Is it possible to fine the bit coins that were stolen and then effectively devalue them? One thing the miners should be able to do is refuse to verify transactions with the stolen BTC.
What if there was a way to tag bitcoins as stolen and declare them null and void? Would this not disincentivize thieves? Could we prevent abuse of such a system?
I think that would require an authority deciding whether bitcoins were truly stolen. Otherwise, couldn't anyone could just claim a transaction was a theft?
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?
I gather that it would be straightforward for individual bitcoin users to refuse to handle known-stolen bitcoins.
Perhaps this is illegal already - under local handling of stolen goods laws. People would likely be inclined to take up this policy were there a single case of legal enforcement.
I believe this would lead to a stable situation where those known-stolen bitcoins were worth far less than regular bitcoins.
The present loud reaction would become irrelevant. What's more, I believe it would benefit bitcoin to remove some of the danger of (irreversible) theft.
Uhh, not for the coins themselves but certainly for the goods that were exchanged with them?
I mean if you did this IRL, the party providing the goods would just report them as stolen and the traditional legal system can be used to retrieve them. Have fun arguing in court that a 51% attack somehow means you get to keep the thing. This is no different from paying for the thing and stealing the money back IRL. The only thing crypto allows you to do is to distance yourself _physically_ (i.e. you don't actually have to break in and steal money), it means f*ck all _legally_. A similar existing situation analogous for 51% attacks is "paying for something with a personal check and later having it bounce".
In fact all major breaches of crypto today involve stealing the coins themselves, which as commenters below have mentioned, cannot be done with a 51% attack---you still don't have the private keys.
I wonder if this is a problem that could be solved with an evolution of the technology. Meaning bitcoin (or a future crypto-currency) policing itself in a distributed manner, without requiring a central authority. Perhaps some way to hold referendums as to whether specific coins should be considered stolen. And if passed, some predetermined resolution mechanism would come into play, whereby the stolen coins would no longer be valid anywhere, and new coins would become available - either returned to the theft victim, or added to the mining pool, or something.
Easy in the case of ransomware or any other cases where a victim has to pay Bitcoins. The entity who pays the ransom/whatever sends the money to a Bitcoin address. This money is immediately marked as "confiscated" in cooperating jurisdictions. That money will be mixed in a tumbler (operating in a non-cooperating jurisdiction) with other Bitcoins, which get the same treatment. Or exchanged for a different cryptocurrency in an exchange that facilitates money laundering, and all cryptocurrency that is traceable that goes through that exchange is immediately marked as "confiscated".
You can keep using Bitcoins in non-cooperating jurisdictions, sure. But they'll automatically be less valuable or worthless because you can't use them in many countries.
People with development experience in Bitcoin could implement this in a jiffy. Doesn't even take a government really, you could probably build a startup whose main thing is to provide this information. Then people/exchanges/etc. could decide on their own if these Bitcoins have value or not.
I have a question related to this that someone expert in Bitcoin could answer.
Could the victim monitor where the bitcoin (we assume) went to using the public blockchain record? Then, trace it every step of the way (and in whatever chunks it divides into) until it reaches the account of a publicly identifiable entity? At that point, there might be legal recourse in recouping stolen goods (at least, this is how it works in the UK with stolen physical goods.. even if someone "legitimately" buys them, they can be reclaimed).
Stealing them may or may not violate laws - I'm not aware of an explicit precedent for this kind of "virtual property", but courts tend to look at intent, so if people treat them as coins and you treated what you were doing as stealing them that probably counts.
Yes, the community could agree they won't accept the stolen coins. But for most bitcoin people the whole point is to avoid regulation. I mean, the primary use for bitcoin is buying drugs - if you start blacklisting coins that were stolen, why not also blacklist coins that were used to pay for drugs, which is also illegal?
The basic cycle of the bitcoin economy is: drug user buys bitcoins for cash from someone who has them (either a drug dealer or one of the early "miners"), user buys drugs from dealer with bitcoins, dealer sells bitcoins for cash.
Is the user (who's already breaking the law) going to refuse to buy stolen bitcoins? Maybe, but if they're cheaper I'll bet they'll find a buyer; is every user going to check the blockchain history?
Is the dealer, who again is already breaking the law, going to refuse payment in stolen bitcoins. Maybe, but that sets a bad precedent for themselves. Maybe they'll charge a higher price for those bitcoins. But I suspect most of them won't care.
If you steal someone's BTC coins in this way - don't expect to be able to talk about it publicly.
A judge might easily make a ruling that you "stole" the money. Don't expect the legal system to accept the notion that crypto is outside their jurisdiction, nor expect them to appreciate your complex tech arguments about why it's not really stealing.
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This is the issue. It can become a never-ending wild-goose chase. The thieves can continue to move the funds around until they're no longer tracked, or far enough ahead that from the trackers (assuming there's any enforcement or penalties or laws relating to accepting stolen Bitcoin - which there aren't currently) or just spend them if they're not being tracked or if there's no enforcement in place.
The thieves will move funds around at little cost in order to try to gain the value from the Bitcoin they stole.
The problem with Bitcoin is that because there's no fee associated with them, there's no money or resources being made available or directed towards policing and following of these thieves.
Edit: And it's not particularly fair to use the rest of society's resources to do this policing, when they're not contributing to the system - they're avoiding contributing, to a partially corrupt and currently inefficient system, yes - but it'd be better to fix these inefficiencies and deal with the corruption.
That is almost the same problem as having to prove one has been robbed at a solitary place. The police would have to look for a fishy-looking transaction, and see if there were indicators that the machine were bitcoins resided was hacked.
Yeah, there would be slim chances of recovering the stolen money, but that already is the case with cash, given a smart enough robber. The right way to tackle that problem is not to make the stolen goods easy to track, but to have preventive measures. In Bitcoin's case, these measures would be good security practices.
If they were stolen, who do I call to help me get them back? If I loose the keys to get into my coins, who will help me get access back to my cash. Does the UN have a BitPolice squad hunting down bit theft? If I were to declare bankruptcy would I have to declare my bit coins as a part of my estate? Is there a BITRUPTSY court?
With bitcoin if I hold my coins in a currency exchange (which is basically a bank) they can obey the court order and reverse transactions.
It would be trivial if it was that simple, but the stolen funds were of course withdrawn from Tradehill, and so are no longer in control of an exchange.
It's no different from a criminal running off with a bag of cash; how are you going to "reverse" the transaction of the money being physically picked up, put in a bag, and carted off?
Transactions are irreversible. That's basically the entire point. They'll only get the coins back if the thieves are caught, haven't spent them, and give them up.
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