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Comment by the_watcher | Hacker News Reader

Well, the supply of BTC is finite, so simply excluding stolen BTC's has some additional problems. May be better than not addressing it, but while BTC provides a mechanism for following them through the transaction chain, it's not that simple to ID what addresses contain "stolen" BTC. What if the thieves are able to launder them through unwitting proxies? For example, steal a bunch of BTC, sell them on another exchange immediately, and now, how do you blacklist those "stolen" bitcoins without screwing over an innocent bystander?

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Because transactions are recorded in a public blockchain, couldn't that be a big downside for anyone accepting bitcoin whether or not the coins appear on a blacklist/warning list. If a sending wallet address is associated with some contested activity (e.g. someone getting sued, or indited), I could imagine that those BTC could easily get swept up in the legal actions to unwind or resolve the activity.

This vs accepting cash which is fungible, and would need some other evidence associating the buyers money with the contested activity. At least the resolution activity there would likely be stopped at one level from receiving the cash, but with BTC, you happen to be able to track that one specific coin right through multiple layers of transactions. I can see lawyers tracking all the way out to the current holder of a given BTC.

edit: Upon a bit more side reading, I think the tracability of a given BTC is a bit overstated here.

That is assuming you can "blacklist" addresses before the transaction takes place. Or they could just create a new BTC address.

I'm pretty sure your logic is flawed. Someone is already screwed, its sort of why police can confiscate stolen goods even if you paid for them.

I'd like to know if it would be feasible to regulate in someway to claim ownership of said coins and have them returned should they turn up in some sort of regulated clearing house / exchange. Caveat: I know this is in no way possible right now, yet as soon as this block chain gets large enough we are going to have some form of centralization going on, and with that I am certain it will be regulated in some way eventually. That is, if it lasts that long.

What exactly is the plan to deal with a multi terabyte block chain anyways?

Are coins able to be differentiated from a wallet?

Sometimes, yes. Not always - it depends on how the transactions inside the wallet are organised, which is not usually displayed unless you go looking for it.

Not that it matters - if 100BTC go into a wallet, and an hour later 100BTC comes out of that wallet, it's fairly irrelevant whether or not they're the same coins.

Well, it does matter - if 100 stolen BTC go into a wallet that has 900 BTC already, and then 1000 deals of 1BTC go out to different wallets... then you blacklist and seize all 1000 outgoing BTC or some arbitrary 100 BTC or some specific (how) 100 BTC?

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