Friday, November 30, 2018

Blacklisting of Bitcoin addresses

At the outset let me say that I support action against criminals .

But that said, I cannot understand the practicalities of the OFAC blacklisting of certain Bitcoin addresses. From what I have read, the expectation is that US citizens should not be accepting bitcoin from those addresses. But then those bitcoins can easily be transferred to other addresses and since mining is open and competitive, those transactions will get confirmed. So now, how will anyone who accepts bitcoin know for sure that they aren't actually receiving bitcoin that originated from those addresses?

Will the authorities also stipulate that miners should exclude transactions from those addresses? And then there will need to be a rule that miners should not build on top of a block that has confirmed a transaction from those addresses. But how will all this be enforced unless a forked bitcoin is created that incorporates this blacklisting as a consensus rule?

If this seems to be the way things go, only Monero with its fungibility can plausibly survive. But I would like to hear how else events can play out that can still make Bitcoin viable despite the above conundrum. I hold both Bitcoin and Monero in my portfolio.


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