Topic: Tainted coins - Who dictates that a coin is tainted? (Read 3313 times)

99% of fiat has cocaine on it. All your moneyz belong to George Bush.

A coin is tainted when its been rubbed in someone's taint.

I will not accept tainted coins. However, since bitcoins are digital, they cannot be tainted

Bumping as this recently became very relevant.

I think it's becoming clearer and clearer that tainting is just a Bad Idea^TM and not really in the best of interests of anyone wanting to use Bitcoin.

Also the idea of optional "taint lists" I think just leads to a slow spiral of death as more and more such lists are put together by different legal jurisdictions whose decision about what is or isn't a crime will inevitably vary.

+1

No, that's totally different because this "taint" is visually obvious and can't appear on a bill while it's sitting in your pocket. A better analogy would be if the FBI regularly published a list of serial numbers of currency that would no longer be honored. Banks would refuse to accept bills on the list, and soon so would grocery stores and so on. That hundred dollar bill you got from the bank, now sitting in your wallet, could appear on that list at any time because the person who deposited it at the bank right before you withdrew might have stolen it.

Think about what using currency would be like in such a world. Could you even have ATM machines? In fact, it would be the death of cash -- forcing people to use cash only for small amounts of money they could afford to lose. Such "tainting", if it hit the Bitcoin world, would similarly be the death of Bitcoin if it caught on in any significant way.

Well, in fact this is one of Bitcoin's least important questions right now. You shouldn't be believing everything a company with liquidity problems tells you.

It was just one of many excuses MtGox pulled in order to get through with withholding their customers' money for a while. If there was any legal relevance to this, they would have made themselves liable as well, as they facilitated the trade with the "stolen" funds and only used it as an excuse to withhold the user's withdrawal later. Hopefully, they will stop pulling such stunts after raising enough money to have their users' deposits fully backed by real money again.

Just choose a more honest exchange and ignore this "issue".

I have travelled to over 40 countries in my life and I have exchanged fiat curenncy to goods or another currency for probalby (guessing here) more than 10 000 times, everytime this transactions has gone smoothly, maybe I have been a lucky guy, buy I think we all have similar experinces with fiat.

Only one thing matters: If thieves want to steal it, then it's worth something... food for thought.

Isn't this the MAD (mutually assured destruction) escrow thing again? A robber breaks into a bank, only to discover that there are no piles of cash lying around on the floor (unlike a certain web service that got cracked recently...), and that the money is locked away inside an indestructible vault.

In the end, the robber manages to take the entire vault with him. Upon hearing about this, the bank manager gets really pissed off and has the key melted down, thus making the stolen cash inaccessible forever. And everybody lives happily ever after.

There are at least two issues in comparing the two:

• Tainting of physical paper money is obvious. It can be easily verified and no one would accept a red dollar bill. Thus, tainted paper money bills stop being money in a transparent and easily verifiable manner
• bitcoins aren't separate units like dollar bills. They get mixed with other coins in varying proportions. It would be the equivalent of paying you with a stolen 100 dollar bill, which you deposit in the bank, and when you revisit the bank to withdraw your savings you find out your entire savings of $10,000 is now partially tainted because of this single bill

In any case this is what is great with a free market. People can choose to do what they want based on what they think is preferable. Hopefully regulation will be futile.

I disagree...  It actually demonstrates that Bitcoin is a very good store of value, as even the value cannot be taken away from the thief; the value remains with the coins.

Not necessarily...  If someone gave you a pile of fiat that was splattered with some bright colored dye or paint, such as what happens when a bank robber flees the scene of the crime and opens their bag of ill-gotten bills only to find an exploding dye canister going off in their face and all over the bills, would you really expect a bank or merchant to accept those "tainted" bills?  This is the fiat equivalent to "tainted" Bitcoin.

I haven't personally decided if I support the idea of "tainting" bitcoin yet, but this would be an example of the real-world equivalent.

I'm moderately concerned about that too. Fortunately, Bitcoin is not a US thing, or even an EU thing, it's international. Several governments tried and failed to oppress the Internet with ACTA. To me this indicates that the public at large is at least "catching on", and are refusing to consent to oppressive nonsense. Maybe I'm just lucky to be in a fairly liberal country right now, but I see a pretty bright future for Bitcoin, despite whatever the US might try.

By now, the bureaucrats should start getting worried about how they're going to get paid in the next few months or years.

Of course the whole idea is idiotic in a practical sense for the users.
But for governments it will be a key issue to kill bitcoin.
They will require some form of regulation, if not at user base, it will be at exchange base.
Forcing them to taint or quarantine coins will be one of the first demands. If they don't abide by those rules, they will be shut down.
I hope it won't come to that, but currently i view this as inevitable.

