Altcoins Talks - Cryptocurrency Forum
Crypto Discussion Forum => Cryptocurrency discussions => Technical Discussion => Topic started by: bitmover on August 09, 2024, 12:25:31 PM
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NY Fed paper: Tornado Cash sanctions show Ethereum’s censorship resistance is ‘tenuous’
(https://www.ledgerinsights.com/wp-content/uploads/2024/08/tornado-cash-graph.png)
Two years ago tomorrow, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the Tornado Cash crypto mixer, which is used as a privacy mechanism for both legitimate and illicit purposes. The sanctions were imposed following allegations that it was used to launder $7 billion, including at least $455 million stolen on behalf of North Korea. In the crypto world, these sanctions were a hugely contentious issue. Today the New York Federal Reserve (NY Fed) published a staff paper exploring the impact of the Tornado Cash sanctions. The mixer is still in operation today. A key conclusion in the paper is that Ethereum’s censorship resistance is tenuous because most people complied with the sanctions.
https://www.ledgerinsights.com/ny-fed-paper-tornado-cash-sanctions-show-ethereums-censorship-resistance-is-tenuous/
Looks like the FED is very satisfied with the sanctions over the tornado cash and how censorship friendly ethereum is.
There are many possible conclusions for this. Could this be good for the price, regulations and even products like ETF? probably.
Is this good for the users? Probably not. Censor transactions is bad, and if someone can censor a transaction this is not very different from banks.
I think this shows how Ethereum is different from bitcoin.
Full FED article: https://www.newyorkfed.org/research/staff_reports/sr1112.html
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The censorship problem actually could be reduced. But it's clear some of ETH owner/community don't care about it by staking their ETH on staking pool which censor TX. https://www.mevwatch.info/ (https://www.mevwatch.info/) shows 37% block in past month created by pool which censor TX.
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The censorship problem actually could be reduced. But it's clear some of ETH owner/community don't care about it by staking their ETH on staking pool which censor TX. https://www.mevwatch.info/ (https://www.mevwatch.info/) shows 37% block in past month created by pool which censor TX.
Interesting. Why do people stake in that pool? Does it offer better payrates ? Or any other particular reason,? Regulations?
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If Ethereum is easily censored, POS coins will be preferred by governments to enact legislative regulations related to them.
The censorship problem actually could be reduced. But it's clear some of ETH owner/community don't care about it by staking their ETH on staking pool which censor TX. https://www.mevwatch.info/ (https://www.mevwatch.info/) shows 37% block in past month created by pool which censor TX.
Does this mean that coins may not be accepted in the next block if my address is added to their black list?
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The censorship problem actually could be reduced. But it's clear some of ETH owner/community don't care about it by staking their ETH on staking pool which censor TX. https://www.mevwatch.info/ (https://www.mevwatch.info/) shows 37% block in past month created by pool which censor TX.
Does this mean that coins may not be accepted in the next block if my address is added to their black list?
Exactly.
Some pools are censoring transactions that are in the blacklist of sanctioned addresses. What is strange is that stakers are still staking their coins in that pools
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The censorship problem actually could be reduced. But it's clear some of ETH owner/community don't care about it by staking their ETH on staking pool which censor TX. https://www.mevwatch.info/ (https://www.mevwatch.info/) shows 37% block in past month created by pool which censor TX.
Interesting. Why do people stake in that pool? Does it offer better payrates ? Or any other particular reason,? Regulations?
Who knows. But i would expect that most people (who stake their ETH) doesn't even know whether their pool engage in censorship or not. There are other technical details such as MEV relay, validator and others. You might also want to visit https://mevboost.pics/ (https://mevboost.pics/) to get the idea.
The censorship problem actually could be reduced. But it's clear some of ETH owner/community don't care about it by staking their ETH on staking pool which censor TX. https://www.mevwatch.info/ (https://www.mevwatch.info/) shows 37% block in past month created by pool which censor TX.
Does this mean that coins may not be accepted in the next block if my address is added to their black list?
