Topic: On tanted coins (removed from coinjoin thread) (Read 945 times)

Yeah you got it. Taint can infect everything, which is the excuse a totalitarian government needs to confiscate everything. But the totalitarianism doesn't need taint and will confiscate any way. So I think CoinJoin is not addressing the real threat which is lack of strong anonymity (because it is not a complete solution to anonymity, i.e. your IP address is still tracked Tor and I2P darknet don't defend against the NSA).

https://bitcointalksearch.org/topic/m.3340053

I don't get the concept of tainted Bitcoin. If you have a tainted coin and spend half of it are both halves tainted? If you combine half a tainted coin with a nontainted coin is the result tainted? if so then eventually every bitcoin except those that are never spent will become tainted. I don't get it.

Any time you're dealing with money, you're expected to be responsible. This means you're expected to care about whether the Bitcoin protocol promotes democracy or hurts it for example. It does not mean you're required to care, it just means if you don't care then you'll have a lot less mainstream support than if you do care. People who do care will support other people who care and will get on board but if you take the position that you have no personal or professional responsibilities at all, that isn't going to work out very well for Bitcoin or for its users long term.

For instance many users will say they'll never pay taxes again, they'll exploit anonymity to their own personal benefit without caring what effect it has on the Bitcoin community or on the global community, but those voices are in my opinion in the minority when you look at the potential that Bitcoin has.

Surveillance is what Eve does. Gordon is the government agent who investigates (with a warrant). Alice is you.

Every participant in the Bitcoin network has different responsibilities. My interest is in protecting Alice because Alice represents the majority of us in the community. Alice typically speaking does not want to be caught up in Gordon's dragnets, does not want to assist sex traffickers and others who want to use the Bitcoin network irresponsibly, Alice generally wants to limit risk to herself while interacting with the network. Anonymity increases risk to Alice and now Gordon must question Alice as part of his investigation while before Gordon would have had to question businesses, banks, ISPs. Alice is now in the crosshairs, is considered to be part of the bank and there is a money laundering investigation, so Alice is now put at risk just by using the new anonymity feature. What would you have Alice do here?

Don't get my position wrong, I support the anonymity feature. My position is that we should implement it in a way which limits the risk to Alice, otherwise Alice may become a statistic, a false positive, a scapegoat for Mallory. Mallory is the individual trying to actively launder money, or exploit anonymity for their personal benefit even if it harms the Bitcoin community as a whole.

It is the responsibility of members of a community to regulate themselves and their community. Every community has rules and every community has investigations. If you're saying there should be no rules, then how do you expect Bitcoin to ever grow beyond a small group of hackers who want to launder money or buy drugs with it? If it's expected to grow into a useful currency by the masses, if every user is instantly made into a suspect I don't see how it can happen. The result is that every user is going to have to keep their own records and the community is going to have to either come together and solve these problems or when the problems occur then everyone involved in even the slightest way will be caught up in drag nets. I'm for reducing the risk to Alice (the primary user of the currency). The drag net from Gordon is a risk to Alice but so is being hacked or scammed by Mallory. That means Alice has to protect Alice, as Gordon and Mallory both have agendas which don't benefit Alice and which put Alice at greater risk. Being anonymous does not protect Alice from Gordon or Mallory, it protects Alice from Eve. Eve is the surveillance program which doesn't require a warrant which looks at everyone without any excuse.  Eve is snooping just because she can and the increased anonymity and privacy can protect Alice from Eve. If an investigation begins then anonymity will not protect Alice from Gordon who will either arrest Alice and charge her or question her and look to find an alibi. Alice needs an alibi to protect herself, which means she needs to keep detailed records on her own activities just in case.
I never said anything about ethics in this discussion. I'm talking about risk mitigation, risk profiles, and different use cases.

So what you're saying is that every Alice user should be prepared to face Gordon and be prepared to go to jail/prison just because they used the software? I'm saying that if you put that much risk on Alice then Alice will not be the primary user and it will never go mainstream. Gordon could destroy the Bitcoin community simply by aggressively investigating and arresting people who use it lawfully but who don't have an alibi. Gordon has every investigative tool necessary to track a suspect and unlike with Eve, Gordon actually has a search warrant. The fact that it's anonymous, that a crime is committed, and that a certain IP address or some piece of evidence is involved, would be enough to get a warrant and investigate Alice. This investigation would result in a false positive, be a complete waste of time, money, resources, but it does not change the fact that it would potentially destroy Alice and disrupt the Bitcoin community if these sorts of investigations became common.

