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Re: Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
The policy is that once UTXOs have been spent, we cannot reverse those transactions in the blockchain itself due to its immutable nature. When I mentioned reversing UTXOs that went through mixers, it was about tracking and potentially recovering those funds, not reversing the transaction in the traditional sense. The focus is on tracing where the funds have gone and working with exchanges or wallets to recover them, rather than altering the blockchain record.
The system is designed to protect innocent parties by ensuring that any action, such as freezing funds, is only taken when there is high confidence that those funds are directly linked to the theft. The CVNs will carefully review each case to avoid any negative impact on individuals who are not involved in the theft.
The intention behind this proposal is not to arbitrarily interfere with or "steal" anyone's Bitcoin. The goal is to create a community-driven process where actions are taken only with thorough verification and consensus to address the specific issue of theft. Any implementation would require broad agreement within the Bitcoin community and would be designed to enhance, rather than undermine, the security and trust in the system. The feature would be optional, only activating under consensus from the community and designed not to infringe on the rights of Bitcoin holders.
It may very well be that the best approach would be an alternative proposal and this post could simply be the spark that initiates the conversation which leads to a better idea.
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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 system is designed to protect innocent parties by ensuring that any action, such as freezing funds, is only taken when there is high confidence that those funds are directly linked to the theft. The CVNs will carefully review each case to avoid any negative impact on individuals who are not involved in the theft.
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If something like this passes and gets into bitcoin it's about the worst thing that could ever happen and we need a new bitcoin ASAP. you can't just steal someone's bitcoin that used.
The intention behind this proposal is not to arbitrarily interfere with or "steal" anyone's Bitcoin. The goal is to create a community-driven process where actions are taken only with thorough verification and consensus to address the specific issue of theft. Any implementation would require broad agreement within the Bitcoin community and would be designed to enhance, rather than undermine, the security and trust in the system. The feature would be optional, only activating under consensus from the community and designed not to infringe on the rights of Bitcoin holders.
It may very well be that the best approach would be an alternative proposal and this post could simply be the spark that initiates the conversation which leads to a better idea.
Re: Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
The decentralized nature of Bitcoin, while providing user autonomy, also excludes the possibility of a centralized authority to intervene in disputes or transaction reversals.
The decentralized and trustless setup of Bitcoin is there to exactly prevent the intervention of some centralized authority for whatever reason. I'll come to apparent problems later.- Private Key Security: Private keys are the linchpin of user security in the Bitcoin network. They are targets for malicious actors because their compromise grants access to the user's funds.
- Exchange Security: Despite improvements over the years, many exchanges still suffer from security flaws that can be exploited by hackers.
- Phishing and Social Engineering: Users can be deceived into giving away sensitive information, leading to the theft of credentials and funds.
Software security at exchanges is more difficult as those tend to show off with all sorts of fancy features that may become a security nightmare.
Phishing and social engineering is again related to user's awareness, education and knowledge of secure best practices.
- Voting Protocol: After reviewing the evidence, CVNs submit their votes through a secure blockchain interface. Votes are encrypted and revealed only after all CVNs have voted to prevent influencing decisions.
Execution of Reversal Transactions
How is this supposed to actually happen? Your whole construct seems to be built around the fact that a theft is immediately detected, merely before a transation is confirmed, isn't it? What if coins were moved and confirmed, possibly multiple times, before a theft is detected? How do you expect to reverse transactions that are burried under multiple blocks?- Flagging Fee: A non-refundable fee, constituting 10% of the disputed transaction value or a minimum threshold (whichever is greater), is required to file a FlaggedTransaction. This fee serves as a deterrent against frivolous or malicious claims.
To potentially get back 90% of the stolen coins is certainly better than 100% loss. But still, the victim has to afford another 10% of the stolen mass to initiate the process where it isn't garanteed that he get's the supermajority of votes for the reversal. Worst case for the victim is a 110% loss!
- Strict Verification for CVN Applicants: Implementing rigorous checks on the identity, reputation, and historical activities of CVN applicants to prevent collusion and ensure only the most reliable participants are selected.
No way!!
I will stop here for now as it's a lot of material.
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The decentralized nature of Bitcoin, while providing user autonomy, also excludes the possibility of a centralized authority to intervene in disputes or transaction reversals.
The decentralized and trustless setup of Bitcoin is there to exactly prevent the intervention of some centralized authority for whatever reason. I'll come to apparent problems later.
The decentralized and trustless setup of Bitcoin is there to exactly prevent the intervention of some centralized authority for whatever reason. I'll come to apparent problems later.
The foundational principle of Bitcoin's decentralization is indeed to prevent any centralized control over transactions. The proposal for reversible transactions does not aim to undermine this principle but to introduce a mechanism where the community itself, rather than a central authority, can decide on reversing transactions under exceptional circumstances such as theft. This is implemented through a decentralized network of Community Verification Nodes (CVNs), ensuring that no single entity has control over the decision.
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Denial of Service possible when one CVN refuses to vote. How is that handled?
To address the possibility of a Denial of Service (DoS) attack or non-cooperation from a CVN, the system can implement a timeout for voting. If a CVN does not vote within the specified time, the vote proceeds without their input. This ensures that the process is not unduly delayed. Furthermore, repeated failure to participate in votes could lead to penalties or removal of the CVN from their role, maintaining the integrity and fluidity of the process.
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Execution of Reversal Transactions
How is this supposed to actually happen? Your whole construct seems to be built around the fact that a theft is immediately detected, merely before a transaction is confirmed, isn't it? What if coins were moved and confirmed, possibly multiple times, before a theft is detected? How do you expect to reverse transactions that are buried under multiple blocks?
How is this supposed to actually happen? Your whole construct seems to be built around the fact that a theft is immediately detected, merely before a transaction is confirmed, isn't it? What if coins were moved and confirmed, possibly multiple times, before a theft is detected? How do you expect to reverse transactions that are buried under multiple blocks?
The execution of reversal transactions is indeed challenging, particularly if the theft is detected after the transactions have been confirmed. The proposed mechanism primarily targets recent transactions where reversal can prevent further propagation of the stolen funds. For transactions deeply embedded in the blockchain, the reversal mechanism may not be feasible due to the irreversible nature of blockchain confirmations. Instead, focus shifts to recovery through other means, such as tracking the stolen funds and collaborating with exchanges and wallets to freeze and recover them where possible.
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Flagging Fee: A non-refundable fee, constituting 10% of the disputed transaction value or a minimum threshold (whichever is greater), is required to file a FlaggedTransaction. This fee serves as a deterrent against frivolous or malicious claims.
Assume all coins were stolen, the victim doesn't have any more coins, might be broke. How is the victim supposed to cover the Flagging Fee?
Assume all coins were stolen, the victim doesn't have any more coins, might be broke. How is the victim supposed to cover the Flagging Fee?
This is a significant concern. The fee model is designed to prevent abuse but should not prevent legitimate claims from being processed. One possible solution could be a community fund or insurance protocol that can cover the flagging fee for verified theft cases where the victim cannot afford the fee. This would require additional community support and governance to manage and distribute such funds responsibly.
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Strict Verification for CVN Applicants: Implementing rigorous checks on the identity, reputation, and historical activities of CVN applicants to prevent collusion and ensure only the most reliable participants are selected.
So, total KYC for CVNs is a mandatory feature? Good luck with that...
No way!!
So, total KYC for CVNs is a mandatory feature? Good luck with that...
No way!!
KYC for CVNs could be contentious within the Bitcoin community, known for valuing privacy. An alternative could be a system where CVN candidates are vetted based on their blockchain activity and community reputation, without needing full KYC. This balances the need for reliable participants in the CVN roles while respecting the community's preference for privacy.
Remember this is purely a proposal, and each point you and the other commuting members are raising is crucial for refining the proposal and determining if it is viable.
Re: Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
Without going into detail, there is little benefit to encumbering the Bitcoin protocol with these new features because your proposal can already be implemented using the current protocol. The transfers would be done using Bitcoin, and the rest would be implemented outside of Bitcoin.
One possibility might be something like a 2-of-3 multisig Lightning channel.
One possibility might be something like a 2-of-3 multisig Lightning channel.
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Without going into detail, there is little benefit to encumbering the Bitcoin protocol with these new features because your proposal can already be implemented using the current protocol. The transfers would be done using Bitcoin, and the rest would be implemented outside of Bitcoin. One possibility might be something like a 2-of-3 multisig Lightning channel.
Thank you for bringing up the potential of using existing Bitcoin technologies such as multisig and the Lightning Network to address issues of unauthorized access and theft. Indeed, these tools offer powerful ways to enhance security and provide mechanisms for dispute resolution without requiring significant changes to Bitcoin's core protocol.