Yes. Although the criteria for exclusion could be more than list of blacklisted ETH address.
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I would not trust anything coming from tornado cash now and I generally don't think any mixing on ethereum is good enough, there is not enough volume for that and it's easier to have software compromised.
Additional danger on ethereum chain is that it's trivial for Tether owners to control and freeze USDT tokens, there is no big difference between that and upcoming CBDC.
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Some pools are censoring transactions that are in the blacklist of sanctioned addresses. What is strange is that stakers are still staking their coins in that pools
Couldn't such a blacklist be created for Bitcoin mining pools? I mean if a government somehow took control of a large percentage of mining pools by owning them or subjecting them to its terms couldn't it impose such a blacklist of addresses that the government bans?
I ask this because Trump has stated that he wants all remaining Bitcoin to be American.
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Some pools are censoring transactions that are in the blacklist of sanctioned addresses. What is strange is that stakers are still staking their coins in that pools
Couldn't such a blacklist be created for Bitcoin mining pools? I mean if a government somehow took control of a large percentage of mining pools by owning them or subjecting them to its terms couldn't it impose such a blacklist of addresses that the government bans?
I ask this because Trump has stated that he wants all remaining Bitcoin to be American.
Yes it is possible and vitalik is favorable to punish nodes that censor transactions
Ethereum co-founder votes in favor of burning ETH stake of sanction complying Ethereum validators
https://coincodex.com/article/17999/vitalik-unveils-he-is-in-favor-of-punishing-censorship-tolerant-ethereum-validators/
Technically ot would require an upgrade in the consensus rules so that validatora who censor transactions would lose their stakes.
So, or they do not censor anything or they lose money. If they can't validate everything, they shouldn't be validating
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Yes it is possible and vitalik is favorable to punish nodes that censor transactions
Thanks for the link and info, it's good to see Vitalik support penalizing nodes that censor transactions.
But my question was basically about Bitcoin, could there be the same blacklist for mining pools that refuse to mine transactions with blacklisted addresses?
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Looks like the FED is very satisfied with the sanctions over the tornado cash and how censorship friendly ethereum is.
There are many possible conclusions for this. Could this be good for the price, regulations and even products like ETF? probably.
Is this good for the users? Probably not. Censor transactions is bad, and if someone can censor a transaction this is not very different from banks.
I think this shows how Ethereum is different from bitcoin.
Most of us already know how different Ethereum is from Bitcoin. However, this message from the fed itself is evidence that ETH's censorship mechanism has weaknesses. And speaking of the satisfaction of FEDs they have to be satisfied because they are making defi more regulated and that's the sole conclusion of this report published by them.
That they used the Tornado cash case as proof that the decentralized world needs rules and regulations. Or in other words, they want to centralize the decentralized world. This is not good for all of us. BTW I don't know why the Fed is so concerned about censorship resistance of ETH. I never considered ETH as censor-resistant.
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That they used the Tornado cash case as proof that the decentralized world needs rules and regulations. Or in other words, they want to centralize the decentralized world. This is not good for all of us. BTW I don't know why the Fed is so concerned about censorship resistance of ETH. I never considered ETH as censor-resistant.
Ethereum is supposed to be censorship resistant as that is the concept of a decentralized app . An app which cannot be stopped once it's running.
Actually, tornado cash was not seized in the backend. It is still mixing eth and only the front end was censored
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Couldn't such a blacklist be created for Bitcoin mining pools? I mean if a government somehow took control of a large percentage of mining pools by owning them or subjecting them to its terms couldn't it impose such a blacklist of addresses that the government bans?
Sure they can.
I think some mining pools already tried censoring transactions like Marathon pool, but they later removed it after receiving many complains from bitcoin community.
Now they started doing something differently that can result in some kind of future censorship, Mara is now stamping each mined block with Made in USA stamp.
Here is one example:
Hf| MARA Pool | Made in USA 🇺🇸 | (v031924)https://mempool.space/block/00000000000000000000150d74a2716704eb115a0f6973780f838340f9e9ae50
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Sure they can.
