Topic: Proposal to help stop thieves - page 2. (Read 4778 times)

Maybe a better way than a blacklist would be to allow people who want this to simply publish their addresses along with their contact information, so that if any of their addresses do ever turn up in the course of tracing coins they can be contacted to ask them who exactly they got those coins from.

It would also help for givernments to issue signed PGP identities people can use to sign things in a way that proves it was them that signed it, so anyone concerned about this can simply insist on a signed transaction record as a condition of accepting any coins, so that when the tracers of stolen coin do come knocking on their door they will have good proof that the person they received the coins from really was who they claimed to be thus that they accepted the coins in good faith...



-MarkM-

Cash does not have a complete public audit history of all transactions going back to its creation. Bitcoin does. Your proposal tries to leverage this fact to make Bitcoin distinctly less fungible than cash.

While it's true that in major bank robberies bills can be marked with exploding ink bags or traced to a set of serial numbers, in those instances there is major corroborating evidence that a robbery actually occurred (police reports, camera evidence etc...). There is no similar reliable way to mark Bitcoin transactions as a robbery.

The situation grows even more fragmented over time as each Bitcoin balance has the potential to be stolen or claimed stolen multiple times over:

https://bitcointalksearch.org/topic/list-of-major-bitcoin-heists-thefts-hacks-scams-and-losses-old-83794

Sorry, but this proposal is DOA.

All good points. But here, I think you are discussing how to construct the blacklist / which addresses should go on the blacklist.

Before we get there, we need to have the ability for the client to easily flag blacklisted coins. I think after that, different people will have different ideas about how to construct a blacklist. They will try different lists, some will become popular, others won't.

To address your specific points:
- Yes, when you accept coins, there is the risk that they are stolen. If you are OK with accepting stolen coins, that's up to you. If you are not, then you would want to at least know that the coins you just received are stolen.
- If you care about avoiding using stolen coins, use mixers at your own risk. That is true even now. Right now, you know that if you use a mixer you might get stolen coins. If you don't want to deal in stolen coins, perhaps you should avoid using a mixer. Or, if people start using blacklists, maybe someone will create a mixer that is careful about which coins it accepts.
- As I said before, unless the proof that coins were stolen is ironclad, most blacklist users will not add them to their list.

Maybe. But even to alert the cops, you still need to know that the coins are blacklisted. So your client needs to be able to use a blacklist.

This is great. It's exactly this type of discussion that we need to have to come up with a good idea that people like.

Blocking the coins makes no sense in many scenarios:

• If the coins are reused before being signaled as stolen, an innocent person will suffer from having received worthless coins before it was known that they were worthless. And you cannot distinguish between coins having been moved by the thief in his own wallet from coins having been used to pay a service or a good, so as soon as the coins have been moved, you can no longer blacklist them.
• If the coins have been sent through a mixer, then you will now blacklist any output which contains even one satoshi from the stolen coins.
• You can attack someone by convincing people that 1 BTC mixed with their 10,000 BTC has been stolen, thus rendering the whole 10,000 BTC worthless.

Can't you see the dozens of way your proposal could go wrong?

Maybe you should not be alerting the sender that you realise the coins are stolen, instead you should quietly call the cops. Rejecting the coins could tip them off that the jig is up so they run away before the cops get there...

-MarkM-

Cash is one of the most fungible things there is. Yet, it's not 100% fungible. In cases of major bank robberies, stolen cash is traced back from the people using it to the thieves.

I am all for bitcoins to be as fungible as cash.

You send me coins. Then you claim that I stole those coins from you. If everyone believes you, and if everyone puts those coins on their blacklist, then I am screwed.

In reality, if you don't have ironclad proof that I stole the coins, no one is going to put them on their blacklist.

This is the key difference between people optionally using their own blacklist and a centralized blacklist that is forced on everyone. With a centralized blacklist, you have to ask, who makes the decisions, how, etc. Here, you are just giving people a choice to easily do what they, in theory, can already do.

What stop someone to attack someone else wallet saying the coins was stolen?

Your proposal is hardly new or novel. It's just another variant on tainted coins and I will resist any such proposals by personally rejecting and opposing use of any such clients.

https://bitcointalksearch.org/topic/a-warning-against-using-taint-85433

What you are discussing is deliberately destroying one of the most important characteristics a currency can have, namely Fungibility:

http://en.wikipedia.org/wiki/Fungibility

You are right. In this context, it does not matter who stole the coins: bitfloor or someone else. They were stolen. I don't want to take them. I can refuse to take them right now, but it's difficult. All I'm asking for is an easy way to do what I can already do anyway.

Stolen coins should still be spendable as stolen paper money. - Yes and no. Paper money that you got from a thief is spendable. If it was a big theft, wait until the cops trace the money back to you...

I don't care about tracking stolen coin- That's fine. You don't have to use a blacklist. I will. It's all voluntary.

Adding an additional layer of complexity to an already hard to grasp protocol will confuse and turn off the average user.- Maybe. Or maybe what's turning off the average user is the fear and uncertainty from hacks and thefts. And we should have several methods in place that are very easy to use to both prevent thefts and make unloading stolen coins difficult. More methods = more security = more better.

Stolen coins should still be spendable as stolen paper money. I don't care about tracking stolen coin to catch the thieve but blocking transaction is bad for Bitcoin. Adding an additional layer of complexity to an already hard to grasp protocol will confuse and turn off the average user.

