Bitcoin Forum

As we all know, the true number of Bitcoins in circulation will always be some unknown number less than the total number of Bitcoins mined. This is not ideal. Wallets can be lost, deleted, or the underlying media on which they are stored on can be damaged beyond recovery.

Are Bitcoins in it for the long haul? Or are they just a five year experiment?

I'm proposing a solution: wallet 'heartbeats'. I'm not sure if it is technically compatible with the existing software infrastructure, but I think it might be. If we define a heartbeat as connecting to the network, then perhaps wallets should give a heartbeat at least every seven years in order to remain valid. Any coins in a wallet that has not connected to the network for seven years become invalid and are made available to be remined, by some method that allows for their easy mining. Because I don't fully understand the mechanics behind the software, I don't know if this is possible, but if it is, I believe the idea has merit.

What about people who just want to have a savings wallet? I have one hidden away that I don't want to bring online for ~30 years.

It would be stupid to have coins lost because you forgot to connect to the network.

Additionally, there's not really a good way to have a decentralized way to do this.

Tl;dr this has been debated and most people think it's a terrible idea. If you want to make a version of bitcoin that does this go ahead. I have my doubts about its success.

You can't connect your savings wallet to the network once every seven years?

Clearly, your coins are worthless if you never connect to the network. For you, though, 30 years is appropriate. However, good luck in finding hardware that will support the USB flashdrive (or where ever it is stored) in 30 years. Seven years is realistic, and not a burden to you.

In the banking industry, accounts with no activity are closed after seven years. Is this really that unreasonable? It insures that bitcoins won't slowly disappear. Also, given your long term outlook (30 years), then it stands to reason that you believe Bitcoins are going to survive. If so, then let's really look into the future. With the slow but inevitable attrition of Bitcoin circulation, assuming lost Bitcoins are never recovered, what then becomes of knowledge regarding the entire system? That knowledge slowly evaporates, given the complete inability to know whether Bitcoins are lost or simply out of circulation.

I posted similar idea before, except with shorter time but coin sitters hated it. I still think it's a good idea.
I don't think it will ever happen with Bitcoins, but it might be a good idea for a new, better cryptocurrency.

Don't you think it's a bit unfair if you just sit on coins for 30 years without a single transaction while OTHERS provide security for the network 24/7, also for you? If heartbeat would need a transaction fee to be accepted, that would mean the miners would be paid also by those who just hoard money for years.


Forget to connect once per 7 years???!


It's very easy, Bitcoins with transaction older than 7 years can't be spent. So heartbeat transaction would be basically transaction back to the same address done automatically by the client for coins that are for example more then one year old. If it got older, the numbre of coins would be simply mineable again.

It would also help keep transaction chain reasonably short.

Why would you want to add trouble to make some people lose coins? What is the upside of this?

So you think holding coins and doing nothing is bad, but holding coins and paying yourself once a year suddenly makes you worthy to keep coins?

Shorter transaction chain, money for miners would come also from hoarders (for heartbeat transactions), practical knowledge what coins have been lost and less deflation over time (if not refreshed coins would go back as mineable coins).



No, I think it would be nice if hoarders would have to pay a little transaction fee once per year (for example) to those who keep the whole system running and ready ALSO FOR THEM.

I don't think the goal is to "add trouble" or to "make some people lose coins", I think you might have misunderstood the aims here.
With a finite amount of Bitcoins available and a slow erosion of that number through loss the upside is longevity of the Bitcoin idea.

Because the system is incomplete and deficient without it. As for trouble, it's not clear to me what trouble is being made. Furthermore, it's actually a favor to savers to insure that their wallets actually function.

It might be more viable if we allow refreshes without the private key. Worst case, someone malicious refreshes lost coins...

A better solution:  Don't let the 50-coin reward run out.

It technically makes inflation unending, but eventually, the rate of lost coins will average out to the rate of new coins generated.  Viola!  Problem solved.

The first question you need to answer is what exactly is the problem this proposal is aiming to solve?

Sure, knowing the total number of bitcoins that have been lost makes for interesting trivia, but is it really worth the hassle and the inconvenience?

Therefore, this strikes me as a bad and purposeless idea.  (And mind you, I'm stating this as someone who would support some pretty fundamental changes to Bitcoin.  For one, I think the fixed 21 million cap is generally a bad idea, and I would very much prefer that the mining reward would stay at 50 BTC forever.  However, I do have a strong motivation for such a change.)

Yes! Yes! Yes!

A permanent 50 BTC reward would solve quite a number of problems.  First, miners would always have an incentive beyond fees, which would make fees lower.  Second, it would eliminate the scarcity psychology that encourages hoarding, speculation, and the formation of bubbles.  This in turn would encourage people to actually spend their bitcoins, which will be essential if we're ever going to have a vibrant economy.  And finally, a constant reward means that inflation rate would asymptotically approach 0% without ever quite reaching it.  Therefore, inflation would still be so low that Bitcoin would remain for all intents and purposes a good store of value.

Mark my words: if Bitcoin does not introduce some limited inflation, some other P2P digital currency will do it and eat Bitcoin for lunch.

This is a good idea.