I think some mining pools already tried censoring transactions like Marathon pool, but they later removed it after receiving many complains from bitcoin community.
Now they started doing something differently that can result in some kind of future censorship, Mara is now stamping each mined block with Made in USA stamp.
Here is one example:
Hf| MARA Pool | Made in USA 🇺🇸 | (v031924)https://mempool.space/block/00000000000000000000150d74a2716704eb115a0f6973780f838340f9e9ae50
Thank you for the valuable information.
I was honestly surprised by this information, it means that they will stamp every block mined in the US with a "Made in USA" stamp so that the US can consider this block legitimate while the rest may not be legitimate in the eyes of the US government!!!
I think this is consistent with Trump's vision when he stated that he wants to make the remaining Bitcoin completely American.
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Or in other words, they want to centralize the decentralized world. This is not good for all of us. BTW I don't know why the Fed is so concerned about censorship resistance of ETH. I never considered ETH as censor-resistant.
If the Tornado cash case was centralized, it would not be a big problem for the government, as they will be monitored until someone makes a mistake that leads to revealing their location and then sending a force to arrest them, but centralized mixers like Tornado cash make it difficult for governments to stop them.
I expect the government to run some versions of Tornado Cash that currently exist to weaken trust in Mixer or any mixing service associated with Ethereum.
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If Ethereum is easily censored, POS coins will be preferred by governments to enact legislative regulations related to them.
The censorship problem actually could be reduced. But it's clear some of ETH owner/community don't care about it by staking their ETH on staking pool which censor TX. https://www.mevwatch.info/ (https://www.mevwatch.info/) shows 37% block in past month created by pool which censor TX.
Does this mean that coins may not be accepted in the next block if my address is added to their black list?
Well of course POS coins are preferable to the government for CDBCs, because 1) they do not require noisy expensive miners 2) the government can easily become the majority minter of said CDBC, which means 3) they can censor whoever they want.
Ethereum never really cared about censorship at all. It is actually disgraceful. And the answer to your last question is "yes". Or at least it will take very long to mine.
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If the Tornado cash case was centralized, it would not be a big problem for the government, as they will be monitored until someone makes a mistake that leads to revealing their location and then sending a force to arrest them, but centralized mixers like Tornado cash make it difficult for governments to stop them.
You mean decentralized?
I expect the government to run some versions of Tornado Cash that currently exist to weaken trust in Mixer or any mixing service associated with Ethereum.
That's not going to be their purpose and I don't think mixing services associated with ETH is topic-related, as I and OP talked about censorship resistance of the ETH network (itself) not some third-party platform providing obfuscating services.
And speaking of introducing their own mixer, that will be so stupid thing to do I mean who will use such mixers which are controlled by governments? That's totally against the purpose of mixers.
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That's not going to be their purpose and I don't think mixing services associated with ETH is topic-related, as I and OP talked about censorship resistance of the ETH network (itself) not some third-party platform providing obfuscating services.
The point is that they censores tornado cash, the eth mixer, and they realized that ethereum censorship resistance is tenuous. There are still people using tornado cash but a lot less. As the dapp cannot be stopped.
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Ethereum never really cared about censorship at all. It is actually disgraceful. And the answer to your last question is "yes". Or at least it will take very long to mine.
If they reversed blockchain once than they can always do it again in future.
But government don't even need to have any blockchain for their CBDC shit, no need for PoS or PoW, they can just run numbers on screen and pretend it's backed by something.
The point is that they censores tornado cash, the eth mixer, and they realized that ethereum censorship resistance is tenuous. There are still people using tornado cash but a lot less. As the dapp cannot be stopped.
Is there any way to see stats about using of tornado cash and other micing tools on ethereum?
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Is there any way to see stats about using of tornado cash and other micing tools on ethereum?
