Can BSV Coins Be Confiscated?
This is not a subject we like to cover, but this thread written by @rot13maxi provides an interesting opinion on how BSV coins can be confiscated and how miners can be blacklisted. “The takeaway is: if you are in a trusted relationship with a miner, there is now tooling in BSV that will let you freeze and spend other people’s coins.”
A few weeks ago I somehow ended up in a conversation with a BSV fan. I made a comment about how now you coins can be stolen from you on BSV (“confiscated”). He said I was wrong and I didn’t know enough about the system to defend my assertion. Until now!
Let’s take a look! 🧵
First, let’s look at the slick marketing page! Here’s the landing page for BSV’s Digital Asset Recovery program:
Ok, so it looks like if you upload a “valid” court order to miners through the blacklist manager, then it freezes coins. What’s the blacklist manager?
It’s a (mandatory to run) piece of software written by nChain (CSWs company) that lets “notaries” update the blacklist.
You can find info about it here: bitcoinsv.io/blacklist-mana…
You’ll see in that page that miners who refuse to run it will be forked off the network.
Oh! And the license on the BSV software requires you to be on the chain that the Bitcoin Association says. So, it’s mandatory!
Ok. But what does this blacklist actually do?
Glad you asked!
The BSV node software now has a handy set of RPCs for adding coins to the blacklist. For example:
Once funds are on the blacklist they are considered frozen. Any transaction spending frozen coins is now considered invalid: github.com/bitcoin-sv/bit…
This is what would cause a non-cooperative miner to get forked off the network. If they include a TX spending frozen coins.
Ok, so now there’s an RPC that can freeze coins at the consensus level. I’m sure that will *never* be abused.
That’s it, right?
Nope, there’s more. There’s a blacklist the freeze TXOuts, and there is a whitelist to allow “confiscation transactions”! Sounds scary. Let’s look:
I’ll skip right to the juicy part: if a transaction is whitelisted as a “confiscation transaction” and is spending blacklisted/frozen coins, then it is valid. Normally you have to satisfy the locking script of your inputs by providing a signature or some other witness. Not here!
If a tx is marked as a confiscation transaction, it is automatically valid. Bypasses all conditions set on the coin.
Here’s the code. Hilariously to the point:
Here’s a permalink to the code if you want to check yourself: github.com/bitcoin-sv/bit…
I was wondering how the confiscation transaction works. Luckily there’s a test that walks through the whole workflow!
Here’s a high-level summary:
- Freeze a transaction by adding it to the blacklist
- Create a transaction that spends the frozen inputs, and includes an OP_RETURN that contains a hash (it’s supposed to be the hash of the court order, which is cute and total theater)
…
…
- take that confiscation txid and add it to the confiscation transaction whitelist
- wait until enough blocks have passed(frozen coins have a holding period)
-spend the confiscation transaction
And just like that, you can spend someone else’s coins!
The documentation for the Blacklist Manager covers this pretty well too. Here’s the main page, and I’ll post some screens that I find particularly interesting :
Feel free to read the whole manual. It’s not long.
The takeaway is: if you are in a trusted relationship with a miner, there is now tooling in BSV that will let you freeze and spend other people’s coins.
If you have BSV, there are people who can freeze and spend your coins.
What prevents this from happening in Bitcoin? People can and do and should run their own nodes. When you run a node, you validate all the transactions in every block. If someone tries to create new consensus rules (like seizure), you can reject the block.
If the economic majority of the network rejects the block, then the miner who mined that block is now holding coins on a chain that’s less valuable.
BSV users exclusively use SPV wallets. That means that they can check for transaction INCLUSION but not validity of the block.
So, what did we learn? There are now specially trusted people who can just bypass the rules on BSV. Those users have no option but to hope that those powers aren’t abused.
Truly, Satoshis Vision.
/thread
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