Some members within Bitcoin Foundation are working against us

[Jack N Hoff]

Some members of Bitcoin Foundation are secretly working on making bitcoin a restricted, locked down platform with central control in the form of the current certificate authority structure, blacklisting of Bitcoins, reversing transactions and much more.  Bitcoin Foundation no longer wants bitcoin to be an open payment system as Satoshi Nakamoto had designed it.  This thread will contain links to ripped threads from www.bitcoinfoundation.org that only members of Bitcoin Foundation have access to.  These HRML files can also be found available for download on bitcointalk.org

[Jack N Hoff]

I'm experimenting with Medium, which is a sort of next-gen blogging platform. To try it out I wrote an article about how P2P networks with anonymous participants can nevertheless create and enforce ground rules despite the lack of central control.

We already know that Bitcoin is a great example of this, the 21 million rule being the classic. My article looks at Tor, its exit policies and proposes a new method for node operators to block hidden services they personally don't wish to be involved with. It also touches on Bitcoin proofs of sacrifice at the end.

It's a 10 minute read. Let me know what you think.

https://medium.com/p/d3f9f299f729

Ripped thread - https://anonfiles.com/file/cbb4d3e18056867aa24b0db6428a3a80

[Jack N Hoff]

I would like to start a discussion and brainstorming session on the topic of coin tracking/tainting or as I will call it here, "redlisting". Specifically, what I mean is something like this:

Consider an output that is involved with some kind of crime, like a theft or extortion. A "redlist" is an automatically maintained list of outputs derived from that output, along with some description of why the coins are being tracked. When you receive funds that inherit the redlisting, your wallet client would highlight this in the user interface. Some basic information about why the coins are on the redlist would be presented. You can still spend or use these coins as normal, the highlight is only informational. To clear it, you can contact the operator of the list and say, hello, here I am, I am innocent and if anyone wants to follow up and talk to me, here's how. Then the outputs are unmarked from that point onwards. For instance, this process could be automated and also built into the wallet.

I have previously elaborated on such a scheme in more detail here https://bitcointalk.org/index.php?topic=157130.60, along with a description of how you can avoid the redlist operator learning anything about the list's users, like who is looking up an output or who found a match.

Lately I was thinking about this in the context of CryptoLocker, which seems like it has the potential to seriously damage Bitcoin's reputation. The drug war is one thing - the politics of that are very complex. Extortion is something else entirely. At the moment apparently most people are paying the ransom with Green Dot MoneyPak, but it seems likely that future iterations will only accept Bitcoin.

Specifically, threads like this one https://bitcointalk.org/index.php?topic=330720.0 concern me a lot. Summary: a little old lady was trying to buy bitcoins via the Canada ATM because she got a CryptoLocker infection. She has no clue what Bitcoin is beyond the fact that she needed some and didn't know what to do.

The risk/reward ratio for this kind of ransomware seems wildly out of proportion - Tor+Bitcoin together mean it takes huge effort to find the perpetrators and the difficulty of creating such a virus is very low. Also, the amount of money being made can be estimated from the block chain, and it's quite large. So it seems likely that even if law enforcement is able to take down the current CryptoLocker operation, more will appear in its place.

I don't have any particular opinion on what we should talk about. I'm aware of the arguments for and against such a scheme. I'm interested in new insights or thoughts. You can review the bitcointalk thread on decentralised crime fighting http://bitcointalk.org/index.php?topic=157130.60 to get a feel for what has already been said.

I think this is a topic on which the Foundation should eventually arrive at a coherent policy for. Of course I know that won't be easy.

Ripped thread - https://anonfiles.com/file/18bbc1bfb7a832849b1a745218ecafd3

[Jack N Hoff]

Some regulators in the USA have apparently expressed concern that irreversible transactions undermine consumer protection.

In this position I will argue that Bitcoin allows consumers to choose between irreversible and dispute mediated transactions. Furthermore I will argue that this flexibility is a significant win for consumers, resulting in cheaper and more reliable transactions, higher quality protection and superior results for the economy.