In the op there is a chart
(https://www.ledgerinsights.com/wp-content/uploads/2024/08/tornado-cash-graph.png)
There is some more information here
https://dune.com/hildobby/tornado-cash
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There is some more information here
https://dune.com/hildobby/tornado-cash
Thanks for posting this.
There is much more activity than I initially thought, but it still has much lower popularity and use compared to peak from several years ago before the big bust.
I don't know if there are any other alternatives for mixing ethereum, but I never heard about them and they could be just another honeypot.
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Since Ethereum transactions are easily censored, and transactions on other blockchains like Bitcoin and Monero aren't, they are just going to do what they got to do for coins like Ethereum and then for the other, more stubborn networks (as in 'we do not care what is being ordered as we are decentralized), they put extraordinary amounts of KYC through it or failing that, blackhole them from centralized exchanges and other platforms.
It's no good to be using a network where funds can be frozen. Then it just becomes a bank with no insurance and low payment penetration.
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Since Ethereum transactions are easily censored, and transactions on other blockchains like Bitcoin and Monero aren't, they are just going to do what they got to do for coins like Ethereum and then for the other, more stubborn networks (as in 'we do not care what is being ordered as we are decentralized), they put extraordinary amounts of KYC through it or failing that, blackhole them from centralized exchanges and other platforms.
I dont see any problem for them censoring any bitcoin transactions.
They already did it with some mining pools, and they are already blacklisting a bunch of addresses and others that are connected.
Now they are even confiscating coins from big exchanges like binance, claiming they are used for terrorism ::)
It must be very stupid or fake terrorists that are using bitcoin in combination with binance.
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Now they are even confiscating coins from big exchanges like binance, claiming they are used for terrorism ::)
It must be very stupid or fake terrorists that are using bitcoin in combination with binance.
I think binance growed a lot with dirty money in its early days....
You could withdrawal up to 2 BTC per day without doing any kyc until 2021.
I think some people with legal problems used it for years without any problem, until one day when their accounts were frozen
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I think binance growed a lot with dirty money in its early days....
You could withdrawal up to 2 BTC per day without doing any kyc until 2021.
Most centralized exchanges worked like that back in the days, and I would not divide and split bitcoins into ''dirty'' and ''clean'', even if many people do that all the time.
And that doesn't mean I am defending Binance and how they are conducting their business at all, especially recently working with idf and biggest terrorist state in the world.
Talking about dirty money, most of it is going into non-stop wars around the world, not on crypto exchanges.
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Looks like the FED is very satisfied with the sanctions over the tornado cash and how censorship friendly ethereum is.
There are many possible conclusions for this. Could this be good for the price, regulations and even products like ETF? probably.
Is this good for the users? Probably not. Censor transactions is bad, and if someone can censor a transaction this is not very different from banks.
I think this shows how Ethereum is different from bitcoin.
Most of us already know how different Ethereum is from Bitcoin. However, this message from the fed itself is evidence that ETH's censorship mechanism has weaknesses. And speaking of the satisfaction of FEDs they have to be satisfied because they are making defi more regulated and that's the sole conclusion of this report published by them.
That they used the Tornado cash case as proof that the decentralized world needs rules and regulations. Or in other words, they want to centralize the decentralized world. This is not good for all of us. BTW I don't know why the Fed is so concerned about censorship resistance of ETH. I never considered ETH as censor-resistant.
The centralised nature of eth is its real weakness.
If Mr v died today what happens to eth?
AND on the other hand if Mr v does not want censorship how come he could not stop it?
Basically the two questions I ask show a leadership or structural issue with eths centralised nature.
Here is a third question if a country grabs Mr v and locks him up what happens to eth?
There is no clear cut step up for eth and the fact that it was easily censored means Mr v is not in the full control he is appeared to be.
I EXPECT MANY more cracks in eth for the next few years.
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If Mr v died today what happens to eth?
AND on the other hand if Mr v does not want censorship how come he could not stop it?
Basically the two questions I ask show a leadership or structural issue with eths centralised nature.
Here is a third question if a country grabs Mr v and locks him up what happens to eth?