For Bitcoin to grow Alice needs to be able to use Bitcoin and not feel like a criminal, not put herself under risk of investigation, not put herself at risk of being sent to jail. The only way she can minimize her risks is to keep records so that if she is arrested or she does get questioned she will have the answers that Gordon is looking for and can avoid being harassed. It's not about helping or hurting Gordon, it's about protecting Alice.

I'm not saying that at all. Have a look at this video
http://video.cnbc.com/gallery/?video=3000196987&play=1

What I'm saying is that democracy is very important. That Bitcoin is important within the context of promoting democracy and liberating people. Bitcoin can easily be used to erode or destroy democracy by the same forces that use fiat currencies and off-shore banking to do that. Corruption if it's the source of our problems, why would you want Bitcoin to be used that way as a member of the Bitcoin community? I admit this is a political issue so it's quite possible that you don't care about solving the problems of corruption or about building and maintaining democracy, and I can accept differing views. Technology is neutral but every user of Bitcoin is going to use it according to their views.
And don't you see that my concerns are justified? If Bitcoin could be used to empower the interests of oligarchy then Bitcoin will become a lot less popular. I'm not pulling these scenarios out of my ass, I've given them deep thought. Money corrupts the political process and anonymous money corrupts it the most.

The reason money laundering is considered a problem is specifically because it can be used as a process or method of corrupting a democracy. A coin-operated government isn't necessarily an intended consequence but it probably will happen at some point because at this time it's already like that only it's the dollar doing it. Basically Bitcoin will take on the role of cash, but will be far better at everything cash is good at. Cash is good at corrupting politics and corrupting democracies, let's be honest about that. I'm not saying Bitcoin shouldn't become the best cash it can become, but I m saying that as a community the users of Bitcoin who choose to use it for anonymous donations to political campaigns must also think about how easy it would be for billionaires to use Bitcoins anonymously as well. It's something to think about.

Your argument is that Bitcoin is just a technology and that it's politically neutral? I agree. But the users of the currency all have different agendas and are from different demographics even if the technology is neutral.

The users who fit into the Alice category want to run businesses, or spend Bitcoin like they would with cash. The difference is that Bitcoin will be far more anonymous than cash currently is, which can benefit Alice but also Mallory and potentially Gordon. It can benefit Alice because she can buy products with privacy and cannot be ethically or morally judged. It benefits Mallory because she can con, hack or steal someone else's coins and have a lower risk of being caught, it also allows Mallory to launder money or finance terrorism. It benefits Gordon because now he will have a much bigger budget to fight financial crime and a much easier time getting warrants and plenty of people to investigate.

The risks will mainly fall on Alice and that is the problem I have with it.  Alice is the person who will be at the risk of being a false  positive and arrested in a drag net. Alice will be the one at greatest risk for being investigated. Mallory will typically be more skilled than Gordon or Eve and with anonymity will be very difficult to track down but Alice will be the easiest low hanging fruit.

This could become a severe problem in the future. You don't have to understand what I'm saying, go ahead and implement these features and collect the statistics for yourselves. If we find out that most of the people who get arrested are false positives or are innocent or if we find out that some other technology becomes popular because it reduces risk for Alice then you'll see what I mean.


They do bribe people. But not just governments but private sector billionaires and corporations as well. The problem with this is that foreign corporations from say the USA could take over entire political systems in Europe simply by buying up Bitcoins (or mining) and then funding the elections. It probably already happens to a certain extent right now through the CIA and other intelligence agencies anyway. I think these sorts of activities are the activities of Mallory, because it subverts democracy but it's something to at least think about.

I'm not against the technology or the creation of technology. I'm saying the people who create the technology don't seem to give a lot of thought about how it will potentially be used against them in the future. Bitcoin is a beautiful technology which can solve a lot of problems for a lot of people but it's also going to bring unintended consequences as it's neutral and it's only as good as the hands it is in.

Anonymity could be good for Alice, but when it presents risk to Alice then its important we find ways to minimize or mitigate the risk to Alice. Alice is someone who wants to use Bitcoin for it's beneficial uses, to fight corruption rather than to encourage it, to promote democracy, free speech, etc. Mallory on the other hand is against all of these things and could use Bitcoins to suppress free speech, subvert democracy, and encourage corruption.

They'll rely on other tactics but they'll be able to identify at least some of the people involved and from there they will question Alice. If Alice refused to answer the questions then they'll bug computers and rely on surveillance of Alice. None of this will be good for Alice and I don't see how it would reduce the size of the police state. I see it would trigger an arms race between Gordon and Mallory which would put Alice at the greatest risk in most scenarios.