2-of-3 Multisig Approach: Utilizing a 2-of-3 multisig setup could indeed serve as a preventive measure against theft. In this scenario, one key could be held by the user, another by a trusted third party or service, and the third could act as a recovery key in cases of dispute or loss. This setup provides a balance between security and recoverability, allowing transaction reversals under agreed conditions without needing protocol changes.
Lightning Network Channels: The Lightning Network offers another layer of security for transactions that can be reversed within the channel under certain conditions. For instance, a 2-of-3 multisig Lightning channel could facilitate faster dispute resolutions and provide a layer of reversibility for transactions before they are settled on the blockchain.
These solutions, while viable, rely heavily on external enforcement and trust in third parties, which might not align with the decentralized ethos of many Bitcoin users. The proposal aims to integrate a reversible transaction feature directly within the Bitcoin protocol to address these concerns systematically and transparently, ensuring all network participants adhere to the same rules without needing external arbitration.
Moreover, while multisig and Lightning solutions can provide mechanisms for security and dispute resolution, they do not address all cases, especially when transactions are already confirmed on the blockchain. The proposed reversible transaction feature aims to fill this gap, offering a method to contest and potentially reverse confirmed transactions in extreme cases of theft, which are currently irreversible under standard Bitcoin operations.
It's important to weigh the benefits of leveraging existing technologies against the need for new features that might provide a more comprehensive solution tailored specifically for theft recovery. Each approach has its merits and potential drawbacks, and the ongoing community discussion will be crucial in determining the most appropriate path forward.
Re: Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
- 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.
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.
Re: Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
IMO there's almost no chance your proposal will be applied on Bitcoin network. Anyway, your proposal is very long and there are many questionable technical detail. Here are few of those,
How many FlaggedTransaction can be created by someone? How does it handle TXID which involve multi-sig address where multiple people may be involved?
How exactly reputation score is determine? Is there any minimum Bitcoin amount before someone can submit a proof of stake? What happen if CVN doesn't bother do it's role? What if someone wish to become CVN without any on-chain blockchain history?
Does all CVN have same vote weight or the weight determined based on amount of staked Bitcoin?
Transaction Lifecycle Modifications
- 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.
- Temporary Transaction Freeze: Upon network acceptance of a FlaggedTransaction, the disputed funds are temporarily frozen, preventing any further transfers. This state is maintained until the resolution of the claim.
How many FlaggedTransaction can be created by someone? How does it handle TXID which involve multi-sig address where multiple people may be involved?
Community Verification Nodes (CVNs) Setup
- Node Selection: Nodes apply to become CVNs by submitting a proof of stake and a reputation score, derived from their historical activities and peer reviews within the network. The selection process is automated, governed by smart contracts to ensure fairness and transparency.
- Role of CVNs: CVNs are responsible for reviewing all submitted evidence, interacting with claimants, and possibly contacting involved parties for additional information. Their task is to assess the validity of the claim based on the evidence and vote accordingly.
How exactly reputation score is determine? Is there any minimum Bitcoin amount before someone can submit a proof of stake? What happen if CVN doesn't bother do it's role? What if someone wish to become CVN without any on-chain blockchain history?
Voting and Consensus Mechanism
- Voting Protocol: After reviewing the evidence, CVNs submit their votes through a secure blockchain interface. Votes are encrypted and revealed only after all CVNs have voted to prevent influencing decisions.
- Consensus Achievement: A transaction is reversed only if a supermajority (e.g., 75%) of CVNs agree that the evidence substantiates the theft claim. This high threshold ensures that reversal is truly reflective of community consensus.
Does all CVN have same vote weight or the weight determined based on amount of staked Bitcoin?
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How many FlaggedTransaction can be created by someone? How does it handle TXID which involve multi-sig address where multiple people may be involved?
The proposal includes a safeguard to prevent abuse through the implementation of a fee structure for initiating FlaggedTransactions. This fee is designed to be significant enough to deter frivolous claims—set at 10% of the transaction value or a minimum fixed amount, whichever is greater. The exact value can be adjusted based on community consensus to ensure it serves as an effective deterrent without being prohibitively expensive for legitimate claims. This fee is non-refundable, which further ensures that only serious cases are brought forward. For multi-sig transactions, all signatures required by the wallet configuration must agree to initiate the FlaggedTransaction, maintaining the decentralized and democratic ethos of the network.
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How exactly reputation score is determine? Is there any minimum Bitcoin amount before someone can submit a proof of stake? What happen if CVN doesn't bother do it's role? What if someone wish to become CVN without any on-chain blockchain history?
The reputation score is calculated based on past activities and contributions within the network. A minimum amount of Bitcoin is required to stake to become a CVN, aligning their incentives with the network's health. If a CVN fails to perform their duties, they risk losing their stake and damaging their reputation, which can disqualify them from future participation. New participants can build their reputation through smaller, verifiable actions on the network before applying to become a CVN.
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Does all CVN have the same vote weight or the weight determined based on the amount of staked Bitcoin?
All CVNs have equal voting weight, regardless of the amount of Bitcoin they have staked. This is to ensure fairness and prevent wealthier nodes from having disproportionate control over the reversal process.
Re: Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
There don't seem to be too many technicalities in this proposal, which makes it very readable and easy to understand. I must first commend you for the hard work in putting this proposal together. I am a none developer, but I have understood everything in the best way I can, so do well to correct me if I misunderstood anything.
One thing that makes people like Bitcoin is its level of decentralization, security, transparency, and immutability. Bitcoin theft is rampant, but the introduction of this proposal if accepted by the community, will reduce the level of decentralization and trigger centralization.
Bitcoin, as we all know is pseudonymous, which means transactions can be traced, but the real identities of the owners are not revealed. If the reversibility of transactions is added, we would see more influence from the government and agencies, as the power to halt anyone's transaction would be possible. Transaction reversibility wouldn't be used only for the specified purposes but would be exploited beyond that, trust me.
This is unlike banks that can perform reversibility with ease because they are centralized. Filing a complaint about a false transaction would be handled in a centralized way, which would require you to provide lots of details about yourself and prove you didn't initiate the transaction. In most cases, you have to visit the bank in person to clarify your claims. This is why implementing the same on Bitcoin, where there is no central authority, would be very difficult to manage.
I also think that this implementation will cause massive problems for the community, resulting to trust issues between all Bitcoin holders, miners, and developers.
I also think that the implementation might not work for everyone if it were to happen. Only major attacks involving massive amounts would be considered. Just imagine someone stole your 0.1 BTC. Would you expect massive action compared to when an exchange loses 120,000 BTC?
The only solution to solving this is never to introduce it in any way. This will reduce the pressure and opportunity for manipulation from the government or other parties. It is also a clear way of saying NO to centralization.
The issue of fund theft through various means has been ongoing for a long time and will likely continue. This theft does not only affect Bitcoin but also other valuable assets like alts, fiats, etc. Addressing Bitcoin theft has mainly been to improve wallet security and educate users on how to protect their keys. But there are still loopholes that attackers exploit due to regular discoveries. We can trace these vulnerabilities to the level of security and human error by those who end up being the victims.
My opinion on an instance where the community wants to consider the proposal.
Just as I said earlier, I really like Bitcoin for its decentralization, immutability, security, and transparency. If we are considering reversible transactions on Bitcoin, then we should determine at what level this might be possible. Ideally, when a transaction is initiated (whether by an attacker or the real owner), it must be validated, which means it sits in the mempool and waits for its turn. After the completion of its validation, the transaction ends up sealed in a block, which is aligned with other blocks.
There are two points I can pick from that process:
1. There might be a possible chance for reversal when the attacked transaction is in the mempool waiting to be confirmed. This chance might be possible if the victim flags the transaction before confirmation. If the transaction is flagged on time, the attacked transaction should be set aside for clarification.
2. When the transaction is already placed in the block and attached to the chain, then I don't think we should be talking about any transaction reversal.
Am not a developer, which means I won't be part of those making decisions for the approval. I hope to see this as a BIP on the community GitHub, so I can do my follow up on the decisions taken. You can also share regular update on this thread or board, as I visit here most often .
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Final Reflections
While introducing reversible transactions into Bitcoin introduces a paradigm shift, it is a thoughtful response to the ongoing challenges of theft within the cryptocurrency space. By carefully balancing the core principles of Bitcoin with the practical needs of its users, this proposal aims to foster a safer, more resilient network for all participants.
While introducing reversible transactions into Bitcoin introduces a paradigm shift, it is a thoughtful response to the ongoing challenges of theft within the cryptocurrency space. By carefully balancing the core principles of Bitcoin with the practical needs of its users, this proposal aims to foster a safer, more resilient network for all participants.
