Following the sad loss of funds suffered by Binance, the well-loved crypto exchange, the Bitcoin community rallied around the embattled exchange and wisely proposed that Binance institute a reorganization of the Bitcoin blockchain in an attempt to steal back the funds, or at least confiscate them from the hacker.
However, due to miner unreadiness and the shameful trolling by certain regressives and malcontents, Binance was not able to marshal a reorganization in time. Those stolen funds are now buried under an impossibly heavy hash weight and cannot be recovered.
To prevent this in the future and protect our blockchain from griefers, hackers, and the alt-right, I propose a set of countermeasures to ensure that Bitcoin remains ethical, compliant, and bailout-friendly, as intended by its creator, Craig Wright.
Introducing the BMSRO
Bitcoin mining at present is a global, anarchic industry with no barriers to entry. From 2009-present, individuals merely had to plug in a computer and start hashing away without asking anyone for permission. Otherwise-wasted power is often purloined and mining is sometimes done without government consent, as in Venezuela. Mining must be rendered more compliant, and miners must have a central body informing them when to reverse fraudulent transactions.
Today, I am delighted to announce the Bitcoin Miner Self-Regulatory Organization (BMSRO) which will remediate these woes. By demonstrating compliance, a commitment to rapid chain reorganizations, and serving as a single point of contact for governments, the BMSRO will take Bitcoin mining from a dangerous backwater to a safe, modern, and cooperative industry.
The chief activity the BMSRO will engage in will be the facilitation of deep reorganizations of the Bitcoin blockchain, to punish fraudsters and hackers who steal coins. Inspired by the excellent work at the EOS Core Arbitration Forum, the BMSRO will enable exchanges to submit Reorg Requests to member miners who will collectively agree to reorder the transaction history. This requires significant cooperation, so we will need to get a critical mass of miners on our side first — at least 51%. We believe that miners will join us thanks to the same economic incentives that drive Bitcoin. By introducing regulatory moats, the BMSRO will enable miners to create barriers to entry in their industry, protecting the hardworking incumbents from competition.
How will the BMSRO affect you? If you are a regular user, you won’t have to change much — but you can rest assured that your network will actively seek out and reorg crooks and fraudsters. At last, a safe and crime-free network. Below, we’ve included guidance for major stakeholders.
Guidance for miners
If you’re compliant, clean, and happy to cooperate with other miners, your business won’t change. All miners will have to register their business with the SRO and announce their participation before beginning to hash. Previous hashers will be granted conditional amnesty if they agree to fully comply with the SRO’s mandates on an ongoing basis, subject to a probationary period.
Miners should submit their self-identification to our CAO (Chief Anarchy Officer) with the ITH-1 form (Intent To Hash). ITH-1 approvals are subject to on-site audits, meeting environmental suitability guidelines, and passing background checks. Full form in Appendix A.
Other conditions of SRO membership include:
- Member miners must, in an expedient manner, process the latest Reorg Requests from exchanges who have lost funds. Failure to do so will lead to expulsion from the BMSRO and punitive actions, including the confiscation through reorg of your last 12 months of block rewards (failing to take part in the BMSRO is classified by our Ethics in Bitcoin board as a hostile act).
- All miners must include the latest hash of the Miner Accord in each coinbase output. The miner accord specifies permissible miner behavior and the inclusion of the hash indicates their willingness to participate in arbitration decisions.
- All miners meeting the hash thresholds who are classified as Medium or Large miners on ITH-1 must appoint a mandatory compliance officer who will manage the on-site audit process and the environmental sustainability of the mine. Acceptable sources of energy include solar and wind, but not nuclear because it’s scary. Dirty miners will have to buy carbon credits.
- Is your randomness good enough? Miners classified as Large under ITH-1 must appoint a CEO – Chief Entropy Officer. They will be tasked with sampling hashes to ensure randomness. Good randomness is hard to obtain; we suggest using our official BMSRO Certified Randomness Feed. Alternatives such the NIST Randomness Beacon are also acceptable.
Guidance for users
- Do not store critical information (timestamps, hashes of important documents, supply chain information, proof of provenance) on Bitcoin. Bitcoin is not your playground. It is a strictly mutable ledger and should be treated as such. Know that due to the many deep rollbacks the BMSRO expects to facilitate over the coming years, information included in Bitcoin ought to be treated as unreliable and nonfinal.
- Practice strict KYM (Know Your Miner) policies. Do you know who is mining your transaction? It could be anyone — vagabonds in Sichuan monetizing otherwise-wasted hydropower, ISIS, North Korea, or even 4chan. Did you know that under the Bank Secrecy Act of 1970, a failure to vet the miner who is including your transaction in a block could be a federal offense? Ensure that you have a clean line of communication with your miner and that you trust them to behave appropriately and censor the correct transactions.
- Be advised that the militant wing of the BMSRO — the Subcommittee for Correctness in Bitcoin Transacting— actively ensures compliance by monitoring users. If you express skepticism of the BMSRO’s objectives, wear a UASF hat in public, or “troll” our member organizations on Twitter, expect a two-week ban from transacting with any of our member miners. On your second offense we will include your information and your offense in the OP_RETURN so everyone will know of your malfeasance. However, due to our ongoing challenges with immutability, we expect these public shamings to be reorged out at some point.
Guidance for exchanges
Fear not — hacks will soon be a thing of the past. If you join us, you will be able to submit expedient Reorg Requests to the Arbitration Forum the very moment you notice something awry. We will manage the miner coordination and ensure that, pending approval by the Ethics in Bitcoin Board, malicious transactions are reversed. The EiB Board, consisting of three white dudes in their 30s from Brooklyn, has worked out a consistent and fair ethical framework that should prove acceptable to people the world over.
- Connect with your local miner! Exchanges should have very close relationships with their miner counterparts and abide by KYM (a stated policy position of the BMSRO is to lobby regulators to institute mandatory local KYM). You trust your miners to order your transactions, why not codify that relationship with a contract? You deserve recourse if they don’t follow one of your official Reorg Requests.
- OTC desks and traders — if you make a bad trade or a fat finger, we encourage you to submit a Reorg Request (although our member exchanges will get priority in the Reorg Queue). We promise the deepest and most compliant network of miners and will be happy to help reorder transactions in the blockchain such that you do not have to suffer.
- We suggest you vertically integrate. Why trust a third party miner to reorg on command when you can simply mine yourself and take full responsibility for your transactions? This way, you can impose full stack compliance on your users. And if you register as a miner, you will get to enjoy all the benefits of arbitration without the exchange fees.
As an organization dedicated to uniting the innovation of the present with the prudence of the past, we have designed our governance processes accordingly. Just as Bitcoin’s innovation must be married to the recourse of credit networks and the benevolent American oversight of SWIFT, we will unite old governance mechanisms with the new.
In this light, we will marry liberal democracy — the greatest innovation the world has ever seen — with futurism and neat algorithms. As such, members of the BMSRO advisory council, the Ethical Correctness Board, and the Arbitration Forum will be elected by members through cubic voting. That’s like quadratic but with the third exponent. (We wanted quadratic but apparently that’s encumbered by IP).
I hope you’ll join me. If you don’t — we’ll reorg you anyway.
Towards a more compliant, safer, and predictable world,
Inaugural Chief Anarchy Officer
The Bitcoin Miner Self Regulatory Organization