Published on: 2013-06-07T05:46:04+00:00
On June 6, 2013, Peter Vessenes, the CEO of CoinLab, shared an article discussing FinCEN's belief that irrevocable payments are tools for money laundering. He proposed a scheme to add revocability to Bitcoin transactions without any protocol changes by creating a trusted escrow service that issues time promises for signing. However, he acknowledged that this approach is vulnerable to griefing and requires trust in the escrow service. Vessenes suggested replicating the effect of revoking a transaction by giving private keys to a relevant revocation authority or using 1-of-2 multisig addresses. He emphasized the importance of taking money from someone who thought they had it and giving it to someone else instead of simply revoking a transaction.In an email exchange with others, Vessenes disagreed with the American Banker article's claim that irrevocable payments are tools for money laundering. He argued that credit card transactions are not completely reversible either and questioned the motives of the head of FinCEN. He proposed the idea of layering on revocability without any protocol change as an opt-in. He suggested using 2-of-3 dispute mediation, which was already outlined in Satoshi's paper. However, he noted that implementing such a solution would require deploying the payment protocol first and defining how disputes would be opened and mediators found. Vessenes believed that reversible payments where one party decides whether to reverse them seem pointless, as they are equivalent to post-pay for buyers and just a refund for sellers, which can already be supported by the payment protocol.The conversation also touched on P2SH with 2 of 3, which involves the payer, recipient, and a trusted third party. It was explained in detail on the Bitcoin wiki contracts page, along with an example of escrow and dispute mediation. The issue of tainted coins was raised, and it was mentioned that nothing can be done at the protocol level if the transaction needs to remain peer-to-peer. The authorities were accused of using the differences between cryptocurrencies and the banking system as an excuse to prosecute members of the new industry. Suggestions were made to collect arguments against such accusations, and the concept of maturation for dedicated accounts/transactions was proposed as a possible solution.Overall, the discussion focused on finding ways to add revocability to Bitcoin transactions without requiring protocol changes. Various ideas, including trusted escrow services, dispute mediation, and alternative transaction structures, were proposed. However, concerns were raised about the vulnerability of these approaches to griefing and the need for trust in third parties. The conversation also highlighted the potential legal issues and implications surrounding reversible payments and the ongoing efforts to comply with US regulations on money transfers.
Updated on: 2023-08-01T05:06:46.163301+00:00