One thing that makes people like Bitcoin is its level of decentralization, security, transparency, and immutability. Bitcoin theft is rampant, but the introduction of this proposal if accepted by the community, will reduce the level of decentralization and trigger centralization.
Bitcoin, as we all know is pseudonymous, which means transactions can be traced, but the real identities of the owners are not revealed. If the reversibility of transactions is added, we would see more influence from the government and agencies, as the power to halt anyone's transaction would be possible. Transaction reversibility wouldn't be used only for the specified purposes but would be exploited beyond that, trust me.
This is unlike banks that can perform reversibility with ease because they are centralized. Filing a complaint about a false transaction would be handled in a centralized way, which would require you to provide lots of details about yourself and prove you didn't initiate the transaction. In most cases, you have to visit the bank in person to clarify your claims. This is why implementing the same on Bitcoin, where there is no central authority, would be very difficult to manage.
I also think that this implementation will cause massive problems for the community, resulting to trust issues between all Bitcoin holders, miners, and developers.
I also think that the implementation might not work for everyone if it were to happen. Only major attacks involving massive amounts would be considered. Just imagine someone stole your 0.1 BTC. Would you expect massive action compared to when an exchange loses 120,000 BTC?
The only solution to solving this is never to introduce it in any way. This will reduce the pressure and opportunity for manipulation from the government or other parties. It is also a clear way of saying NO to centralization.
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- Private Key Security: Private keys are the linchpin of user security in the Bitcoin network. They are targets for malicious actors because their compromise grants access to the user's funds.
- Exchange Security: Despite improvements over the years, many exchanges still suffer from security flaws that can be exploited by hackers.
- Phishing and Social Engineering: Users can be deceived into giving away sensitive information, leading to the theft of credentials and funds.
The issue of fund theft through various means has been ongoing for a long time and will likely continue. This theft does not only affect Bitcoin but also other valuable assets like alts, fiats, etc. Addressing Bitcoin theft has mainly been to improve wallet security and educate users on how to protect their keys. But there are still loopholes that attackers exploit due to regular discoveries. We can trace these vulnerabilities to the level of security and human error by those who end up being the victims.
My opinion on an instance where the community wants to consider the proposal.
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Introducing a Community-Driven Reversible Transaction Mechanism
This proposal seeks to introduce a reversible transaction feature into the Bitcoin network that is activated through community consensus. The mechanism enables a system where transactions identified as potentially fraudulent can be temporarily halted and reviewed by a decentralized body of appointed verifiers, herein referred to as Community Verification Nodes (CVNs). This feature aims to mitigate the risks associated with theft by allowing for corrective action, which is currently impossible due to the irreversible nature of Bitcoin transactions.
This proposal seeks to introduce a reversible transaction feature into the Bitcoin network that is activated through community consensus. The mechanism enables a system where transactions identified as potentially fraudulent can be temporarily halted and reviewed by a decentralized body of appointed verifiers, herein referred to as Community Verification Nodes (CVNs). This feature aims to mitigate the risks associated with theft by allowing for corrective action, which is currently impossible due to the irreversible nature of Bitcoin transactions.
Just as I said earlier, I really like Bitcoin for its decentralization, immutability, security, and transparency. If we are considering reversible transactions on Bitcoin, then we should determine at what level this might be possible. Ideally, when a transaction is initiated (whether by an attacker or the real owner), it must be validated, which means it sits in the mempool and waits for its turn. After the completion of its validation, the transaction ends up sealed in a block, which is aligned with other blocks.
There are two points I can pick from that process:
1. There might be a possible chance for reversal when the attacked transaction is in the mempool waiting to be confirmed. This chance might be possible if the victim flags the transaction before confirmation. If the transaction is flagged on time, the attacked transaction should be set aside for clarification.
2. When the transaction is already placed in the block and attached to the chain, then I don't think we should be talking about any transaction reversal.
Am not a developer, which means I won't be part of those making decisions for the approval. I hope to see this as a BIP on the community GitHub, so I can do my follow up on the decisions taken. You can also share regular update on this thread or board, as I visit here most often .
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One thing that makes people like Bitcoin is its level of decentralization, security, transparency, and immutability. Bitcoin theft is rampant, but the introduction of this proposal if accepted by the community, will reduce the level of decentralization and trigger centralization.
The proposal indeed introduces a mechanism that could be seen as a shift towards centralization. However, the design specifically incorporates decentralized decision-making through Community Verification Nodes (CVNs) that are elected by the community and operate under strict guidelines and transparency. The goal is to create a balance where the community can act in cases of clear theft without undermining the decentralized nature of Bitcoin.
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If the reversibility of transactions is added, we would see more influence from the government and agencies, as the power to halt anyone's transaction would be possible. Transaction reversibility wouldn't be used only for the specified purposes but would be exploited beyond that, trust me.
This is a critical concern. The structure of the reversible transaction feature is designed to limit the scope of reversibility strictly to cases flagged by users and verified by multiple independent CVNs. This multilayered approach aims to protect against unilateral misuse of power. Furthermore, transparency in the CVN decision-making process and the ability for the community to audit and contest CVN decisions are intended to guard against potential government overreach or other exploitative behavior.
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I also think that the implementation might not work for everyone if it were to happen. Only major attacks involving massive amounts would be considered. Just imagine someone stole your 0.1 BTC. Would you expect massive action compared to when an exchange loses 120,000 BTC?
The proposal aims to cover theft of any size, not just large-scale thefts. The community-driven aspect of the mechanism allows for flexibility in addressing various scales of theft, ensuring that even smaller amounts can be contested if deemed significant by the affected parties.
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There might be a possible chance for reversal when the attacked transaction is in the mempool waiting to be confirmed. This chance might be possible if the victim flags the transaction before confirmation. If the transaction is flagged on time, the attacked transaction should be set aside for clarification.
Your point about flagging transactions while still in the mempool introduces an interesting layer of prevention. This early intervention could indeed be a critical component of the mechanism, allowing for quicker responses and potentially halting theft before it is cemented into the blockchain. This aspect will require further technical exploration and could be a key feature to enhance the responsiveness of the proposed system.
As you suggested, the next steps would indeed involve drafting a Bitcoin Improvement Proposal (BIP) and submitting it for community review on GitHub. Continuous updates and discussions like this one are crucial, and your active participation, even as a non-developer, is invaluable. The community’s broad range of perspectives strengthens the proposal’s development and ensures that it addresses the concerns of all stakeholders.
Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
Proposal for Community-Driven Theft Prevention Feature in Bitcoin Network
Abstract:
Overview of Bitcoin and its foundational principles: decentralization, security, and transparency.
Discussion of the current challenges with theft and fraud within the network.
Rationale behind the need for a reversible transaction mechanism.
2. The Problem Statement
Detailed analysis of the theft issues in the Bitcoin network.
Examples of significant theft incidents and their impact on users and the network.
Limitations of the current Bitcoin protocol in addressing theft.
3. Proposal Overview
Introduction to the community-driven reversible transaction mechanism.
High-level description of how the mechanism works.
Initial benefits and potential drawbacks.
4. Technical Implementation
Flagged Transactions:
Community Verification Nodes (CVNs):
Reversal Transactions:
Blockchain Integration:
5. Economic Model and Incentives
Fee structure for initiating a FlaggedTransaction.
Rewards system for CVNs and its impact on economic incentives.
Analysis of the economic implications for the broader Bitcoin ecosystem.
6. Security and Risk Management
Detailed strategies to prevent abuse of the new feature.
Security risks associated with reversible transactions and mitigation strategies.
Legal and regulatory considerations.
7. Community and Stakeholder Engagement
Importance of community involvement in the development and implementation phases.
Proposed methods for gathering community feedback and consensus.
Pilot testing and phased rollout plans.
8. Challenges and Limitations
Technical challenges and potential performance impacts.
Ethical and philosophical debates surrounding the reversal of transactions.
Possible resistance from segments of the Bitcoin community.
9. Future Considerations and Extensions
Potential extensions of the theft prevention mechanism to other blockchain applications.
Long-term impacts on Bitcoin's adoption and reputation.
Open questions and areas for further research.
10. Conclusion
Recap of the proposed features and their anticipated benefits.
Call to action for community feedback and participation in the testing phase.
Final thoughts on the balance between innovation and adherence to Bitcoin's core principles.
Appendices and References
Technical appendices with detailed formulas, code snippets, and diagrams.
References to previous studies, papers, and other relevant documents.