Definition. Consumer protection mechanisms have over time become widely adopted across many jurisdictions and payment networks. They are the mechanism by which consumers are insulated against non-delivery by a merchant (whether malicious or accidental), as well as hacking and outright fraud. Additionally, they protect honest merchants by preventing competitors gaining an unfair market advantage via dishonest or other deemed unacceptable behaviours.

Chargebacks. A chargeback is a common form of dispute mediation implemented in credit card networks. Chargebacks allow consumers to dispute a charge on their account and if successful, get it reversed. Typically this results in the merchant having the money taken back out of their account, and possibly fined or being ejected from the card network. Chargebacks can occur for a variety of reasons, such as non delivery of goods, being billed for a service that was not wanted, resolution of administrative errors and unacceptably low quality. However the most common reason is use of stolen credit card details. Merchants are allowed to fight chargebacks and win the dispute in approximately 40% of cases.

Identity theft. Because credit cards can be charged only with details that must be given to online merchants to make a purchase, theft of these details is extremely common. Although ultimately caused by the "pull" design of credit card systems, merchants end up paying the price - transactions caused by theft of credentials result in an automatic win by the consumer.

Friendly fraud. The combination of chargebacks and lax card security can result in serious abuse. So called "friendly fraud" is where ordinary consumers initiate fraudulent or grossly unfair chargebacks. Because card networks compete harder to obtain users than merchants, they have little incentive to resolve this problem. An example would be that the porn industry has much higher chargeback rates (and thus fees) than normal, due to consumers legitimately purchasing pornography and then claiming it wasn't them when caught by their partners.

Professional fraud. Some payment providers have inadequate dispute mediation procedures in place. For example, PayPal requires proof of postage from a seller or else the buyer automatically wins any dispute. This leads to a common scam in which a fraudster purchases an item from a seller online, pays via PayPal and then picks it up in person from the victims front door. Hours after the fraudster has left, the payment is reversed and because no postage was involved, the victim loses both the goods and the money.

Financing of terrorism. The chargeback structure combined with the dominance of a handful of payment networks yields little incentive to create better security or dispute mediation procedures. Criminals know this and exploit that fact. Stolen credit card details can cost as little as $3.50 on the black market. Once obtained by "carders" they can be pumped for money. Because the identity details are all stolen anti-money laundering requirements do not help with finding the perpetrators. This was used to great effect by an al-Qaeda cell investigated as part of Operation MAZHAR. Over $3 million was raised for the Iraqi insurgency via carding.

Additional costs. One reason that credit card transactions are so expensive is the cost of dealing with fraudulent chargebacks. Many businesses implement their own risk analysis systems and review procedures above and beyond those provided by banks and card networks, because they find it to be the only way of controlling fraud rates. Even so, large losses are inevitable, and those losses are passed on via price rises and fees.



Bitcoin and consumer protection. Bitcoin was explicitly designed to learn from the mistakes of existing payment networks. Bitcoin does not implement chargebacks. By default, transactions are irreversible, but if buyer and seller agree they can include a third party dispute mediator into a suspended transaction. This mediator is not an escrow agency and does not hold the money at any point. Rather, in the case of dispute they can select a winner. If there is no dispute, they need do nothing at all and the payment will be cleared as normal. The use of this technique is rare in 2013 due to the lack of easy to use graphical interfaces for it, however simplicity will likely improve in due course.

Flexibility and specialisation. By separating the act of settling a dispute from the act of processing a payment, Bitcoin allows buyers and sellers to agree on any mutually satisfying choice of mediator. By avoiding the need to trust the mediator to hold the money, the market for mediation services becomes more competitive and fluid. Specialised trades can be mediated by individual domain experts or small businesses. Ordinary every day trades, like selling some second hand goods in person, can be handled by larger companies that may be able to have agents on the ground. Over time, mediators will arise that draft their own quality standards, and they will compete on the fairness and justice of their procedures.

