle who (temporarily) gains control of your money and takes it as a deposit/could run off with it. In a perfectly decentralized world such entities would not exist at all, of course in reality our money starts out in banks so you need to use an exchange to get it out of there.

This is an issue because money transmitter laws (in the USA) work on two levels; the federal level via FinCEN, where registration requirements are not that hard (fill out a single online form) and the compliance requirements are basically to keep records, ID your customers and tip off the government when you see suspicious transactions. Even very small companies can manage that. The problems start at the state level, which is actually justified on the grounds of consumer protection rather than fighting crime - the idea is that if you move money around on the behalf of other people, you might be tempted to steal it, gamble with it, lose it through incompetence, whatever. Hence all the paperwork showing you the CEO's have never been convicted of a crime before, taking fingerprints, posting bonds and so on.

Whether these rules actually in balance do help consumers is rather debatable - it ignores the cost of all the killed startups that could have innovated, but you can see how politicians arrive at such rules, especially after scandals in which money transmitters collapse (search Greg Gonzales).

Fortunately for purely P2P payments in Bitcoin there is no risk of the money going missing, so the only consumer protection issue becomes what if you buy something and it's not properly delivered, which can/will be addressed by dispute mediation/multisig contracts in the protocol. We did a presentation at the FTC on this topic recently.

Thank you for this response.  Carper seems reasonable on the matter and likened it to internet early days in an interview aired this morning (when fear mongers were chanting child porn over and over).  He pointed out that while they certainly worked against such things, the internet has brought much more benefit than harm due to a reasoned policy debate.

If the pencils have been sharpened even further since the response to the California nonsense was drafted, it promises to be very good reading.  Curiosity is peaked.

The internet was a tax-free zone in the US for quite a while.  That model worked strongly to US advantage and this point may resonate with Carper.

If I were to offer anything further to that it would be to as strongly suggest as possible that since every transaction (not within an off-chain service provider) is public and unencrypted, there should be no need for money-transmitter registration so long as all transactions by a potential registrant are done on the public block chain.