1. Introduction
Overview of Bitcoin
Bitcoin, envisioned by Satoshi Nakamoto in 2008, represents a pioneering approach to digital currency, circumventing traditional financial intermediaries through a decentralized ledger system known as blockchain. At its core, Bitcoin is predicated on principles of decentralization, security, and transparency. Transactions within the Bitcoin network are immutable and publicly recorded, offering a level of transparency and auditability that traditional financial systems struggle to match.
However, the network's strengths also give rise to significant challenges, particularly concerning security and the management of theft. While the blockchain itself is highly secure, vulnerabilities exist primarily at the user and exchange levels. Phishing attacks, private key theft, and exchange breaches frequently result in the loss of bitcoins. Once stolen, these funds are almost impossible to recover due to the inherent irreversibility of blockchain transactions.
Challenges of Theft in Bitcoin
The decentralized nature of Bitcoin, while providing user autonomy, also excludes the possibility of a centralized authority to intervene in disputes or transaction reversals. This absence becomes problematic when funds are stolen. Victims of theft have no recourse to recover their funds, which contrasts sharply with traditional financial systems where transactions can often be reversed.
Theft not only impacts individual users but also undermines the broader perception of Bitcoin as a secure and reliable store of value. High-profile thefts have led to publicized media coverage and regulatory scrutiny, which in turn affect market stability and investor confidence.
Need for a Reversible Transaction Mechanism
Given these challenges, there is a pressing need for mechanisms within the Bitcoin protocol that can address theft while respecting the foundational principles of decentralization. This white paper proposes a reversible transaction mechanism that allows the community to intervene in clear cases of theft, providing a balance between immutability and corrective justice without compromising the decentralized ethos of Bitcoin.
2. The Problem Statement
Theft Issues in the Bitcoin Network
Theft within the Bitcoin network has been a persistent issue since its inception. Several high-profile incidents highlight the vulnerability of digital wallets and exchanges. For example, the infamous Mt. Gox incident, where approximately 850,000 bitcoins were lost or stolen, underscores the catastrophic potential of security lapses. More recently, the hack of Bitfinex involved the theft of nearly 120,000 bitcoins, illustrating ongoing security challenges.
These incidents reveal several critical vulnerabilities:
Limitations of Current Protocols
The current Bitcoin protocol does not support the reversal of transactions. Once a transaction is confirmed on the blockchain, it is considered immutable. This feature, while central to preventing fraud such as double-spending, also means that there is no mechanism to correct wrongful transfers of value, such as those resulting from theft.
The lack of any recourse in the event of theft poses several problems:
3. Proposal Overview
Introducing a Community-Driven Reversible Transaction Mechanism
This proposal seeks to introduce a reversible transaction feature into the Bitcoin network that is activated through community consensus. The mechanism enables a system where transactions identified as potentially fraudulent can be temporarily halted and reviewed by a decentralized body of appointed verifiers, herein referred to as Community Verification Nodes (CVNs). This feature aims to mitigate the risks associated with theft by allowing for corrective action, which is currently impossible due to the irreversible nature of Bitcoin transactions.
Operational Framework
The key components of the proposed system include:
Goals of the Proposal
4. Technical Implementation
Detailed Architecture of the Proposed Mechanism
Transaction Lifecycle Modifications
Community Verification Nodes (CVNs) Setup
Evidence Handling
Voting and Consensus Mechanism
Execution of Reversal Transactions
5. Economic Model and Incentives
Fee Structure for Initiating a FlaggedTransaction
To prevent misuse of the reversible transaction feature and to ensure that only serious claims are pursued, a fee mechanism is proposed:
Rewards System for Community Verification Nodes (CVNs)
Economic Implications for the Bitcoin Ecosystem
Impact on Transaction Dynamics: Introducing reversible transactions could potentially influence user behavior, leading to an increased perception of security and possibly affecting transaction volumes and patterns.
Market Response: The ability to contest and potentially reverse fraudulent transactions could enhance market trust in Bitcoin, possibly affecting its market value and volatility.
Sustainability Considerations: The economic model needs to ensure the long-term sustainability of the theft prevention mechanism, requiring regular assessments and adjustments based on operational data and economic conditions.
6. Security and Risk Management
Strategies to Prevent Abuse of the New Feature
Given the transformative nature of introducing reversible transactions into a traditionally immutable system, robust safeguards are essential to prevent abuse:
Security Risks Associated with Reversible Transactions
Introducing transaction reversibility carries inherent security risks that must be meticulously managed:
Legal and Regulatory Considerations
The introduction of reversible transactions poses several legal and regulatory challenges:
7. Community and Stakeholder Engagement
Importance of Inclusive Community Involvement
The success of the proposed reversible transaction feature largely depends on the acceptance and active participation of the Bitcoin community. Engaging a broad range of stakeholders—including miners, developers, investors, and everyday users—is critical to ensuring the feature reflects a wide array of interests and insights.
Strategies for Community Engagement
Role of Key Stakeholders
8. Challenges and Limitations
Technical Challenges
Philosophical and Ethical Concerns
Resistance from the Community
9. Future Considerations and Extensions
Long-term Implications
The implementation of a community-driven reversible transaction feature in Bitcoin could set a precedent for how blockchain technologies address security issues without compromising their core principles. It's important to consider the long-term implications of this feature, including its potential extension to other cryptocurrencies and blockchain applications.
Extensions to Other Cryptocurrencies
Technological Advancements
Further Research Areas
Potential for Regulatory Alignment
10. Conclusion
Recap of the Proposal
This white paper has detailed a proposed mechanism for integrating community-driven reversible transactions into the Bitcoin network, aiming to enhance security without undermining the decentralized, immutable nature of the blockchain. The mechanism involves significant changes to the transaction process, including the introduction of Flagged and Reversal Transactions, the role of Community Verification Nodes, and a robust economic model to fund and incentivize the operations of this new feature.
Community's Role in Realization
The realization of this feature depends heavily on the active participation and consensus of the Bitcoin community. It requires not only technical adoption but also a philosophical alignment on the balance between immutability and the need for intervention in exceptional circumstances like theft.
Call to Action
Final Reflections
While introducing reversible transactions into Bitcoin introduces a paradigm shift, it is a thoughtful response to the ongoing challenges of theft within the cryptocurrency space. By carefully balancing the core principles of Bitcoin with the practical needs of its users, this proposal aims to foster a safer, more resilient network for all participants.
Appendices and References
Appendix A: Technical Specifications
Detailed technical specifications for the FlaggedTransaction and ReversalTransaction structures, including field definitions, data types, and protocol adjustments required for implementation.
FlaggedTransaction Specification:
Description of the algorithm used to select Community Verification Nodes, including criteria such as stake size, network activity, and reputation score. This section also covers the security measures implemented to ensure the integrity and fairness of the CVN selection process.
Appendix C: Evidence Submission Protocol
Detailed protocol for how evidence is submitted, stored, and accessed securely by CVNs. This includes encryption standards, data integrity checks, and the anonymization process to protect user privacy during the dispute resolution phase.
Appendix D: Economic Impact Analysis
A comprehensive analysis of the economic impacts of introducing reversible transactions into the Bitcoin network. This analysis covers the effects on transaction volume, network fees, miner incentives, and the overall market dynamics of Bitcoin.
Appendix E: Pilot Program Results
Summary of findings from pilot programs conducted on testnets. This includes user participation rates, types of disputes encountered, effectiveness of CVN interventions, and overall network performance during the tests.
References
Acknowledgments
We thank the numerous contributors from the Bitcoin development community, security experts, and economists whose insights have been invaluable in shaping this proposal. We look forward to continuing this collaborative effort to enhance the security and functionality of Bitcoin.
Abstract:
- Brief overview of Bitcoin's security features and vulnerabilities related to theft.
- Introduction of the proposed reversible transaction feature.
- Summary of the benefits and goals of the proposal.
Overview of Bitcoin and its foundational principles: decentralization, security, and transparency.
Discussion of the current challenges with theft and fraud within the network.
Rationale behind the need for a reversible transaction mechanism.
2. The Problem Statement
Detailed analysis of the theft issues in the Bitcoin network.
Examples of significant theft incidents and their impact on users and the network.
Limitations of the current Bitcoin protocol in addressing theft.
3. Proposal Overview
Introduction to the community-driven reversible transaction mechanism.
High-level description of how the mechanism works.
Initial benefits and potential drawbacks.
4. Technical Implementation
Flagged Transactions:
- Structure and components of a FlaggedTransaction.
- Process of initiating a FlaggedTransaction.
Community Verification Nodes (CVNs):
- Role and selection criteria for CVNs.
- Responsibilities and operations of CVNs.
