Quote from: mikegogulski on November 16, 2013, 12:03:07 PM

I can very well understand Luke's motivation for publishing and implementing this patch as a counterweight to CoinInvalidation and similar awfulness. Admittedly, my poor brain hasn't had time to sort through all the pros and cons here. But:

Quote from: gmaxwell on November 15, 2013, 07:46:23 AM

Globally visible public records in finance are completely unheard-of. They are undesirable and arguably intolerable.

Er, not so. If you're arguing from the standpoint of a profit-driven business in a competitive landscape or from the standpoint of an individual burdened by increasingly pervasive financial surveillance, you're right, but those are not the only use cases for a currency.

There are lots of people around the world continuously pushing for more and more transparency in government finance, the logical endpoint of which is real-time, globally-visible transactions records for state treasury accounts. Most inputs (taxes, fines, fees, etc.) blinded for privacy reasons, and most outputs (salaries, goods, services, etc., but not, for example, welfare payments) required to be explicitly linked to an identity, for transparency and accountability purposes. Want to work for the state or one of its corporate appendages/owners? Be transparent and accountable.

The non-profit sector, and donors to it, would also benefit from such radical transparency. Charities that can prove that they're not blowing donor funds on exorbitant executive pay, corporate jets, fancy hotels and catering, for example, and are actually delivering real benefits to people in need (or at least working diligently toward what they've promised to donors), globally visible (at least up to the fiat interface or the real-world-goods/services interface), supplant and, er, out-compete, those which waste so much on overheads. For them and for donors, globally visible public records are a desirable feature, at least for the ones that survive the transition to a cryptocoin economy.

As another example, I operate a Bitcoin legal defense fund for the accused Dread Pirate Roberts (link in my sig). The transaction record to the fund's sole address shows that I've disbursed nothing of what's been given, and it needs to stay that way until I can properly justify an expenditure.

All of these models, and others, can benefit from reusing addresses tied to individual and/or institutional identity, and address re-use carries a massive benefit in simplicity ("donate here" QR codes on paper flyers? yes we can!), despite the known drawbacks. Deprioritizing or (especially!) filtering transactions seems to raise the costs for implementing such models, significantly.

(At another level, all of this sums down to mining pool centralization as systemic risk, but that's another discussion entirely.)

I what's important to remember is what Luke is doing with Eligius is a: just a one block delay, and b: can be easily changed later. Right now we have a serious problem with address re-use - doing what we can to stop it makes a lot of sense even if what we do isn't necessarily the perfect solution.

Even if reusing addresses was 100% banned and it was impossible to re-use an address ever, with appropriate tools all those examples of transparency that you cite would still be possible using BIP32: rather than achieve transparency by publishing the address, publish a BIP32 pubkey seed and derive all the addresses where funds are stored from it. In many cases this is an even better solution, because you now have the option to be selective about who you are transparent too.

On the other hand if you truly are trying to be globally transparent re-using a single fixed address has an advantage over the BIP32 option: it lets other people know that your transactions are not anonymous. If I receive funds in a transaction where the change address is the same as the address the funds were originally at, I know the funds I've received are not as anonymous as they could be, and I might want to take steps in response. But again, in this case a minor one-block delay does no real harm.

tl;dr: I fully support what Luke is doing in the here and now, and we can and should monitor the situation to determine if the strategy needs to be changed in the future.