Topic: The problem of stolen coins - page 3. (Read 8955 times)

If I ever encountered (sic) that my dollars were stolen and I do not get my money's worth, I'd get straight out of dollars
If I ever encountered that my gold was stolen and I do not get my money's worth, I'd get straight out of gold.


It isn't the role of a currency to prevent improper use/transfer or ensure recovery.

If I ever encountered that my bitcoins were stolen and I do not get my money's worth, I'd get straight out of bitcoin and never come back. Somehow I have the feeling, I won't be the only one with such a reaction. If this verfication is truly unstoppable and will really happen, bitcoin is doomed. The banks win. The governments win. Fire in the hole.

A question: When some bank robbers rob a US bank, they sometimes get some bags of US Dollars with them. I don't know if all bills' serial numbers are stored in the bank system, perhaps it is for newly delivered USD bills that are just printed ? Anyway, the dollars that are stolen in a bank robbery, eventually makes it back into the economy, and even if the banks have the serial numbers, what they're likely to catch is innocent persons. For instance you buy an icrecream, and you get some bills in change, and then you give those bills to your niese, and she goes to the bank with her mother to deposit them in a savings account, and she gets rejected because the money stems from a bank robbery. That would not make sense.

Of course if it's possible to prove a direct connection, for instance a police raid in a house, finding a Van with gear that can be used in a robbery, and bunches of newly printed bills in a hidden room in the house, matching serial numbers stored at the bank, then it's pretty obvious who the money belongs to, and they have to be returned, and the holders of the money needs to be investigated. But once the money get's into circulation... lost cause. You can't expect every store everywhere to check that USD bills received from a customer is not coming from illegal activity.

Likewise if mtGox receives coins directly from a heist, they should freeze it and start an investigation. But I can't imagine a skilled cracker being that stupid..

So if we look at bitcoins as the internets answer to the real worlds cash, then it's only logical that stolen coins can't be blacklisted and tracked. It will only lead to a host of problems of which two are very obvious:

1. What if coins are tainted by malice ?
2. What if users encounter problems because a few weeks ago the coins they posess were stolen ?

We can't expect the average user to check if bitcoins he's about to receive are stolen, just as little we can expect a walmart customer to check every bill he receives in change against a list of usd bills stolen from usd banks.

So basically, blacklisting stolen on a large scale, will only lead to problems. Now, what we need to do is to make more secure services, reduce hot storage, and amp up security altogether. I guess if anyone runs a business where they handle large amount of coins, they can also afford dedicated servers which will reduce the risks of an insider heist.

exactly, it sucks but I'm pretty sure this is gonna happen

but it could also be a good thing, those bitcoins have to stay in the bitcoin economy! you have to spend them and the next holders will have to spend them too

I suspect that governments can use that loophole regulate bitcoin - they can force the exchanges to check coins and then even people that transact outside of exchanges will start doing it as well - because coins that would not be accepted by exchanges will not have a full value.

The solution - use exchanges that don't overstep their bounds.

Right, now we all have this problem of having to make complex verifications about where BTC are coming from if we want to deal with MtGox and possibly other exchanges/users as well in the future.

That's not a stolen coins problem. I would say it's a greed problem.

Tell that to those that get their accounts frozen

There is no problem of stolen coins beyond not getting your coins stolen.

Trying to have a solution to this non-problem will kill Bitcoin and likely whatever comes next will need to ensure such "solutions" aren't possible.

What the community decides is one thing what would an exchange do after receiving a court order is another thing.

If anyone would like to launder bitcoins for any reason, feel free to contact me. I will only charge a 3% fee.

I don't work with exchanges, so I don't really care about dirty coins (as long as they can buy my coffee and my alpaca socks - and I can always launder them on printcoin bills). Just pass them through about 10 different addresses before passing them on to me. Feel free to contact me via an alias.

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If anyone gets blocked from exchange using dirty bitcoins, just say you got them from me - a known launderer. I can make it truth for a small fee.