Reversal Transactions:
- Conditions under which ReversalTransactions are triggered.
- Security measures to ensure the integrity of ReversalTransactions.
Blockchain Integration:
- Necessary modifications to the existing blockchain protocol.
- Details on the soft fork required for implementation.
5. Economic Model and Incentives
Fee structure for initiating a FlaggedTransaction.
Rewards system for CVNs and its impact on economic incentives.
Analysis of the economic implications for the broader Bitcoin ecosystem.
6. Security and Risk Management
Detailed strategies to prevent abuse of the new feature.
Security risks associated with reversible transactions and mitigation strategies.
Legal and regulatory considerations.
7. Community and Stakeholder Engagement
Importance of community involvement in the development and implementation phases.
Proposed methods for gathering community feedback and consensus.
Pilot testing and phased rollout plans.
8. Challenges and Limitations
Technical challenges and potential performance impacts.
Ethical and philosophical debates surrounding the reversal of transactions.
Possible resistance from segments of the Bitcoin community.
9. Future Considerations and Extensions
Potential extensions of the theft prevention mechanism to other blockchain applications.
Long-term impacts on Bitcoin's adoption and reputation.
Open questions and areas for further research.
10. Conclusion
Recap of the proposed features and their anticipated benefits.
Call to action for community feedback and participation in the testing phase.
Final thoughts on the balance between innovation and adherence to Bitcoin's core principles.
Appendices and References
Technical appendices with detailed formulas, code snippets, and diagrams.
References to previous studies, papers, and other relevant documents.
1. Introduction
Overview of Bitcoin
Bitcoin, envisioned by Satoshi Nakamoto in 2008, represents a pioneering approach to digital currency, circumventing traditional financial intermediaries through a decentralized ledger system known as blockchain. At its core, Bitcoin is predicated on principles of decentralization, security, and transparency. Transactions within the Bitcoin network are immutable and publicly recorded, offering a level of transparency and auditability that traditional financial systems struggle to match.
However, the network's strengths also give rise to significant challenges, particularly concerning security and the management of theft. While the blockchain itself is highly secure, vulnerabilities exist primarily at the user and exchange levels. Phishing attacks, private key theft, and exchange breaches frequently result in the loss of bitcoins. Once stolen, these funds are almost impossible to recover due to the inherent irreversibility of blockchain transactions.
Challenges of Theft in Bitcoin
The decentralized nature of Bitcoin, while providing user autonomy, also excludes the possibility of a centralized authority to intervene in disputes or transaction reversals. This absence becomes problematic when funds are stolen. Victims of theft have no recourse to recover their funds, which contrasts sharply with traditional financial systems where transactions can often be reversed.
Theft not only impacts individual users but also undermines the broader perception of Bitcoin as a secure and reliable store of value. High-profile thefts have led to publicized media coverage and regulatory scrutiny, which in turn affect market stability and investor confidence.
Need for a Reversible Transaction Mechanism
Given these challenges, there is a pressing need for mechanisms within the Bitcoin protocol that can address theft while respecting the foundational principles of decentralization. This white paper proposes a reversible transaction mechanism that allows the community to intervene in clear cases of theft, providing a balance between immutability and corrective justice without compromising the decentralized ethos of Bitcoin.
2. The Problem Statement
Theft Issues in the Bitcoin Network
Theft within the Bitcoin network has been a persistent issue since its inception. Several high-profile incidents highlight the vulnerability of digital wallets and exchanges. For example, the infamous Mt. Gox incident, where approximately 850,000 bitcoins were lost or stolen, underscores the catastrophic potential of security lapses. More recently, the hack of Bitfinex involved the theft of nearly 120,000 bitcoins, illustrating ongoing security challenges.
These incidents reveal several critical vulnerabilities:
- Private Key Security: Private keys are the linchpin of user security in the Bitcoin network. They are targets for malicious actors because their compromise grants access to the user's funds.
- Exchange Security: Despite improvements over the years, many exchanges still suffer from security flaws that can be exploited by hackers.
- Phishing and Social Engineering: Users can be deceived into giving away sensitive information, leading to the theft of credentials and funds.
Limitations of Current Protocols
The current Bitcoin protocol does not support the reversal of transactions. Once a transaction is confirmed on the blockchain, it is considered immutable. This feature, while central to preventing fraud such as double-spending, also means that there is no mechanism to correct wrongful transfers of value, such as those resulting from theft.
The lack of any recourse in the event of theft poses several problems:
- Lack of Recourse: Users have no means to recover stolen funds, leading to financial loss and decreased trust in the platform.
- Incentive for Hackers: The irreversible nature of transactions makes Bitcoin an attractive target for hackers since stolen funds are nearly impossible to reclaim.
3. Proposal Overview
Introducing a Community-Driven Reversible Transaction Mechanism
This proposal seeks to introduce a reversible transaction feature into the Bitcoin network that is activated through community consensus. The mechanism enables a system where transactions identified as potentially fraudulent can be temporarily halted and reviewed by a decentralized body of appointed verifiers, herein referred to as Community Verification Nodes (CVNs). This feature aims to mitigate the risks associated with theft by allowing for corrective action, which is currently impossible due to the irreversible nature of Bitcoin transactions.
Operational Framework
The key components of the proposed system include:
- Flagged Transactions: These are transactions that are marked by the sender as "disputed" immediately upon suspicion of theft. This marking halts any further transaction processes involving the disputed funds until a resolution is reached.
- Community Verification Nodes (CVNs): These nodes are elected by the community based on their stake and reputation within the network. Their role is to investigate flagged transactions, verify the legitimacy of the claim, and vote on the outcome based on evidence presented.
- Evidence Submission and Review: A secure, decentralized platform will be established for the submission and review of evidence related to theft claims. This platform ensures that all data remains confidential, accessible only to authorized CVNs.
- Voting and Consensus: Decisions on whether to reverse a transaction are made through a majority vote among the CVNs. This decision must be reached by a predefined consensus threshold to execute a reversal.
- Reversal Transactions: If a consensus is reached that a theft occurred, a Reversal Transaction is executed. This transaction negates the disputed transaction and returns the funds to the original wallet, subject to the conditions predefined in the protocol.
Goals of the Proposal
- Enhance Security: Provide a method to recover funds in clear cases of theft, enhancing user confidence and security within the Bitcoin ecosystem.
- Maintain Decentralization: Keep the process decentralized, ensuring that no single entity has the authority to reverse transactions unilaterally.
- Preserve Transparency: Ensure that all actions taken to reverse transactions are transparent and recorded on the blockchain for auditability.
- Balance Immutability with Flexibility: Introduce a controlled flexibility within Bitcoin’s rigid immutability paradigm, allowing for corrective actions under strict conditions.
4. Technical Implementation
Detailed Architecture of the Proposed Mechanism
Transaction Lifecycle Modifications
- 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.
- Temporary Transaction Freeze: Upon network acceptance of a FlaggedTransaction, the disputed funds are temporarily frozen, preventing any further transfers. This state is maintained until the resolution of the claim.
Community Verification Nodes (CVNs) Setup
- Node Selection: Nodes apply to become CVNs by submitting a proof of stake and a reputation score, derived from their historical activities and peer reviews within the network. The selection process is automated, governed by smart contracts to ensure fairness and transparency.
- Role of CVNs: CVNs are responsible for reviewing all submitted evidence, interacting with claimants, and possibly contacting involved parties for additional information. Their task is to assess the validity of the claim based on the evidence and vote accordingly.
Evidence Handling
- Secure Submission Portal: A decentralized application (dApp) on a secondary layer of Bitcoin will be developed for evidence submission. This dApp ensures encryption and anonymity, only granting access to designated CVNs.
- Evidence Review Process: CVNs access the evidence through secure, time-limited sessions. All interactions with the evidence are logged and cryptographically signed to maintain a transparent review trail.
Voting and Consensus Mechanism
- Voting Protocol: After reviewing the evidence, CVNs submit their votes through a secure blockchain interface. Votes are encrypted and revealed only after all CVNs have voted to prevent influencing decisions.
- Consensus Achievement: A transaction is reversed only if a supermajority (e.g., 75%) of CVNs agree that the evidence substantiates the theft claim. This high threshold ensures that reversal is truly reflective of community consensus.
Execution of Reversal Transactions
- Smart Contract Execution: Upon achieving the required consensus, a smart contract automatically generates a ReversalTransaction. This transaction is linked to the original FlaggedTransaction and effectively returns the disputed funds to the claimant’s wallet.
- Transparency and Record-Keeping: All ReversalTransactions are recorded on the blockchain, providing a permanent, immutable history of the decision and its justification, which is critical for maintaining transparency and trust in the system.
