In that case, it would be better to have established some sort of organization to be able to in a way punish the bad faith miners by responding accordingly in a timely manner.
So a centralized third party to police the other centralized third parties? No thanks. What we need is more privacy by default on the base layer to make this kind of censorship impossible to begin with.
No, see, bitcoin already has structures of (certain authority) that help govern it.
It's not complete unstructured anarchy that's going on with it's developments. Certain older core devs approve proposals for discussion for instance.
Others review code changes and push them to release.
Even the mailing list is Grey listed.
This process is neither democratic nor very free (as in freedom). But the community generally trusts these individuals as they have years of contributions to back their position.
But if an emergency event was to happen like an unintended fork or a sustained 51% attack, what were the users going to do?
Would we form a new organization to deal with these emergency issues?
Probably not. Most users would likely follow what the existing core developers proposed as a solution, trusting them in downloading their client update.
Unless of course they were deemed as bad faith actors.
But on that note, with the freedom of being able to exclude transactions, also comes some responsibility that bad faith authorities like the OFAC might want to impose on bitcoin miners.
I expect mining pools to understand the ethics and principles of the BTC network, it is true that mining is a 'business' and miners want to make profit, but sanctioning tx's defeats the principles and ethics of the network and it also doesn't help them in the case of making profit, because they are rejecting the tx fees attached to those tx's. The authorities cannot 'impose' anything on miners, because pools have the 'right' to oppose any policy that affects the nature of the BTC network, and if the conditions because so unfavorable, it is better miners relocate or pack up their gears from such locations, than for them to directly 'attack' the BTC network.
Leaving the window open for abuse means that it's bound to happen at one point or another.
Just as MARA pool was doing OFAC compliant blocks in 2021, same as F2POOL this year etc. Can't base this relationship completely on trust.
So the idea of cloaking transactions before confirmation just so miners can't see what they're confirming might be a good idea after all. No possibility to pick and choose means reduced liability also.
That is not possible, the BTC blockchain is both a public and transparent ledger, everything is open to everyone and even if this was possible, i would not support it.
There might be solutions without making bitcoin transactions completely dark.
Adam Back called his proposal committed transactions, which was demonstrated 10 years ago. Maybe that idea could be picked up to be worked on again so we can see how feasible it is.