Who would manage such database of "shunned" Bitcoins? Who would decide which ones are "shunned" and which aren't? This is a delicate topic, almost as much controversial as censoring internet to get rid of child porn. With decentralized protocol/currency as Bitcoin is, that is not possible to do properly. OTOH, every service can decide on their own what they accept and how they operate, so each and every service operator COULD implement such measures. But then the thief would just choose another service provider who doesn't implement that.

Note, I'm not saying it's a fantastic idea, just something that happened to occur to me as a possible development in Bitcoin's future.

It'd likely be along the lines of anti-spam lists. You might have one that's high-profile thefts or seizures. For that matter, these lists could be political, issue-based, or whatever.

It's ridiculous and unlikely to be followed if taken out to the extremes of issue-based disputes, but I don't think it's impossible for a significant number of people to agree not to transact in stolen Bitcoins, some on principle, some as self-preservation (the exchanges), and most because their utility is reduced by the first two groups refusing them. This also happens to increase the value of untainted Bitcoins.

If you think that a pile of anonymous people on the internet are going to respect a 'stolen' flag with no real downsides, I've got a bridge to sell you...

Also, this is ignoring the entire problem of 'who decides what stolen means in a totally decentralized protocol?' That's non-trivial in and of itself.

I think you might be able to just start and end with the laundry cleaners. Blockchain.info could just decide that they won't wash coins that they know were from a high profile hack like this.

Then use Satoshi Dice first, or start your own game of chance with ridiculous odds floated with the stolen coins and exploit peoples natural greed.

They could, but there will always be people willing to accept the coins anyway. Without protocol support, it's not particularly meaningful.

I don't think it needs to be binary. Anyone today can choose to accept stolen or blood money. But I think you could create a distributed dye pack. It could just be an API that you query with a coin and receive a signed answer. Your Bitcoin client can report saying e.g. 'Blockchain.info thinks that this coin may be stolen. Accept anyway? Y/N' and leave it up to the user to decide. The downside is that the next person you try to give the coin to could decide that they trust Blockchain.info and not accept your money.

It's a democracy. If the masses decide that Blockchain.info is blocking coins that weren't stolen for some nefarious reason, they can just ignore their warning.

The question is: do the majority of bitcoin users even care if they are using stolen coins?

Law enforcement could enflict some real downsides if bitcoins were considered stolen goods. Stolen goods can be seized when discovered by police, even if their current owner acquired them legitimately.

>Interesting thought. Could there be "shunned" Bitcoins where, if they held certain blacklisted wallets in their history, businesses and users would choose not to accept them?

This is the mechanism I always thought the feds would use to go after bitcoin. "Possession of stolen property" - My understanding of the law in my area is that I am breaking the law if I possess stolen property, even if I can prove that I obtained said property legitimately and even if I couldn't reasonably be expected to know that said property was stolen.

What if the feds decided to apply the same thing to bitcoins? I mean, what if you legitimately obtain bitcoins that are, in fact, stolen property? Or bitcoins that were used in a law-breaking transaction?

that would never work due to a simple reason -- there would never be a 100% way of telling if the "shunned" flag is legit.