5. Economic Model and Incentives
Fee Structure for Initiating a FlaggedTransaction
To prevent misuse of the reversible transaction feature and to ensure that only serious claims are pursued, a fee mechanism is proposed:
- Flagging Fee: A non-refundable fee, constituting 10% of the disputed transaction value or a minimum threshold (whichever is greater), is required to file a FlaggedTransaction. This fee serves as a deterrent against frivolous or malicious claims.
- Economic Justification: The fee acts as a financial commitment from the claimant, indicating the seriousness of the theft claim. The fee collected will be used to cover the operational costs of the CVNs and the infrastructure required to support the evidence review and voting process.
Rewards System for Community Verification Nodes (CVNs)
- Incentivizing Participation: CVNs receive a portion of the flagging fees as compensation for their work in reviewing and voting on FlaggedTransactions. This reward is meant to encourage high engagement and integrity within the CVN community.
- Distribution Model: The rewards are distributed based on the accuracy and timeliness of a CVN's contributions to resolved cases. This model promotes not only participation but also quality and reliability in the verification process.
Economic Implications for the Bitcoin Ecosystem
Impact on Transaction Dynamics: Introducing reversible transactions could potentially influence user behavior, leading to an increased perception of security and possibly affecting transaction volumes and patterns.
Market Response: The ability to contest and potentially reverse fraudulent transactions could enhance market trust in Bitcoin, possibly affecting its market value and volatility.
Sustainability Considerations: The economic model needs to ensure the long-term sustainability of the theft prevention mechanism, requiring regular assessments and adjustments based on operational data and economic conditions.
6. Security and Risk Management
Strategies to Prevent Abuse of the New Feature
Given the transformative nature of introducing reversible transactions into a traditionally immutable system, robust safeguards are essential to prevent abuse:
- Strict Verification for CVN Applicants: Implementing rigorous checks on the identity, reputation, and historical activities of CVN applicants to prevent collusion and ensure only the most reliable participants are selected.
- Limitations on Reversibility: Setting strict criteria under which transactions can be reversed, such as clear evidence of unauthorized access or exploitation, to maintain the integrity of the blockchain.
- Auditing and Monitoring: Regular audits of CVN activities and the decisions made on FlaggedTransactions to detect any patterns of abuse or corruption.
Security Risks Associated with Reversible Transactions
Introducing transaction reversibility carries inherent security risks that must be meticulously managed:
- Potential for Centralized Control: While the decision-making process is decentralized, the aggregation of power among a small group of CVNs could lead to centralization risks. Measures such as rotating CVN responsibilities and enforcing transparency in CVN activities are proposed to mitigate this risk.
- Risk of Social Engineering: The increased complexity of the transaction system could be exploited through social engineering attacks aimed at manipulating CVN decisions. Comprehensive training for CVNs, coupled with advanced cryptographic security measures, is essential to safeguard the integrity of the process.
Legal and Regulatory Considerations
The introduction of reversible transactions poses several legal and regulatory challenges:
- Compliance with Global Financial Regulations: Ensuring that the reversible transaction mechanism complies with international financial regulations, including anti-money laundering (AML) and combating the financing of terrorism (CFT) standards.
- Jurisdictional Variability: The decentralized nature of Bitcoin operates globally, which may intersect with diverse legal frameworks that could affect the enforcement and recognition of reversible transactions.
- Responsibility and Liability: Establishing clear guidelines on the legal responsibilities and liabilities of CVNs and other parties involved in the reversible transaction process.
7. Community and Stakeholder Engagement
Importance of Inclusive Community Involvement
The success of the proposed reversible transaction feature largely depends on the acceptance and active participation of the Bitcoin community. Engaging a broad range of stakeholders—including miners, developers, investors, and everyday users—is critical to ensuring the feature reflects a wide array of interests and insights.
Strategies for Community Engagement
- Public Consultations and Feedback: Conduct extensive public consultations through online forums, dedicated workshops, and virtual town halls to gather feedback from the community. These discussions will be structured to cover specific aspects of the proposal, such as its technical feasibility, security implications, and economic impact.
- Collaborative Development: Open-source development of the protocol modifications and the related infrastructure to encourage transparency and collaborative input from developers worldwide. This approach ensures that the codebase is robust, secure, and benefits from diverse expert perspectives.
- Educational Campaigns: Launch educational initiatives to inform the community about the benefits and operations of the new feature. These campaigns will include detailed documentation, explainer videos, and live Q&A sessions to address common questions and concerns.
- Pilot Programs: Implement pilot programs on testnets to demonstrate the reversible transaction mechanism in action. These pilots will allow participants to interact with the feature in a controlled environment, providing valuable insights into its practical implications and any potential issues.
- Iterative Feedback and Refinement: Use the feedback from pilot programs and community consultations to refine and improve the proposal. This iterative process ensures that the final implementation is well-tuned to the community’s needs and expectations.
Role of Key Stakeholders
- Miners: Engage with miners to discuss the impact of the new feature on their operations and incentives. Miners play a crucial role in adopting and enforcing new protocol rules, and their support is essential for the successful implementation of a soft fork.
- Developers: Collaborate with software developers, particularly those involved in wallet and node software, to ensure compatibility and ease of integration with existing systems.
- Regulators: Proactively communicate with financial regulators to ensure that the feature complies with legal standards and to foster a regulatory environment that understands and supports innovative developments in blockchain technology.
8. Challenges and Limitations
Technical Challenges
- Performance Impacts: Introducing mechanisms for reversible transactions adds complexity to the Bitcoin protocol, which could impact transaction processing times and overall network performance. Balancing security, complexity, and performance will require innovative technical solutions and may involve trade-offs.
- Scalability Concerns: As Bitcoin continues to grow, maintaining scalability is paramount. The added data and processing requirements for managing disputed transactions must be carefully integrated to not adversely affect the network's scalability.
Philosophical and Ethical Concerns
- Philosophical Shift in Immutability: One of the foundational appeals of Bitcoin is the immutability of the blockchain. Introducing reversible transactions, even in limited contexts, represents a significant philosophical shift that may not be universally accepted within the community.
- Risk of Centralization: The role of Community Verification Nodes introduces a layer of decision-making that could be seen as a move towards centralization. Ensuring that this system remains decentralized and resistant to manipulation is a fundamental challenge.
Resistance from the Community
- Varied Interests: Different segments of the Bitcoin community may have conflicting interests regarding the introduction of reversible transactions. For example, merchants may support the feature due to the added security against theft, while purists might oppose any change to the immutability principle.
- Adoption and Enforcement: Even if the feature is technically sound and ready for deployment, achieving widespread adoption and enforcement across the network will require substantial consensus-building efforts.
9. Future Considerations and Extensions
Long-term Implications
The implementation of a community-driven reversible transaction feature in Bitcoin could set a precedent for how blockchain technologies address security issues without compromising their core principles. It's important to consider the long-term implications of this feature, including its potential extension to other cryptocurrencies and blockchain applications.
Extensions to Other Cryptocurrencies
- Adaptability: Other cryptocurrencies, particularly those facing similar theft and security challenges, might consider adopting similar mechanisms. The success and efficiency of this feature within Bitcoin could serve as a blueprint for broader industry adoption.
- Interoperability: Developing standards for reversible transactions that could work across different blockchain platforms could enhance security and user protection industry-wide, fostering greater interoperability between different cryptocurrencies.
Technological Advancements
- Smart Contract Capabilities: As smart contract technology evolves, there may be opportunities to automate more aspects of the verification and reversal process, reducing the need for human intervention and enhancing the efficiency and security of the system.
- Machine Learning and AI: Leveraging artificial intelligence to assist in the detection of fraudulent patterns and potential theft could enhance the preliminary screening of flagged transactions, making the CVN’s role more focused and efficient.
Further Research Areas
- Economic Impact Studies: Ongoing research into the economic impacts of reversible transactions on Bitcoin’s market dynamics, user behavior, and overall network health will be critical.
- Security Protocols: Continuous development and refinement of the security protocols associated with this feature, especially in combating new and evolving cybersecurity threats.
Potential for Regulatory Alignment
- Enhanced Compliance Tools: The feature could be designed to help cryptocurrency platforms comply with regulatory requirements related to anti-money laundering (AML) and combating the financing of terrorism (CFT).
- Dialogue with Regulators: Regular engagement with financial regulators could help shape a regulatory framework that recognizes and supports secure, reversible transactions as a legitimate tool for theft prevention.
