In Bitcoin and blockchain 101 course in the mining section, Ivan says “if someone does not like you, you can still spend your money” as mining prevents censorship.
Wondering how this work in light of the report yesterday about Bitfinex hack and the difficulty for the stolen coin to be moved from wallet to wallet. Cleary a case of someone not liking you and for a good reason trying to prevent spending.
How does this work? any resource you could be pointing me to?
Thanks
In some cases like the hack of the exchange the UTXOs get marked as stolen. Imo its bad practice, but you can still get buyers of these stolen coins.
I’m not aware of any good resource that would explain this. It boils down to the UTXO blockchain model that kind of makes some coins “less fungible” which is not the issue with account based blockchains like Ethereum which compromise by being less private because of it.
Thanks Alko
Would you say that the real guardian of the temple is the node community ?
Here is my understanding in non technical terms : the UTXOs have this tattoo like marking that says “stolen” and every time these coins get moved it leave a trace on the network. This marking comes from the exchange raising the alert to the network but it has not been validated by the blockchain like a transaction would as there is no incentive.
And a potential buyer might be put off by the marking as it may be less tradable (if the buyer is aware of it) and so will a node or miner as it may question its ability play by the rule, so to speak.
Now should a seller of coins may try to bump up the fee for any transaction that involved stolen coin, one can assume that the mempool might show this and nodes may be alerted and refuse to pass on the transaction so that a miner happen to validate it.
Thus my initial question of the real guardian of the temple in this case.
Hmmm, actually its just up to the exchange to accept these stolen funds or not. There is no difference in these coins on the blockchain, they are not marked on it. So basically the exchange marks some UTXOs as stolen in their central database and doesn’t accept coins that come from these UTXOs.
There is no “guard” that would actually guard these coins on the blockchain itself.