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Comment by ChuckMcM | Hacker News Reader

This [https://news.ycombinator.com/item?id=5475389] conversation suggests that there might have been a very large withdrawal of funds just prior to the system shutdown.

It points out again how careful you have to be when suddenly there is "real money" on the line.

I've yet to see the "exit strategy" where an enterprising crook sets up an exchange and then loots it once its net value is high enough. But I would not be surprised to see that happen. It has happened in the brick and mortar world with banks, no reason it shouldn't be any different in the digital world.

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So everyone knows the destination address of fraudulent transfer. I wonder if it would make sense to mark it as "dirty" and mark as "dirty" every other address where the funds will be transferred from this address. And then every legitimate merchant, after receiving bitcoin payment would validate incoming address against "dirty" list to allow tracking of thief? This of course works only if every merchant and service in bitcoin world would do that.

Just an idea ...

I doubt the miners would accept this idea. It goes against a key principle of Bitcoin: that transactions are irreversible and no authority can appropriate your coins.

Even the 0.8->0.7 reversal was hard for some miners to swallow. And in that case it was only accepted because only doubly-spent transactions would be reversed. Singly-spend transactions would just transfer over to the new chain.

I don't expect to ever see a Bitcoin fork where a cryptographically valid, singly-spent, included-in-a-block transaction is reversed.

That would be totally merchant-driven, nothing to do with miners. No reversals needed.

Your list could get pretty big, but I think it's a decent idea.

Some merchants don't give a shit, AKA "it's your own fault if you get robbed," but lots of people don't like to help thieves.

It's been a while since I looked at the protocol -- can you "reject" a payment? Or return it?

I don't understand how your proposal is tenable. There's nothing preventing the fraudulent party with their blocked Wallet A to just create a new Wallet B, transfer funds to that, and then use it.

If you're a merchant, you'd have to do origin tracing of the funds in all the wallets you accept. It's not as simple as just creating a blacklist, that would be very easily avoided. The only thing that might work is getting all miners to refuse to accept transfers from the "bad" address to ANY other address (good luck, that's never going to happen).

Isn't the whole point of bitcoins to get away from that kind of thing though? Someone has to maintain a list of what is 'dirty' and that maintainer becomes a central authority in the market. And, as I understand it, part of the philosophy of bitcoins is to have an open and free market. So while your idea is theoretically possible, once things like that start I fail to see how bitcoins are different from any other currency.

The counterattack to this is to transfer small amounts of the "tainted" btc to the addresses of the people who are leading the effort (or to outgoing addresses for large exchanges, faucets, and so on). This is effectively the same as laundering through dice/the late instawallet/et cetera

>and mark as "dirty" every other address where the funds will be transferred from this address

One problem is that bitcoin launderers could intentionally send a portion of stolen coins to legitimate wallets. That would make a blacklist difficult to maintain, to say the least.

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