[shazow]

"Tainted Bitcoins" can be trivially laundered and mixed in with normal Bitcoins. This will only become easier in the future, and conceivably make it into the protocol itself with something like ZeroCoin.

It's funny but there is a lot of similar discussion on the other side of the fence, too: "Now that the FBI has a hold of DPR's Bitcoins, how do we blacklist these tainted Bitcoins so that we don't fall for honeypots/undercover agents?"

You can't, unless you want to fork the blockchain and start a new genesis block sans the Bitcoins you don't like, but that would be disasterous and no one would agree to it. It would defeat the whole premise of Bitcoin—why are your Bitcoins more special than my Bitcoins?

Truth is, tax collection works largely on the honour system, cooperation from employers, and through audits/investigation. Bitcoin is no different. The only real benefit the blockchain could give is to help automate some of the consensual tax collection further.

[maxerickson]

You are insisting on your own definition of tainted here. Your parent comment is using a definition where coins that pass through a mixer with tainted coins themselves become tainted. An aggressive party might do much the same thing with a service like Zerocoin (that is, once it watched a tainted coin go it, it would assume that only tainted coins can come out).

But anyway, the government accepting any bitcoins for tax payments should probably be considered a win for the ecosystem.

[shazow]

> You are insisting on your own definition of tainted here.

How do you figure?

> Your parent comment is using a definition where coins that pass through a mixer with tainted coins themselves become tainted. [...]

1. The aggressive party would have to stop accepting any coins that come from Zerocoin altogether.

2. Mr. Taint can go about his day sending Satoshi's to random addresses in the blockchain, effectively tainting every address he can find.

3. It would require collaboration from every single Bitcoin service, otherwise a single non-collaborating service would end up mixing tainted coins with non-tainted coins over time and the whole population would become tainted.

[maxerickson]

Because under a stronger definition of tainted, they cannot be trivially mixed, they pass on the contagion.

The US government can ostensibly stop accepting Zerocoins. In that event, so would any party that wanted to trade with them. There wouldn't be any need for a new blockchain, possessors of clean coins would simply have to decide how much extra value that part of ecosystem provided.

That last sentence mixes up with your point 3, tainting all the coins would be a collaboration between owners of clean coins and service providers, there is at least room for owners of clean coins to be careful with them.