10. Conclusion
Recap of the Proposal
This white paper has detailed a proposed mechanism for integrating community-driven reversible transactions into the Bitcoin network, aiming to enhance security without undermining the decentralized, immutable nature of the blockchain. The mechanism involves significant changes to the transaction process, including the introduction of Flagged and Reversal Transactions, the role of Community Verification Nodes, and a robust economic model to fund and incentivize the operations of this new feature.
Community's Role in Realization
The realization of this feature depends heavily on the active participation and consensus of the Bitcoin community. It requires not only technical adoption but also a philosophical alignment on the balance between immutability and the need for intervention in exceptional circumstances like theft.
Call to Action
- Engagement: We encourage all stakeholders in the Bitcoin ecosystem to engage with this proposal through discussion, debate, and contribution to its refinement and testing.
- Participation in Pilot Programs: Actively participate in upcoming pilot programs on testnets to better understand the practical implications of the feature and provide feedback.
- Contribution to Development: Developers and researchers are invited to contribute to the open-source development efforts and to participate in ongoing security and economic research related to this feature.
Final Reflections
While introducing reversible transactions into Bitcoin introduces a paradigm shift, it is a thoughtful response to the ongoing challenges of theft within the cryptocurrency space. By carefully balancing the core principles of Bitcoin with the practical needs of its users, this proposal aims to foster a safer, more resilient network for all participants.
Appendices and References
Appendix A: Technical Specifications
Detailed technical specifications for the FlaggedTransaction and ReversalTransaction structures, including field definitions, data types, and protocol adjustments required for implementation.
FlaggedTransaction Specification:
- transactionID: Unique identifier of the original transaction being disputed.
- flagged: Boolean indicating the transaction is disputed.
- reason: Text description of the dispute reason.
- evidenceHash: Hash of the evidence file submitted to support the dispute.
- claimantSignature: Digital signature of the user who is flagging the transaction.
- originalTransactionID: Reference to the original disputed transaction.
- flaggedTransactionID: Reference to the FlaggedTransaction.
- CVNSignatures: Array of signatures from Community Verification Nodes who approved the reversal.
- executionTimestamp: Timestamp when the reversal was executed.
Description of the algorithm used to select Community Verification Nodes, including criteria such as stake size, network activity, and reputation score. This section also covers the security measures implemented to ensure the integrity and fairness of the CVN selection process.
Appendix C: Evidence Submission Protocol
Detailed protocol for how evidence is submitted, stored, and accessed securely by CVNs. This includes encryption standards, data integrity checks, and the anonymization process to protect user privacy during the dispute resolution phase.
Appendix D: Economic Impact Analysis
A comprehensive analysis of the economic impacts of introducing reversible transactions into the Bitcoin network. This analysis covers the effects on transaction volume, network fees, miner incentives, and the overall market dynamics of Bitcoin.
Appendix E: Pilot Program Results
Summary of findings from pilot programs conducted on testnets. This includes user participation rates, types of disputes encountered, effectiveness of CVN interventions, and overall network performance during the tests.
References
- Nakamoto, Satoshi. "Bitcoin: A Peer-to-Peer Electronic Cash System." 2008.
- Antonopoulos, Andreas M. "Mastering Bitcoin: Unlocking Digital Cryptocurrencies." O'Reilly Media, Inc., 2014.
- Buterin, Vitalik, et al. "A Next-Generation Smart Contract and Decentralized Application Platform." Ethereum White Paper, 2014.
- Eyal, Ittay, and Emin Gün Sirer. "Majority is not Enough: Bitcoin Mining is Vulnerable." In Financial Cryptography and Data Security. Springer Berlin Heidelberg, 2014.
- Rosenfeld, Meni. "Analysis of Bitcoin Pooled Mining Reward Systems." arXiv preprint arXiv:1112.4980 (2011).
Acknowledgments
We thank the numerous contributors from the Bitcoin development community, security experts, and economists whose insights have been invaluable in shaping this proposal. We look forward to continuing this collaborative effort to enhance the security and functionality of Bitcoin.
for a job portal site it looks kind of dead.
I can only see 2 job posts available.
I can only see 2 job posts available.
Yes the job is dead for the most part.
Is there a way to establish some form of security in the negotiation process?
The platform is concerning because the payment is not guaranteed, and not secure.
In terms of legitimacy, how are freelancers protected from scams?
Can a freelancers research the employer or company offering the job?
Ensure that you’re comfortable with the terms and conditions before starting any freelance work.
The platform is concerning because the payment is not guaranteed, and not secure.
In terms of legitimacy, how are freelancers protected from scams?
Can a freelancers research the employer or company offering the job?
Ensure that you’re comfortable with the terms and conditions before starting any freelance work.
If the website ever gained traction, I could enhance it, but it never gained traffic, and I invested a lot of money and time into it.
The best way to protect yourself is to ask questions and create Milestones! Do not complete the project fully, deliver it in Parts. For example, only finish 20% of it, then as for 20% payment.
It says there that I will need to bid at least 1 eth in order to secure a job that is supposed to give me money in exchange for my skills alone. Why is this so? If I'm looking for work, I don't want to pay money upfront to receive said work. How is this site named working for bitcoins when I have to have some money first before I can start working? 
Also, that 15 ETH posting for a data entry job is sketchy.
Also, that 15 ETH posting for a data entry job is sketchy.
You are Bidding on the Job, when bidding on a job, you are indicating how much you'll charged to do the work. This is different than bidding for an item/product/service, where you are indicating how much you will pay for it.
That makes sense. I tried sending my bid and see what comes up with the offer. I'm interested in knowing what kind of jobs are there that is legitimate and is worth of my time since I literally just work 20 hours a week and have a lot of time to burn somewhere else.
Best approach is to ask many questions and jump into a meeting with them and get a sense of the type of people they are, then setup milestone payments.
It is between the job poster and the freelancer to agree to payment terms and process.
There are no payment options through the site. Think of it simply as a forum.
I can see you are wearing their logo on your avatar, which probably means you know how the site works or have some history with them. My issue is how is the freelance protected from the fraudulent job offers?There are no payment options through the site. Think of it simply as a forum.
I have worked with some freelancing platforms in the past, and they would use smart contracts that act as an escrow to hold the funds that are to be paid to the people doing the tasks. I think even Gitcoin does the same things.
Your best best is to create milestones, for example if you are a job, say you will do 20% of it, and then expect 20% payment. For example lets say you bid 0.01 BTC, to write 10 stories. After you write 2 stories, you ask the employer/contractor to give you 0.02 BTC, before you do 2 more.
This is simply an example of how you would go about it. This website is basic and does not have enough traffic or interest to warrant more advanced features.
It says there that I will need to bid at least 1 eth in order to secure a job that is supposed to give me money in exchange for my skills alone. Why is this so? If I'm looking for work, I don't want to pay money upfront to receive said work. How is this site named working for bitcoins when I have to have some money first before I can start working?
Also, that 15 ETH posting for a data entry job is sketchy.
Also, that 15 ETH posting for a data entry job is sketchy.
You are Bidding on the Job, when bidding on a job, you are indicating how much you'll charged to do the work. This is different than bidding for an item/product/service, where you are indicating how much you will pay for it.
HTML5 CSS Javascript React.js
0.01 BTC open
https://workingforbitcoins.com/category/website/default/job/website_development40
Excel Data Typing for Analysis
15 ETH open
https://workingforbitcoins.com/category/blockchain/default/job/excel_data_typing_for_analysis
Tech-Focused Content Creation
2 ETH open
https://workingforbitcoins.com/category/writing/default/job/techfocused_content_creation
THESE ARE NOT MY JOBS. I am just sharing them.
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Re: In addition to LN, I would like to suggest a new service called ASSURED
To the ear of regular user of bitcoin like me it’s more or less bitcoin concept. I am not sure why this is sounding more or less a other project similar to any crypto currencies claiming their outflow over blockchain. If we want bigger proposals and assured lightening transactions then we need to forget about the logics of bitcoin and to better extent also need to waive off the blockchain protocols. I mean what are alts in this comparison? Aren’t they providing what is already explained above.
We already have ordinals that are contesting the network to the alarming rates and it’s going to hamper more as the time is passing.
I am just hoping ASSURED won’t burden the chain in similar way.
We already have ordinals that are contesting the network to the alarming rates and it’s going to hamper more as the time is passing.
I am just hoping ASSURED won’t burden the chain in similar way.
Thank you for your feedback. You have some misconceptions about ASSURED and its purpose. ASSURED is not a competitor to Bitcoin or any other cryptocurrency. Rather, it's a separate project that complements the existing blockchain ecosystem by providing a unique service not currently available. The goal is to provide a decentralized, secure system for scheduling future message releases, not to serve as a financial system or currency.
