From a game theoretic perspective where no parties can be held accountable, being a scammer or hacker will always yield higher pay-offs. This is why Bitcoin will tear itself apart.
The difficulty would be making the blacklist fast but accurate, i.e. there'd need to be high standards of proof that coins were stolen rather than traded fairly. But if blacklisting took too long the thief could already have fenced the coins for real assets before the blacklist took effect.
Ultimately it could end up looking like credit card fraud alerts - suspicious bitcoin transactions could be put on hold (temporarily blacklisted) until confirmed by the wallet owner. But at that point you lose anonymity. I guess you can't have anonymity and accountability...
Well, you could say NameCheap wouldn't accept those coins in the first place, but can you really expect every store and person to be using this list?
What happens if you take those 4m worth of bitcoins, send 3m to your own wallets, and distribute 1m to random wallets of strangers? How do you know which wallets to blacklist? All of them? You're just going to put tens of thousands of people in the dark, and say their bitcoins are now worthless and blacklisted, because they received a random payment?
Hmm, I didn't realize you could send money to people without their consent. That would make blacklisting more difficult. But if receiving the bitcoins was indeed unintentional on their behalf, you could just temporarily blacklist them until they returned the stolen bitcoins to the original owner.
In theory this could lead to attacks where small amounts of stolen bitcoins are continually deposited in victims' accounts, but that could be avoided if the exchanges themselves enforced the blacklist and refused to process transactions from blacklisted accounts (except back to the theft victim).
> Well, you could say NameCheap wouldn't accept those coins in the first place, but can you really expect every store and person to be using this list?
It would certainly require a cultural shift in bitcoin use, yes. I just find it funny that the entire transaction history is public record, yet bitcoins can still be stolen!
I think the point of blacklisting would mean that miners wouldn't include transactions from those addresses in blocks. Once the transaction is in a block then there's not much that can be done, so blacklisting will require cooperation among a majority of miners.
Who and how would decide whether given bitcoins are stolen?
Who will create this blacklist?
"I guess you can't have anonymity and accountability..."
Actually, you can:
People that received tainted coins could repudiate them with high fee transactions to invalid addresses (so that most of the coins go back into the network as mining fees). I guess 'invalid address' is the wrong language, but you get the idea, an address with no private key.
People aren't going to maintain such lists individually. So you'd want some central operators, like the antispam DNS services. But then they have to decide what counts as "stolen". Ordered something and then claim it doesn't arrive - who do you believe? You're back to the paypal situation, except rather than reversing transactions you're declaring bitcoins "stolen".
Not to mention the difficulties of running a collaborative central operator in a community of radical individualists.
Forex traders may have been attracted to a market without regulation but their customers were there to make foreign currency trades. I'm sure that not as many bitcoin users would be happy to lose their anonymity to gain that accountability.
What about the other side of regulation? Not from customers demanding safety but from governments demanding reporting? (E.g. anti-money laundering, tax-evasion laws, commodity markets laws)
I don't know nearly enough about the mechanics of bitcoin to say anything remotely meaningful, but it seems like there is no way that bitcoin won't be regulated like any other commodity. At least in the US, the CFTC will absolutely regulate it by criminalizing anyone for not registering their holdings. Or, even outside of commodities, you could get something like FACTA that forces people/banks to report stores of value in offshore centers where US citizens are involved. This is all US-centric, sure, but why wouldn't it be like this generally? Or, rather, do the mechanics of bitcoin mean you could stay anonymous while not becoming a criminal under the regulation that is going to come?
I'd say that more and more bitcoin users are using it because of the hype, not because of the anonymity.
>>I'm sure that not as many bitcoin users would be happy to lose their anonymity to gain that accountability.
Maybe not yet. But if everybody currently holding and hyping bitcoin achieves their goal of mainstream adoption, then at that point the new majority bitcoin user demographic will probably be very happy to lose anonymity to gain accountability.
That's why Wells Fargo has a market cap of $225BN but has assets over a trillion, right?
Banks are in an unusual position. They have cash, but it's not theirs. Depending on the report and reporting rules, it might be reported as either an asset or a liability.
http://www.amazon.com/The-End-Money-Counterfeiters-Dreamers/...
Me. I'd been slowly weaning off credit cards due to the potential for purchase profiling and then two years ago Visa and MC both started in double-talking about selling "anonymized" purchase histories for online ad targeting -- as if you can anonymously target specific individuals.[1] That obvious prevarication was enough to convince me it was now open season on customer privacy so I cut my usage down to the bare minimum necessary to maintain one account for emergency use.
For me, $100 bills are the new credit card. I get a stack from the teller at my credit union about once every 6 months (careful to stay under the $10K mandatory government terrorist hysteria snitching limit[2]) and spend as necessary. It took a little getting used to, but it quickly became quite normal. I'm confident that my CU does not participate in any schemes to correlate serial numbers on bills with purchases. At least not any non-government schemes.
[1] http://online.wsj.com/news/articles/SB1000142405297020400230...
Unless regulations relax, there will be an ongoing profitable business for people who sell software that does behavioural analysis on compliance-related cash behaviours for the finance sector.
Best case it is really no one's business where, when and how I spend my money. Worst case the info could be used to directly harm me, maybe through blackmail, maybe to enable some other crime against me or maybe even to falsely implicate me in a crime that I would then have to spend time and money to defend myself against in court.
As for the change - my credit union has a coin counter, I bring in a bucket of change, they give me dollar bills in return.
Some of this is probably just due to historical accident, but some of it is also due to differences in the tradeoffs between the various payment methods in different countries.
In Japan, for instance, (1) cash is both easier to deal with in many cases (e.g. ATMs will happily give you very large quantities of it, a lesser crime rate makes using it safer, vending machine bill readers are much more accurate, shops are much more willing to deal with large bills, etc), (2) the presence of other mechanisms like very easy/cheap bank transfers replace some of the use-cases of credit cards in the U.S., and (3) credit cards are more restrictive (e.g. by default you have to pay your entire balance every month).
Also I think credit cards started their climb in the U.S. by replacing checks (which were in many ways very inconvenient), and that gave them enough familiarity and infrastructure to continue from there; in Japan, on the other hand, checks were never really used at all, so credit cards never had that "in."
Basically I used the small notes when my total was close to a round figure. I could leave a $1.39 tip on a $20 meal or I could add a few $1 notes.
Most of the time I used my card (which is another story) so I could do this more easily, but sometimes you're in a hurry and the extra steps involved in US dining are a pain in the posterior. Hence: carrying small bills to allow tipping flexibility.