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The money wants to be free. Opposition to this believe just creates openings for profit.

I agree with you, it's a pain in the ass and it hinders Bitcoin, I'm just saying it's inevitable.

I don't even know if that kind of thing can be improved in the protocol..

money is money, but bitcoins are not like coins or bank notes, they're bank wire transfers

it's up to you if you accept bitcoins of unknown origin, just remember the risks..

It's also a feature of Bitcoin that you cannot reliably link a transaction to a person once there is a hoop in between you and him.

You can make all guesses you want but encouraging the confiscation of coins based on conjectures looks criminal to me.

But it's a feature of Bitcoin. Bitcoins are highly traceable.
You're implying that people should ignore it but it's not gonna happen.

I'm going to say some things that you might not like - I definitely don't like this idea but...
As time passes by - more and more people get interested in Bitcoins, more and more thefts will happen. If we start marking Bitcoins as 'dirty' - some time later we will have almost 99% of the coins being marked as bad.

What should an average Bitcoin user do if 99% if his income is 'dirty'? Is he actually responsible for some event that had happened long before he even got to know what Bitcoin is?

Tracing stolen coins and returning them back to the owner is good at first or second step of transacting those coins. And only if you are 100% sure that previous owner lost them and current owner have stolen them.

As it have been said previously - money is money. Community should try to block theives but we shouldn't go absolutely crazy about it. And I think that community should accept this concept as default. This will be hard to do - exactly as it is hard for someone to accept Bitcoin as the completely new paradigm. But if we don't do this now - we will arrive to that point anyway: Bitcoin stands for new opportunities but it also brings new problems. And people will have to learn to live with them.

Bitcoin is already hard for the common folk to understand and now we are adding an extra layer of complication when we all need to know how to track the origins of every transaction.

This only makes BTC less attractive for casual usage and impedes its adoption.

It's a very difficult question.

1. The attacker(s) who stole the coins is probably not dumb, so he won't shuffle the coins to mtGox and dump them right away.
2. The coins could be spent in numerous ways, they could be exchanged to fiat money through exchanges or otc-trades, or they could be used to purchase goods.
3. There exists no central registry of stolen coins, and since the exchanges are not regulated, attempting to have them all applying a black list will be futile.

Then, what if an exchange suspects that funds stem from illegal activity ? If they have reason to believe so, would the right way to go about it be to contact law enforcement and initiate an investigation, and if the investigation could not prove that the coins are stolen, then they would be returned to the account holder. But there are many what if's. What if a person buys 100 BTC online, and then transfers these coins to MtGox, and then mtGox freezes the coins, because they come from criminal activity, how can mtGox know if these coins are being held by an innocent 3rd party, or if it's the attacker that have just moved them between different addresses ?

Say the attacker offloads coins at an exchange that deals in virtual currencies only, does some trading there and then withdraws the bitcoins again, then he might have washed his coins, as the original coins from the heist are paid out to other customers or is still left at the site wallet.

As far as I can see, when coins are stolen, there are so many ways to hide your tracks and to get away with it that unless a thief is catched redhanded in a physical location, there's not much one can do really. And also if there were to be blacklisting of coins, what would stop anyone from blacklisting other people's coins ?  I'm sure there could be clever methods of attempting to prevent that, but sooner or later it could happen. Imagine you moved 2K BTC to mtGox, and then for whatever reason (perhaps somebody just didn't like you), they claim that these coins are stolen, and then mtGox freezes your account, wouldn't be much fun, would it ?

I'm sorry to say this, but I think both customers and merchants needs to learn from the numerous security breaches and take appropriate measures to protect their funds. Once coins are lost, there's likely no recourse, unless you're lucky enough to work with highly specialized law enforcement that deals with computer crime. I guess most constables would just scratch their head saying, "Eh.. bitcoins you say ??", followed with a blank stare.