That is basically the main difference of BTC and ETH: Satoshi disappeared. No one can arrest him. No one can coherce him
He can't say bullshit in TV because he basically doesnt exist anymore!!
He was very wise in his decision to disappear.
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Ethereum was a bit better when it was with Proof-Of_work algorithm, but I don't trust this coins since it was possible to reverse blockchain transactions.
I wonder why there was never any mixer that mixes ethereum with good volume and solid reputation.
Maybe it's pointless.
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If Mr v died today what happens to eth?
Some governments will take control of ETH (it seems they already have it). Ethereum is ideal to be a semi-official token of some crypto-friendly country. Many have been announcing this for years, and this would be a complete solution.
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The centralised nature of eth is its real weakness.
If Mr v died today what happens to eth?
AND on the other hand if Mr v does not want censorship how come he could not stop it?
Basically the two questions I ask show a leadership or structural issue with eths centralised nature.
Here is a third question if a country grabs Mr v and locks him up what happens to eth?
There is no clear cut step up for eth and the fact that it was easily censored means Mr v is not in the full control he is appeared to be.
I EXPECT MANY more cracks in eth for the next few years.
I agree with you on this that centralization is the real weakness, which means whenever the government wants ETH to be shut down they can do it not easily though, but if given unsupervised full power then they can easily shut down ETH due to its centralized nature. The question number one doesn't really raise any concerns about the centralized nature of ETH. I mean, they will just lie there and nothing bad will happen to those ETH if MR V dies today. As you said he can't control the censorship and can't make it stop.
I was not expecting any cracks, but let's see.
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The centralised nature of eth is its real weakness.
If Mr v died today what happens to eth?
AND on the other hand if Mr v does not want censorship how come he could not stop it?
Basically the two questions I ask show a leadership or structural issue with eths centralised nature.
Here is a third question if a country grabs Mr v and locks him up what happens to eth?
There is no clear cut step up for eth and the fact that it was easily censored means Mr v is not in the full control he is appeared to be.
I EXPECT MANY more cracks in eth for the next few years.
I agree with you on this that centralization is the real weakness, which means whenever the government wants ETH to be shut down they can do it not easily though, but if given unsupervised full power then they can easily shut down ETH due to its centralized nature. The question number one doesn't really raise any concerns about the centralized nature of ETH. I mean, they will just lie there and nothing bad will happen to those ETH if MR V dies today. As you said he can't control the censorship and can't make it stop.
I was not expecting any cracks, but let's see.
Not sure any country is trustable but they are in power. Not us.
I was thinking I am typing with an ipad on my stomach as I lay in my bed watching the daily show.
is the battery in this ipad loaded with an oz of plastic explosives. 🧨
would have sound crazy to write this a month ago. Now that all those pagers blew up it shows just how much a government can do with tech.
Not sure I want to trust any pos coin when a single rogue country can do an attack on tech.
I would guess a pos coin can be fully attacked much like those pagers were.
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Not sure any country is trustable but they are in power. Not us.
I was thinking I am typing with an ipad on my stomach as I lay in my bed watching the daily show.
is the battery in this ipad loaded with an oz of plastic explosives. 🧨
would have sound crazy to write this a month ago. Now that all those pagers blew up it shows just how much a government can do with tech.
Not sure I want to trust any pos coin when a single rogue country can do an attack on tech.
I would guess a pos coin can be fully attacked much like those pagers were.
You raise a good point I also saw things that I never thought would happen, like not only pagers were destroyed, the walkie-talkies and the solar energy systems that we have installed in our homes were also destroyed by Israel in Biuret, which is insane. I mean, we are installing these bombs in our homes by ourselves.
I doubt if they could do the same with our smartphones. Governments have ways like agencies and tech nerds who are finding new ways to attack people's devices and this whole world has become a part of IoT when I learned about how small devices can gather our information, I realized how important data can be for such agencies.
I know the topic is going off-topic here,, but governments are really in control and they have all the power who knows what they can do with BTC?
