Quote from: larry_vw_1955 on June 07, 2024, 11:38:43 PM

Quote from: bitcoinore.com on June 07, 2024, 01:53:59 AM

FlaggedTransaction Creation: When a user detects unauthorized access or theft, they can initiate a FlaggedTransaction via their wallet interface. This transaction includes the transaction ID of the suspicious transaction, a digital signature of the claimant, and a preliminary evidence package.

how long do they have to create such a transaction because what if alot of time has elapsed such as weeks or months? and the initial transaction utxos have been spent and created a huge chain of utxos are you going to go and cancel all of them starting from the original suspicious transaction? what if the money was sent through bitcoin mixers how are you going to know whose utxos to put a freeze on? you could end up hurting innocent people then. and the bad guys still get away...

i'm not so sure this thing has been thought through well enough if that's the case.

The timeline for initiating a FlaggedTransaction is a critical component of this proposal, and it is designed with several factors in mind to address the concerns you’ve raised:

1. **Time Limit for Flagging**: There is a proposed time window during which a FlaggedTransaction can be initiated. This is typically set to a few days or weeks from the original transaction date to ensure that it is practical to trace the subsequent chain of transactions. The community can adjust this period based on consensus to balance responsiveness with practicality.

2. **Handling Long Transaction Chains**: The Bitcoin Core protocol tracks UTXOs (Unspent Transaction Outputs) efficiently, and this system does not inherently allow for the reversal of entire chains of transactions once UTXOs are spent. In cases where UTXOs have been transferred multiple times, the reversible transaction mechanism would focus only on the most recent transaction where the original UTXOs were still unspent at the time of flagging. This avoids the complication of unraveling long transaction chains.

3. **Dealing with Mixed Transactions**: Bitcoin mixers complicate the traceability of funds. In situations where mixed or shuffled funds are involved, the CVNs (Community Verification Nodes) would employ advanced forensic tools that analyze transaction patterns and mixer outputs. However, reversing transactions involving mixed funds would be approached with extreme caution to avoid affecting innocent users. Decisions in such cases would likely require additional layers of verification and possibly a higher threshold of CVN consensus.

4. **Technical Mechanism in Bitcoin Core**: Within the Bitcoin Core software, transactions are validated against the current state of the UTXO set stored in the `chainstate` database. FlaggedTransactions would involve checks against this database to verify the current status of the relevant UTXOs at the time of flagging. If the UTXOs have already been spent, the system would not allow a reversal but would instead focus on recovery or tracing the subsequent transactions, depending on the circumstances.

5. **Protection of Innocent Parties**: The proposal includes mechanisms to safeguard non-involved parties, primarily through selective freezing of transactions identified with high confidence as linked to the theft. This would be managed through a judicious review process by the CVNs, who would be required to assess not only the evidence of theft but also the potential impact on third parties.

The technical feasibility and ethical considerations of implementing such a feature in a system as complex and decentralized as Bitcoin require thorough vetting and robust community discussion. The goal of this proposal is not to provide an all-encompassing solution but to open up possibilities for mitigating theft while respecting the fundamental principles of blockchain technology. Your points highlight the need for careful implementation and continuous evaluation of the system's impact, ensuring it serves the community effectively without unintended consequences.