The previous method ("haircut" tainting) - wheretransactions from a wallet with "bad" bitcoins are marked as "X% tainted" where X := (#bad_coins / #total_coins) - quickly marked all the active bitcoins on the recent blockchain as ~10% tainted.

With the new FIFO method, the tainting doesn't dilute as quickly. The give an example of a "theft of about 1000 bitcoins in 2014 and trace it forward to 2016", poison tainting and haircut tainting affect ~1.5 million addresses. With FIFO tainting, only 11,000 addresses are affected.

This 'solves' the problem of dilution, but it does not address the issue of following the flow of tainted crypto-cash, because the root cause of that problem is that bitcoin do not have identities (they are bosons, not fermions?) This 'solution' is just one of several similar possible schemes that arbitrarily assign a provenance to each atomic unit of the currency, and is not fundamentally more sound than any other.

Any scheme like this is pointless without a mechanism to sanction the use of 'bad' bitcoin, and belongs in the realm of cryptocurrency regulation, not blockchain mechanics. A scheme something like this does exist for banknotes, in that if you are found to have a counterfeit bill, it will be confiscated. The only reason this does not have a stifling effect on the use of paper money is that the probability of this happening to you is slight.

its equally silly as the other methods. even worse as should have been obvious by the fact they quote a video.

imho poison is the ONLY method slightly acceptable.

with fifo it's all too easy to mislead the system with a honest transaction and now the vendor has the stolen btc, even though they delivered something in exchange for it and behaved honestly all the way.

edit: they measure total coins marked as stolen from begining to end of each tracking process, not correctness. as all the exchanged want is to have less poisoned coins to work with.