TL;DR: usually we only know someone stole some value; claims that some coins on the blockchain were stolen are usually being made by the primary suspect, that is, the person who is refusing to pay people owed money and claiming coins on the chain are somehow an excuse for not paying people what he owes them. ("Someone stole from me so I am now going to steal from you (with no proof anyone stole anything from me)...")

For example we have no way of proving any coins were stolen from bitfloor at all.

They could have been stolen by bitfloor.

I suppose in both cases they are stolen though so watching them to see if they ever fall into the hands of any friend or relative or business associate of bitfloor could have merit... until a thief figures that out and makes sure to use them to implicate a victim.

About the only cases in which you actually know coins are stolen is cases like this, where you do not know whether the person claiming they have been stolen is lying or not, all you really know is that person owed money to people. Given fungability, it is not really any particular coins that have been stolen, all that has been stolen is value, and the person who stole that value is claiming some coins on the blockchain represent that value.

It seems wrong to screw around with those coins, we have only a suspect's word for it that he is not the current owner of those coins.

Better would be to consider who owns which coins currently irrelevant to the fact that he owed people a certain amount of value.

-MarkM-

1. If A and B both want to optionally block tainted coins, then they will have to work it out between themselves.

If A did receive the coins from the thief, then A has or should have some information about who the thief is. He can share that info with the world and with law enforcement. The coin blocking actually alerts A very quickly, so he can take action. If A is running a don't ask don't tell business, like a remixer, then that's the risk he takes.

A might be stuck if he was selling immediate delivery goods, like ebooks / music, etc. If he was selling goods that need to be mailed, the handling takes a day or two, which gives him time to send the coins back to where he got them from and request clean coins.

2. You have a point. I think most people who use a blacklist will use a very conservative one. If the thief is sitting on the coins, those coins will go into the list. But if, by the time the dust clears, the thief has spent the coins, a conservative list will not list the coins.

The bitfloor thief is STILL SITTING ON THE COINS. So I think most people would be fine with blacklisting them. But nobody will use a list that today lists coins from the Mt. Gox theft a year ago. People who wish to block tainted coins will have choices as to which coins exactly they block and as to which list to use.

Maybe the theft was reported AFTER A sent the coins. 

A accepts coins from thief (unknown to A).
A sends coins to B
blacklist updated to include theft
B client reports coins are tainted.

So who gets stuck with the blocked coins?  A? B? It certain isn't the thief he already got away with it.

+1

1) Sure. This blacklisting will be optional. The people who turn on the option will be fine with paying the fees. If you don't want to pay fees, don't turn on the option.

2) Do you mean this scenario:
- A sends coins to B.
- B's client detects that they are tainted, sends them back to A.
- A's client detects that they are tainted, sends them back to B?

Good question, something to think about. If A's client had the option to detect tainted coins turned on, why did it receive them from someone else in the first place? It's possible, for example, A just turned on the option, but I don't think it will be a common occurrence.

If the coins have gone back and forth between the same 2 people a certain number of times, the client could ask for confirmation to send the coins back. At this point, B could call up A and say, "Look, you are the one who sent me tainted coins. I am sending them to you. Don't send them back." A and B will have to work it out between themselves. The client will break the infinite loop by asking for confirmation and / or adding a fee.

Currently bitcoin transactions are just transfers of money. They are not "payments", as there is no indication for example what the transfer is for, who sends it, or how it can be returned. In particular, there is no indication that the transfer was requested by the receiver.

Receiving an involuntary bitcoin transaction is like finding a bar of gold on your doorstep, and potentially later realizing it was stolen good.

As in so many cases, the solution in my opinion is a payment protocol, where the transaction can be negotiated by sender and receiver at the exact time when the transaction takes place. Regardless of whether marking coins tainted (even subjectively) is a good idea, such a system would certainly allow transactions to be refused.

Your right that it is voluntary but it many believe it will be conterproductive and create chaos and additional risk.

Just some scenarios you may not have thought of:

Say I accept coins from someone and then the "bad tx" ends up on a blacklist?  So now through no fault of my own I am stuck with coins that I may not be able to spend.  At best I lose some % of their utility, at worst nobody takes them and the cost of the loss is passed from the responsible party (the thief & the entity who left coins unsecured) to me (an innocent third party).

Think that is going to increase merchant adoption?  What about malware?   Infect user's computer so their black list is spoofed and trick them into accepting "bad" coins.  

Also what about coin "hostage".  You sell me 1000 BTC worth of Gold.  I pay you 1000 BTC.  I then say I am going to report these stolen unless you give me back 100 BTC.  Your choice lose 10% or lose 100%.

The person(s) maintaining the list?  How are they going to pay for the cost of investigating all these claims and counter claims?  Charge list subscribers?  So the loss is simply subsidized by third parties.

You can't pretend it is all benefit with no cost.   The cost is in terms of confusion, chaos, complexity, reduced adoption, acceptance risk, and corruption (lots of power & money to be made adding/removing an address from a blacklist) are huge.   You are right nobody can prevent you from building a list today but it doesn't mean that it is a good idea or people won't do everything possible to ensure it doesn't gain enough acceptance to be effective.

BTW: Not sure where you get the idea your proposal is new.  It has been proposed before many many times (essentially once or twice after every major hack going back 2 or 3 years).  It is just as bad now as it was when first proposed.