Here is a breakdown to help you better understand it:
Different Purpose: Unlike Bitcoin and other cryptocurrencies, ASSURED is not primarily a currency or a financial system. Its primary purpose is to provide a decentralized, secure system for scheduling future message releases. While it does use a token system (ASSURED tokens) to incentivize node operation and to set the cost for scheduling messages, these are secondary features, not the main purpose.
Not a Replacement for Bitcoin: ASSURED is not meant to replace Bitcoin or any other cryptocurrency. It is a separate project with a distinct use case. It complements Bitcoin by providing a service currently unavailable within the Bitcoin ecosystem, specifically, the ability to securely store and schedule the release of messages.
Not Overburdening the Chain: ASSURED will have ZERO impact on the Bitcoin network, and the design would avoid overburdening its own network. The sharding mechanism ensures that the data is distributed across the network, preventing any single node from becoming overwhelmed. The reward system incentivizes the operation of nodes, promoting a healthy, robust network.
Re: In addition to LN, I would like to suggest a new service called ASSURED
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Does that mean ASSURED can be categorized as Bitcoin's sidechain?
No, not exactly. However, integrating ASSURED as a sidechain to Bitcoin could potentially bring several benefits, but implementing a sidechain involves a significant amount of technical complexity. It would require careful design to ensure secure and efficient operation, vs just having it operate on its own dedicated blockchain.
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I fail to understand how decentralized system could send email. Does this rely on full node operator to run email server?
In the ASSURED system, we implemented two types of nodes to foster a robust, decentralized network:
Simple Nodes: These nodes contribute to the network by validating transactions, maintaining the blockchain, and participating in consensus. For their contribution, they receive ASSURED token rewards as per the protocol's reward schedule.
Full Nodes: These nodes not only perform all the functions of a simple node but also run integrated email servers. They have the additional responsibility of dispatching stored messages to traditional email addresses at the specified release time. To incentivize this added functionality and responsibility, full nodes receive extra ASSURED tokens each time they deliver an email.
This dual-node structure encourages participation from users with different levels of resources and technical expertise, promoting decentralization. The additional rewards for running a full node incentivize users to take on the task of email delivery, ensuring the reliable dispatch of messages.
The ASSURED protocol would be designed to distinguish between simple and full nodes, to allocate rewards appropriately, and to direct email delivery tasks to full nodes. The protocol will also have safeguards to ensure that full nodes accurately report their email delivery activities and do not claim undeserved rewards.
ASSURED will aim to avoid relying on any centralized or third-party services for email delivery, staying true to our commitment to decentralization. This framework will allow ASSURED to offer a secure, reliable, and decentralized messaging system.
Re: In addition to LN, I would like to suggest a new service called ASSURED
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Will the use case for this be primarily to "unlock" funds, if something happens to the owner of those funds?
Let's say you become ill and your family members needs money for your treatment or in the event when you die?
Let's say you become ill and your family members needs money for your treatment or in the event when you die?
The primary function of ASSURED is to provide a platform for secure, reliable, and time-controlled message delivery, which has numerous potential applications beyond the release of Bitcoin funds. However, due to the nature of the platform (secure, decentralized, and time-controlled), it lends itself particularly well to the use case of "unlocking" cryptocurrency funds in the event of the owner's incapacitation or death.
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It can also be helpful with scheduled payments of regular expenses, for example the monthly fixed payment of streaming providers and/or VPN services.
The ASSURED system, as it's currently conceived, is primarily designed for the secure storage and timed release of messages, not for facilitating transactions or recurring payments. While it's conceivable that a user could include payment information or instructions within a message, it's important to note that the system itself does not interact directly with payment providers or perform transactions.
However, the concept of automated, timed payments is certainly a relevant one in the context of blockchain and cryptocurrency. There are other blockchain projects and platforms that are designed specifically for this purpose, providing smart contract functionality to automate payments based on specific conditions or timeframes. Ethereum is the most notable example of this, with its built-in support for smart contracts.
While the idea of expanding ASSURED's functionality to include scheduled payments may seem appealing, it's important to clarify that the underlying architecture and security model of the system have not been designed for this purpose. Thus, the ASSURED system should not be used to facilitate scheduled payments.
Re: In addition to LN, I would like to suggest a new service called ASSURED
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How does node run for the average user?
It would be no different than running a current Bitcoin Node, hardware, Assured Client, and internet connection.
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I mean what exactly requirements does he need to run a single node?
Here's a phased approach to the hardware requirements for running an ASSURED node, considering various growth stages of the network:
Phase 1 - Startup (0-18 months):
- Traffic: Low, initial users and early adopters.
- Usage: Minimal transactions, mostly test transactions and initial users' events.
- Hardware Requirements:
- CPU: Dual-core processor
- Memory: 4GB RAM
- Storage: 100GB SSD
- Network: Stable internet connection with at least 5Mbps speed.
Phase 2 - Growth (1.5-3 years):
- Traffic: Moderate, adoption starts to grow as the platform gains recognition.
- Usage: Moderate increase in transactions as more users join the network and create events.
- Hardware Requirements:
- CPU: Quad-core processor
- Memory: 8GB RAM
- Storage: 500GB SSD
- Network: Stable internet connection with at least 20Mbps speed.
Phase 3 - Expansion (3-5 years):
- Traffic: High, widespread adoption across multiple regions.
- Usage: Significant increase in transactions as user base grows.
- Hardware Requirements:
- CPU: Octa-core processor
- Memory: 16GB RAM
- Storage: 1TB SSD
- Network: Stable internet connection with at least 50Mbps speed.
Phase 4 - Maturity (5-8 years):
- Traffic: Very high, the platform is well-established and widely used.
- Usage: High volume of transactions, with many users actively creating and receiving events.
- Hardware Requirements:
- CPU: Sixteen-core processor
- Memory: 32GB RAM
- Storage: 2TB SSD
- Network: Stable internet connection with at least 100Mbps speed.
Phase 5 - Global Utilization (8+ years):
- Traffic: Extremely high, the platform is globally utilized and has a massive user base.
- Usage: Extremely high volume of transactions, with a global user base creating and receiving events.
- Hardware Requirements:
- CPU: Thirty-two core processor or more
- Memory: 64GB RAM or more
- Storage: 4TB SSD or more
- Network: Stable internet connection with at least 200Mbps speed.
These are obviously estimations and actual requirements may vary based on many factors such as optimizations in the ASSURED platform, changes in blockchain technology, and variations in user behavior. As the network grows, more nodes will be present, distributing the load and making the system more efficient. Additionally, the 1000-character message size can be reduced, if deemed to excessive, to reduce the storage requirement and bandwidth usage.
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Is it possible to run more than one node?
Yes, and there are a few benefits to this, which include:
- Resilience and Redundancy: Multiple nodes run by the same entity can increase the resilience and redundancy of the network. If one node fails or goes offline, others can continue to participate in the network.
- Network Support: More nodes can help support the network by processing transactions, maintaining the ledger, and contributing to the consensus process.
- Increased Network Coverage: If the nodes are geographically distributed, they can help increase the network's coverage and accessibility.
It's important to note that all messages stored on the blockchain are encrypted. This means that even if an individual manages to gather all the fragmented pieces of all the messages stored on the system by running multiple nodes, they would still be unable to decipher or access the content of these messages.
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Also you say: "The fee for scheduling a message is 2880 ASSURED tokens, equivalent to running a node for one month" How much does this cost in bitcoins or dollars?
The cost in Bitcoin or dollars for scheduling a message would be dependent on the current market value of the ASSURED token. As the system is hypothetical and not live, it's impossible to provide a precise conversion rate. If we were to use the model of Bitcoin as a rough guide, early miners earned 50 BTC per block when the value of Bitcoin was very low. Now, those Bitcoins are worth a lot more, but the cost to mine them has also increased significantly.
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Do you see it logical that the fee for scheduling one message is equivalent to running a node for a whole month??!!
The fee structure of the ASSURED system is designed to incentivize the running of nodes, contributing to the overall health and security of the network. By making the cost of scheduling a message equivalent to the reward for running a node for a month, the system encourages users to participate in the network and maintain its operation.
This model ensures that those who want to utilize the service are also contributing to its maintenance. It's worth noting that these parameters (the fee for a message and the reward for running a node) could be adjusted over time as the network grows and evolves.
It's also important to note that users don't necessarily have to run a node to schedule a message. They can purchase ASSURED tokens from others who have earned them by running nodes. In a functioning market, the price of these tokens would be determined by supply and demand.
Maybe a month is too excessive. As I stated, the community can weigh in, and we can collectively determine the reward period.