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29

Fungibility. Money needs to be fungible, otherwise it's not money at all. Blacklists allow censorship and confiscation of wealth by centralized/powerful players (like governments) which will be abused to screw over innocent people Or (hopefully) scare those people away from Bitcoin in the first place: why would you invest in Bitcoin if you know you could ...


17

It wouldn't work. Imagine if you get to a grocery store and try to pay in cash and they say, "Sorry, your dollars are no good, their serial numbers are on a list of bills that have been stolen". You might have gotten those dollars in change yesterday from that very same grocery store because that's where the thief spent them before they got on the list. ...


12

That is accurate. Let me start explaining how Bitcoins work from the beginning: Bitcoins are first created when they are mined by solving a block. The first transaction in the block is basically you saying "I'm giving myself 50 Bitcoins to my address A" (plus transaction fees from the block). When you want to spend Bitcoins, you have to point to one or more ...


9

That's just reality. IOUs will be valued differently depending on who you got them from. You probably value $100 in cash higher than the fact that your friend Joe owes you $100. You can use the cash right away while you have to wait for Joe to pay you back or you could transfer that debt to some common friend of you and Joe's (a friend who is fine with Joe ...


8

Bitcoins are somewhat fungible, but not completely. It's like a family tree. You can't say "this bitcoin was at location Y 2 years ago" any more than you can say "Person X was 1000 years ago person Y". But you can say "This Bitcoin can be traced back to this transaction from 2 years ago" just like you can say "Person Y who lived 1000 years ago is an ancestor ...


6

It really isn't possible to create a blacklist of stolen bitcoins. While it is possible to easily trace stolen bitcoins, thieves can utilize a number of services, such as bitcoin mixing services, that mix stolen bitcoins with other (sometimes even freshly mined) bitcoins before redistributing the bitcoins to new wallet addresses. Because wallets are ...


6

You're definitely right that tainted coins would be bad for Bitcoin. For something to be useful as a medium of exchange, you really want it to be fungible. If something costs $35, that price is useful because there's nothing special about any particular bill or coin and you can form that $35 however you want. Since not all IOUs in the same currency are ...


5

There is actually no such thing as a bitcoin - there are only transactions, which are denominated in bitcoins. Those transactions do have a history, though as the linked answer states, that history can be complex.


5

Bitcoin is decentralized. There is no "we" to appeal to even if we wanted. You may be able to convince a miner to not include txs that go to certain addresses. That is their right. But that certainly won't prevent dealings that are unethical or wrong. That's like saying "why can't merchants not accept stolen $100 bills?" There is a huge tax for everyone if ...


3

The tool for complete history of all bitcoin minted already exist and its called blockchain. You can see all history here (random transaction selected) https://blockchain.info/tx/ff698f3e5321448d4d889fcd3c91f9e5f5767542d2f0fd7e4aa41a83abec3ab7 There is a term taint and it's meaning how two addresses are connected. It partially explained here What are ...


2

Think of how bitcoins are created - in lumps of 50 in a block. You cannot tell the difference between the 'first' bitcoin of this lump of 50 or the 'second' or the 'twenty second'. It is just a number in a public ledger called the blockchain. There are no serial numbers like on a dollar note.


2

If you are asking if Bitcoins can be traced, then answer is no. If you're asking if public keys can be traced, then the answer is yes.


2

Actually, yes, this is possible. However, your payment output might get split or combined with other payment outputs in later payments. Therefore, the graph will be less linear than you suggest: C ↴ ↱ H A → B → D → E → G ↳ F So, A would be sent to B, then B + C would produce D, D would be split up to E and F, E would further be split ...


2

Pieter Wuille posted an answer earlier today that covers some of what is already being explored in the pipeline for additional privacy. ... but improvements are continuously being worked on (search for things like MAST, TumbleBit, Layer-2 payments, Taproot, signature aggregation, scriptless scripts, confidential transactions, ...) In addition, further ...


2

I am not sure if I get your question right. Please tell me if not and I shall iterate on my answer. First of all the lightning network indeed has a different privacy model only opening and closing of channels is stored to the redundant public ledger called blockchain. Once the channel is open even when routing is applied the payment itself is pretty private....


1

Generally, there is no information in a bitcoin transaction which indicates the amount being transacted between two parties. An outside observer can view the value of inputs and outputs, but the ownership of each output will be unknown to them. More specifically, the change output is often indistinguishable from the other outputs, so an outside observer may ...


1

With money, privacy implies fungibility. If all transactions that take place using a particular currency is public, then people will know whether some money that someone is sending them was part of an illegal transaction in the past. This means that they can choose to not accept the money because of its link to illegal activities. This violates fungibility ...


1

yeah, a lot of requirements, where comparison to reality doesn't match. But at first: the question is probably not the right one for this forum - mostly opinion based... IMHO it would find a better home in a discussion board, where it can be discussed back and forth. Bitcointalk.org would be a good candidate. But I can't resist, it's too fascinating! Btw: in ...


1

More concreteley than the existing answers, and expanding on the point made by @Navin in the comments, the reason is because this would happen: Imagine you're a merchant selling goods by bitcoin. You have a list of hacked accounts, and refuse to accept payments from those accounts. But not everybody does this, of course, and even people who do may well ...


1

All existing conventional securities (currencies, stocks, bonds, debt-based "fiat" cash, etc) that have any counter party risk are "tainted" by the issuer (Apple, The Fed, BOJ, etc), Bitcoin, gold, silver, etc are not tainted because they have no issuing counter party (i.e. they represent nobody else's liability). As I understand it, Ripple is primary a ...


1

Bitcoins are like fungible realestate. Your public address owns "title" to a specific fungible quantity of bitcoin. There are no serialized Bitcoin"s" or individual tokens. When you spend some bitcoin you "deed" a specified fungible amount to the new public address using your private key. Private keys are stored in your "wallet", which is really just a ...


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