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I know the topic is going off-topic here,, but governments are really in control and they have all the power who knows what they can do with BTC?
Btc is safer because it is not as centralized as ethereum.
For example, satoshi vanished, and vitalik can be coherced/ intimidated to approve changes in the protocol.
What government can do is going after big btc players : exchanges, minere, etf, etc...
But that is less effective.
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Btc is safer because it is not as centralized as ethereum.
For example, satoshi vanished, and vitalik can be coherced/ intimidated to approve changes in the protocol.
What government can do is going after big btc players : exchanges, minere, etf, etc...
But that is less effective.
You are right in the ETH case the issuers hold most of the coins and they have the most influence like Vitalik and other developers but I think it won't be easy for them to take down ETH as well because it is also a distributed ledge but its POS mechanism is not in favor of its decentralization plus Vitalik alone can't do harm but I can say one thing for sure he is a greedy person and he cares for ETH he can do anything for its existence like Durov did with TG by changing the policies. Well, he did that to save himself.
The point is BTC is way higher and more difficult than ETH to take down, as ETH is not that easy so I said that what else they could do with BTC. I meant they might impose high tax in your country and make you pay the extra money, they might seize or confiscates ours funds if not kept on non-custodial wallets.
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For example, satoshi vanished, and vitalik can be coherced/ intimidated to approve changes in the protocol.
Or maybe he was already coerced long time ago.
Since ethereum moved from PoW to PoS I think it's even easier to make protocol changes in code, and they are doing it all the time.
I am not saying this can't happen with bitcoin and other coins also, if enough miners and nodes agrees than they can make any changes they want.
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I am not saying this can't happen with bitcoin and other coins also, if enough miners and nodes agrees than they can make any changes they want.
I agree, this can also happen with bitcoin.
But it would be necessary to coherce a lot of people and companies in many different continents , for an unknown result...
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For example, satoshi vanished, and vitalik can be coherced/ intimidated to approve changes in the protocol.
Or maybe he was already coerced long time ago.
Since ethereum moved from PoW to PoS I think it's even easier to make protocol changes in code, and they are doing it all the time.
I am not saying this can't happen with bitcoin and other coins also, if enough miners and nodes agrees than they can make any changes they want.
I think it's also worth to mention that Vitalik is part of Ethereum Foundation, where the foundation have rather big influence. And IMO their influence is bigger than people and group who're involved on Bitcoin Core development.
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But it would be necessary to coherce a lot of people and companies in many different continents , for an unknown result...
If you didn't notice already things are getting more centralized with mining pools and blackr0ck with other companies are buying a bunch of bitcoins, they are now one of the top owners in rich list.
So it's not impossible to happen, but it's probably still harder than for all other altcoins.
I think it's also worth to mention that Vitalik is part of Ethereum Foundation, where the foundation have rather big influence. And IMO their influence is bigger than people and group who're involved on Bitcoin Core development.
I never paid much attention to Ethereum Foundation and what is happening there, but I guess Vitalik and few others have the most influence.
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But it would be necessary to coherce a lot of people and companies in many different continents , for an unknown result...
If you didn't notice already things are getting more centralized with mining pools and blackr0ck with other companies are buying a bunch of bitcoins, they are now one of the top owners in rich list.
So it's not impossible to happen, but it's probably still harder than for all other altcoins.
I think that concentration of wealth is expected in the bitcoin network. This is how the world is...
But I also expect that the consensus rules continue to be censorship resistant, in a way people who owns a lot of bitcoin won't be able to control the network. This can happen in ethereum, which is a PoS system.
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But I also expect that the consensus rules continue to be censorship resistant, in a way people who owns a lot of bitcoin won't be able to control the network. This can happen in ethereum, which is a PoS system.
I hope so, but I honestly wouldn't be to surprised if we see major protocol changes in near future.
Someone could always justify things by being forced by government to do something, and I don't think things can continue to work the same way in next 5 years, especially in regards with bitcoin mining.
There is however one protocol change I would like to see and that is better privacy.