Fact correction

Posted Feb 11, 2023 18:19 UTC (Sat) by garloff (subscriber, #319)
In reply to: Fact correction by lmb
Parent article: Free software and fiduciary duty

True point: Operating a network used for massive financial transactions is indeed something that one should expect fiduciary duties for...
I am reading though that the plaintiff has sued developers, not the operators of the network.

Fact correction

Posted Feb 11, 2023 18:41 UTC (Sat) by jejb (subscriber, #6654) [Link] (2 responses)

> I am reading though that the plaintiff has sued developers, not the operators of the network.

Yes but the plaintiff is specifically alleging that because of the distributed nature of the miner network on bitcoin, controlling the official release of code (the Github account) also makes them (really maintainers not general developers) the real controllers of the bitcoin network.

Fact correction

Posted Feb 11, 2023 21:03 UTC (Sat) by garloff (subscriber, #319) [Link] (1 responses)

It is the *choice* of the network operators. Thanks to open source, a choice with many options.

Fact correction

Posted Feb 11, 2023 22:35 UTC (Sat) by jejb (subscriber, #6654) [Link]

> It is the *choice* of the network operators. Thanks to open source, a choice with many options.

Well the maintainers argued something similar (they argued putting a patch in to favour tulip would lead to a fork of the repo).

The appeal court ruled that this point was a dispute of fact that must be decided at trial, but if the decision went Tulip's way they had a reasonable probability of proving the maintainers had fiduciary liability for the bitcoin network.

Fact correction

Posted Feb 11, 2023 22:31 UTC (Sat) by NYKevin (subscriber, #129325) [Link]

The problem is that the network is structured in such a way that even identifying who counts as an "operator" is complicated and messy. And it gets worse when you realize that miners are in all sorts of jurisdictions all around the world.

In the long run, I think the more productive way forward is for regulators to target the "other side" of the transaction - if you sent someone a cryptocurrency, you probably got something in return, and that "something" is often USD or another fiat. So now you have to contend with AML/KYC laws, and if those laws are restrictive enough, then conversion between BTC and fiat might become effectively illegal.

For example, a regulator might say "You cannot redeem any amount of BTC for USD if, tracing backwards through the UTXO chain, those particular BTCs were *ever* involved in a fraudulent transaction, unless you can prove that they were returned to their rightful owner. Also, if you cannot make that showing, then we're going to order you to surrender the BTCs to the government as stolen property." Then the regulator just has to make a list of fraudulent UTXOs every time somebody does a BTC fraud. Over time this "taint" will spread throughout the entire network and make it impractical for anyone to redeem any amount of BTC under any circumstances.