Incentives to develop security. Bitcoin is already significantly more secure than existing card networks because you do not hand out any credentials or steal-able identity details to make payments. But by preventing users from pushing the costs of hacking onto merchants (who can do nothing about it), Bitcoin also incentivises the creation of a market for innovative security products that explore the balance between convenience and protection. For example, users may prefer to keep a small amount of money on their smartphone with no password or PIN at all, for quick access. They may place larger sums into specialised hardware devices that are specifically hardened against viruses and hackers. They may choose to deposit their bitcoins with a third party that handles security and indemnifies them against loss. Whatever the consumers preference, there can and will be a product that satisfies them.

Efficiency and low cost. Many transactions in practice do not need a third party mediator because the business itself is capable of satisfactorily resolving disputes. Major supermarket chains, for instance, will typically choose to please all but the most unreasonable customers rather than take the hit to their reputation. By avoiding the often inappropriate and expensive chargeback mechanism these businesses can reduce their overheads and pass those savings on to consumers. The website bitcoinstore.com is a successful example of this - they manage to undercut even Amazon by accepting payments only in Bitcoin thus saving money on fraud management, yet it is difficult to find an unhappy customer.

Conclusion. By using sophisticated cryptographic technology, Bitcoin separates the act of clearing a payment from the act of mediating disputes. This is a superior approach that will create entirely new ecosystems of entrepreneurial mediation firms that compete on the quality not only of their consumer protection, but also their merchant protection. Innovative security mechanisms will protect users from hacking and theft. Indeed, many examples of such products already exist.

Ripped thread - https://anonfiles.com/file/237a6cf74cab1ff8c6eeafc171272cc2

[Jack N Hoff]

Reserved if needed.

[Jack N Hoff]

Reserved if needed.

[Yoda]

What a scumbag.

Love the excuse Financing of terrorism.   Really surprised he didn't toss in "For the Children", or "Global Warming", to boot. 

[Rastaman Vibration]

What a bunch of bullshit. Plenty of cold hard ca$h is used for unlawful purposes (remeber that Congressman that got caught with the ca$h in his freezer?), I don't see anyone trying to redlist dollar bills

[ENP]

Ugh.

[the g0dfather]

this is a bunch of bull. always trying to take control of shit. and its always the money!!!! lol

[kurtvonnegut]

What a scumbag.

Love the excuse Financing of terrorism.   Really surprised he didn't toss in "For the Children", or "Global Warming", to boot.

Think of the children being killed by terrorists because they're upset about global warming!

[CanIHaveSome]

What a bunch of bullshit. Plenty of cold hard ca$h is used for unlawful purposes (remeber that Congressman that got caught with the ca$h in his freezer?), I don't see anyone trying to redlist dollar bills

That would be William Jefferson (Democrat), aka Bill Jefferson, aka Dollar Bill.

[weather420]

Fork...

[MisterHyde]

It sucks how the greedy always have to have their hand in everyone's pockets one way or another. The practicallity of implementing such changes however is highly questionable, so I'm not really concerned at this point in time. But still interested.

Attempts at regulation would face extreme opposition from the bitcoin community at large, at least from this community. Wouldn't you all agree?

They won't just be able to magically regulate BTC. They will have to tread through the hell and high waters of the already mounting public dissent.

[Dread Pirate Roberts]

Bitcoin foundation are a small group of people who believe they have some authority on the matters of Bitcoin, the problem of course being they do not. If it come to the position of Bitcoin Foundation against Silk Road, they are on a losing war path. Everyone who supports Bitcoin does so because of the inherent nature of the network and Bitcoin Foundation have simply folded to government pressure.

In the event of such issues ever being a real threat however, we do have contingency plans to completely nullify their efforts.

[Rastaman Vibration]

In the event of such issues ever being a real threat however, we do have contingency plans to completely nullify their efforts.

I like the sound of that, boss. Proper planning and preparation are the keys to a successful enterprise. +1