*Sigh...*
The whole concept of taintedness is ridiculous and based on a fundamental misunderstanding of how Bitcoin works.

Unknown Entity A and Unknown Entity B do a transaction.

Bitcoins that were in A's wallet get sent to B's wallet.

With the exception of situations where multi-signature Bitcoin escrow is used, B is the undeniable new owner of the coins, no matter what.

If something goes wrong and A claims that B stole the coins, there is no way to prove that A isn't lying.

Sure, A can go to a government-funded police force in Country F to complain, but then it becomes a ridiculous who-dunnit that can always be gamed if A is a sufficiently clever con artist.

If people want to avoid the problem of theft, use MAD (mutually assured destruction) or some other type of multi-signature escrow feature that is built into the Bitcoin protocol for this very reason. Here's a couple of other questions to ponder over:

• Entities A and B are located in different countries, which have different laws. A transaction occurs and bitcoins are sent. However, it turns out that the product/service/theft/whatever is totally illegal in one of the countries, and totally legal in the other country. In case of a dispute, what happens then? War?
• If coins are transacted multiple times after an unprovable accusation of theft, what is the correct way -- if any -- to undo the damage?

Do you have a cite for this? Because the last time I asked if this was the case, Mt.Gox said no. I pointed out the practical problems with such a policy and they denied they had any such policy.

And I don't see how they could possibly have such a policy. For example, if they retain the right to claim some coins are tainted and not as good as others, presumably they have to extend to others that same right. If I send them Bitcoins I don't consider tainted and they reject them, what do they do? Send me those Bitcoins back? What if I now consider them tainted? (Which is, IMO, justifiable. Since Mt.Gox has now declared them tainted.)

If Bitcoins are not fungible, lots of things start to break.

Of course it's possible, since all transactions are public. It's possible to trace a particular coin's entire transaction history all the way back to its generation and look for transactions known to be illegal. It's also possible to go the other way, and look at a particular illegal transaction and find out where all those coins are now.

The real question is what should be done about tainted coins. I personally think nothing should be done about it, except investigate illegal transactions as soon as possible after they are discovered. Preventing people from using tainted coins would harm innocent people more than it would harm criminals, since criminals are likely to launder their coins (putting them in the hands of legitimate users) before anyone even realises the coins are tainted.

I, for one, am perfectly willing to buy/accept tainted coins, in the same way that I don't care that at least half of the notes in my wallet probably have traces of various drugs on them, simply because I have no way of knowing whether the person paying me is really involved in illegal activity, or just happened to receive money from someone who was. I don't want people's money to be made worthless just because they may be a criminal. That's not how a civilised society is supposed to work, and goes against everything that Bitcoin stands for.

If tainting coins should be done, it should in the end be decided by the police or similar and only apply to that country.
Since it must also be both difficult and illegal to abuse the system.

One problem would otherwise be that it would allow someone to post anonymously under someone elses identity and claim another owners coins to be tainted.
That would open up for extortion by locking that owner out from using his/her coins on MtGox.

If a government would like to control Bitcoin they can force shops to only accept "clean" coins.
By creating a penalty for accepting tainted coins and another penalty to use anonymous adresses.

When it comes to tainting, all coins would sooner or later be tainted, but its a matter of how much tainted a coin is and from what and when.

If a coin is 87% tainted from last week or 0.0001% from last year are two completly different stories.

A coin tainted for being a pretty girl kidnapping ransome.

Very big deal for every owner of Bitcoins
Since that would turn the public
opinion against every one who use Bitcoin unless Bitcoin was allready something everyone used.

The price of Bitcoins would tumble.

In fact every time a big theft of Bitcoins happens, the value of Bitcoins is indirectly affected negativly.
Because in the public mind it shows them that Bitcoin is not a safe way to store value and shops will not want to get hacked.

If a government requires coins to be somewhat clean , it will be in the interest of most people to not accept bitcoins from robbery, theft or kidnapping etc.
Most people will like a society in which crimes do not pay.

Ofcourse, tainting or no tainting. Anyone can still accept tainted coins but the day we have bitcoin kidnappings
it would be in their interest to know how much those coins are tainted and from what and with what certainity that tainting was real.

For example it would be easy for the FBI to publish a list of coins they considered tainted.
And people in other countries would be free to look at it or ignore it.

They say that 90% of British bank notes have traces of cocaine on them. It would be impossible to do business at all, without notes which have been involved in illegal activity at some point in the past (although not while in my possession) .