Updated

My theory is that the adoption rate of Bitcoin is based primarily on the risk tolerance of the demographic of Alice users. If Alice users believe Bitcoin is high risk then Alice users will not be quick to adopt it. Your political views (and mine) are not the majority. Your views are more extreme than most, you believe that the private sector can replace governments. This is fine but let's be realistic, you're not who the majority of Bitcoin users will be over the next 5 or 10 years. My views are all about decentralization, civil liberties, and while I don't have views that say we don't need government at all I certainly don't think we need government telling us how to live or in our personal lives. I think the majority of people who will be coming into Bitcoin will be less and less focused on politics and more and more focused on what the risks are. If they view using Bitcoin as more risky than dealing with the banks and Paypal they'll keep using that. It's like how many years has Tor been around, or Freenet, or I2P, or encrypted email, or email mixers? No one uses these technologies because people have decided the risks aren't worth it.

As long as Alice can opt-out or opt-in on a transaction by transaction basis then it can work without significantly decreasing adoption rate to Bitcoin. If it's all in then Alice does not have the ability to mitigate her level of risk in real-time based on the situation. If that is the case then Bitcoin will have a difficult time achieving mainstream adoption which is the exact problem it faces right now.

A simple solution is to set it up so that Alice has maximum control over how much risk she takes. If she can set up her wallet to make purchases to certain businesses with anonymity turned on, and other transactions with anonymity turned off for instance then it will be recognized as a feature to use when its needed.

In this scenario it will be relatively simple for Alice to only use anonymity when she needs to use it which limits the amount of risk she has to accept to be exactly the amount she requires or is willing to take. Every transaction on the Bitcoin network does not have to be anonymous, I don't even think I'd want every single transaction I make to be anonymous but other transactions I would want privacy.

Everyone has a different risk tolerance so I think this is the solution. In my own case there are many situations where I would definitely want privacy turned on, but then in other situations it wouldn't be worth it.

This would reduce the possibility of drag nets or any unintended consequences. Opt-in on a site by site or business by business or transaction by transaction basis.  

I don't know why you think governments don't already bribe and get away with it because they own the regulators. Jim Corzine is an example. The courts in New York will never allow a case against any financial entity, e.g. the recent Bank of America case was thrown out of court.

Bribery and corruption has existed with every money system ever used by man since Mesopotamia.

Guns can be used by criminals, yet they can also be used to defend ourselves against a government that wants absolute power and a monopoly on violence. Ditto anonymity.


Fact is that economies grow sustainably the fastest (real growth, not debt as a future tax and implosion) when they have the smallest government as % of GDP.

There are less opportunities that uneconomic activity can bribe or coerce.

In an economy with no government and every function provided by for-profit corporations, then uneconomic expenditures are going to hurt the spender.

The most resolute and efficient way to kill a monopoly or cartel is to out-innovate. Knowledge is very difficult to monopolize. We are moving beyond the industrial hard-resource age, to the knowledge age, e.g. 3D printing.

We won't need to give our identity, we will download the design and print what we need instead of it being shipped to us.


The people don't have oversight of the government. Never has been in the history of man.

Anonymity may possibly move us away from top-down governance to individual independence and for-profit economies, away from socialism and collectivism. This will cause a massive boom in prosperity.

The governments would in that outcome shrivel away to irrelevant.


How can they investigate someone when they don't know the identity of whom they want to investigate?


They can't investigate whom they can't identify.


Money trails aren't the only type of evidence that can be used to identify a criminal and prove a crime.

According to that article, any (even negligible) residue of cocaine is sufficient legal grounds to confiscate and keep your cash forever. Nestermann is promoting his second citizenship service, nevertheless he seems to check his facts carefully.

One argument for absolute anonymity is that governments go insane and there is no rule of law. For example, the population of Rome fell from 1.4 million to 40,000 for 600 to 1000 years. People abandoned the city (and suburbs) because the government's demands were impossible to comply with.

The system is shifting to "guilty until proven innocent".

And since 1980 at least, they won't accept your testimony to attest your innocence:

http://armstrongeconomics.com/2013/09/05/lack-of-a-rule-of-law-destroys-businesses/

Since CoinJoin is partially motivated by the threat against fungibility presented by taint...

Cash is tainted too....with cocaine residues!  

http://www.nestmann.com/civil-forfeiture-of-cash-it-could-happen-to-you

Who said do it in the open? I was thinking of a group signature join, where the inputs aren't correlated to the outputs, but then you control all the outputs (they are paying to your anonymous public keys) even where you might not have controlled all the inputs (some of whom are paying to you). Perhaps I am misinterpreting the case you are describing?

Perhaps my prior comment was "off topic" because I was thinking in terms of a solution where we can put the group signature in the blockchain. Thus my rebuttal to you here is I guess "off topic". At least that explains what I was thinking before.