If you could track to to a bitcoin address, it ought to be possible for the crytpocurrency community to "blacklist" an address used by thieves. Since the transactions have a complete history in the blockchain, an exchange could reject transactions that are traceable back to an address involved in theft, fraud, etc.
This is so wrong on so many levels...
Without getting into technical details on how exactly would you do that, think about this: who decides that "an address involved in theft, fraud, etc."? What happens to a legitimate merchant who sells a product or a service to one of the addresses "involved"?
It's seems you would like to bring over the clusterfuck that is credit card chargebacks/disputes over to crypto currencies. Thank you, but no (and thank Satoshi this is not really possible).
You say it's not possible, but if you have the complete list of transactions, it is possible to deny exchange to other currencies. You can't prevent exchange of coins within the currency, but there's no reason anyone has to willingly accept a bitcoin that was originally stolen from a miner in exchange for a traditional currency. In reality, the value of bitcoins today is only as good as what you are able to exchange them for in terms of real goods and services, or in traditional currencies. While a thief may steal a bitcoin and pawn it off on someone else, here's no rule that says an exchange has to accept that bitcoin address for exchange with a dollar, or other currency.
I'm sure you would love to be arrested in a bank because the greenbacks you gave to the cashier were touched by your friendly neighborhood drug dealer a couple of "hops" ago, based on an anonymous tip
. What could possibly go wrong with that.While an amusing scenario to envision, there's no resemblance to the situation here. In this specific case, we are talking about people that have the actual logs of coins mined, transferred, and coin addresses involved, so there's really no anonymity at all. We are talking only about the specific case where the theft is directly traceable, as confirmed by the combination of protocol traffic and the resulting blockchain records. You can't get "arrested" in any case, but nobody has to honor your payment. If an exchange's terms of service state that it will not exchange currency that can be traced to an address involved with theft traceable to logs and the blockchain there's not much you could complain about. They can always simply send your BTC back to you and refuse to exchange it. The currency has no value unless it can be used to purchase goods or services, or to be exchanged for other currency. There's no need to "arrest" anyone. This is not particularly different from spam filtering or blocking DDOS atacks when they are detected. It isn't worth the trouble to deal with small scale theft, but on the scale of spoofing an entire mining pool, or several pools as we have experienced this week? Yes, I think there's an interest. The status quo is an undeveloped wild west, and it would be foolish to think that large scale spoofing and theft will go unpunished in the long run.