Accountability Measures in Bitcoin

by Albert Szmigielski

Accountability measures in Bitcoin are a good idea. However, they should be implemented in such a way, so that they cannot be abused by just anyone. Accountability goes against privacy, if a system is to be 100% private then accountability mechanisms may not be possible. Currently, there is a basic accountability system implemented in the Bitcoin core software. The system bans IP addresses of misbehaving nodes for a period of time. While this is a good start, it is not sufficient to prevent bad actors from trying to attack the network.

Blacklisting

One mechanism of accountability would be to blacklist Bitcoin addresses that do not observe the rules and misbehave. This mechanism would essentially freeze the funds of the bad users thereby acting as a deterrent to others. If an address is found to attempt double-spending such an address would be added to a blacklist that is viewable by anyone. The hope here is that other Bitcoin users would not accept payments from addresses on the blacklist. Bad actors can of course have multiple addresses and maintain very low balances to guard against blacklisting. Although clever analysis, as demonstrated in research, could be used to tie addresses together and then ban them wholesale. Address linkability is helpful for accountability measures but raises the issue of user privacy. If such analysis is possible then privacy suffers as a result. On the other hand if such analysis is not possible then accountability in the system is either low or non-existent. The trick is to find the appropriate balance, which is not a trivial task at all.

Pros:

  • holding users who abuse the system accountable by essentially freezing their funds
  • acts as a deterrent to potential misbehaving actors
  • perhaps accountability measures would increase confidence in the system as a whole

Cons:

  • possibility of abuse of the blacklisting process
  • maintenance and security of black lists
  • privacy concerns when used with address linkability
  • possible prevention of implementing stronger privacy components for the Bitcoin network
  • who will be in charge of the process?

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