Let's look at a scenario where we've got 20 people, each with about 10k bitcoins they've acquired over 10 years. These 20 people all happened to die in the next few years (car accidents, heart attacks, cancer, whatever). That is 200k bitcoins that are instantly taken out of circulation. With a continuing trend, over enough years bitcoins will fade out and the whole communities dreams of bitcoins replacing our current currency is destroyed. At this point in time, sure.. 200k doesn't seem like a lot when there are plenty to go around because they're still being generated. Once 21m coins are reached, the amount of "lost" or forgotten bitcoins will start to add up quickly.

Feel free to create a network that implements this idea.  I suspect that a couple dozen people worldwide will join you.

The rest of us have absolutely no desire to change from a system that is incapable of forcibly removing our coins to one that is.

Each bitcoin is currently divisible to 100,000,000 parts with the current software. If divisional granularity every became an issue the extra bit could be used to signal extended range.  This would be a simple, technical, and economically neutral change if it were ever required.

People who have invested resources and money into bitcoin did so with certain understanding and expectations of the dynamics of the system.  Your proposal would rob them of the expected return that was rationally factored into their decision.  Even if you'd benefit this time what reason would you have to expected that the _next_ change wouldn't rob you?   

There are some invariants in this system. Mess with them and you will completely and justifiably destroy all confidence in it. Other decisions are justifiable and are worth exploring but they should be explored in alternative systems (like beertokens) rather than by destroying this one and salting the earth for all similar systems.

To all of you saying that the 50 coin reward should go on forever - lol.

I'll keep my bitcoins thanks. Feel free to search on the forums for inflatacoin, and use a gimped version of bitcoin if you'd like.

-Garrett

EDIT: Additionally, there's no need to worry about lost coins. See above about granularity.

And as for the 'hoarders' (savers) having to pay a fee to hold coins, what? That's absolutely ridiculous. As long as coins aren't moving they're causing no stress on the network. Think about what you're saying.

The point in reclaiming lost coins is not to:

1) Bilk unsuspecting savers out of their coins
2) Address any issues regarding granularity
3) Have fun with trivial data

The point in reclaiming lost coins would be to:

Know that the system, at any point in the future, possibly far future, has the same dynamics as it was intended to have at its inception. I believe you are mistaken if you think it will have the same dynamics over time if you do not allow lost coins to be reclaimed. Please read the following to understand the logic.

We know for a fact that coins will be lost. Take, for example, the Japanese earthquake and tsunami. Perhaps harddrives and flash drives were destroyed then. Also, there is the potential for failed electronics, unintentional and intentional deletion, etc. Logic says that this will happen and continue to happen for as long as Bitcoins exist. The logical conclusion, until the heat death of the Universe, is 100 percent loss.

Now, before we get into a debate about the Universe's heat death or the practicality of a system designed to last that long, let's at least entertain the idea that a robust and long lasting system is desirable. Given that, let's look at how the dynamics of the system change with a significant loss of coins from the system.

The system as it is now is designed to allow commerce and valuation to occur, assuming that valuations are based on the collective wisdom of the crowd, which is based on the notion that most all coins are not lost.

The system as it will inevitably be will not be as the above system is. Instead, it will be a system in which commerce and valuation occur, but based on the collective wisdom of the crowd operating on less information than when the system was founded. In other words, valuation will be based on a more uncertain model of how many coins are truly in existence.

The short synopsis: over time, valuation will become more uncertain and less able to assess the true number of bitcoins in circulation. Is that a good model?

No.  The system was based on the notion that the total quantity of coins is unimportant.

From day one it has been understood that coins could be and would be lost.  I'm sorry you missed this in your research, but coin loss was a design decision, not an accident.

Clearly, you are stating then that a design decision was made to allow for the loss of coins because the total quantity of coins is unimportant. That is simply an indication that you are not reading what I have written.

It is one thing to design a system that allows for division of coins into ever more granular tokens, and justifying a design decision based on that. That, however, does not address the issue of increasing uncertainty in the system as it evolves.

Please show me in the papers written on the subject where it explicitly states that a design decision was made to allow and encourage increasing uncertainty in the system over time. If you can do that, I will accept that the original designers intended increasing uncertainty over time.

Again, it's not about increasing granularity or increasing deflation, neither of which are issues. It's about increasing uncertainty.

How many USD are in existence? I'm not sure that there is an exact number due to credit and such. And from people with old bills stored under mattresses, etc.

With bitcoins, you know there are at most 21 million, and by looking at active coins over the last X years, you can get a good idea of how many are in circulation.

I fail to see how adding another layer of complications to things will help address the supposed problem that you've found.

You can get a good idea of how many are in circulation, but as time progresses, you will have less certainty of how many are saved vs. lost.

Let's assume it's the future and all 21 million have been minted. Let's assume that we see 14 million in active circulation and 7 million that aren't circulating. Are they lost or being saved? Valuations will be less accurate over time. I don't see how they cannot be. Imagine valuations based on the assumption that they are mostly lost, and then have them dumped on the market from a dormant account.

Over time, there is a guarantee that bitcoins will be lost, but there will be no real way to measure the average loss over time. Requiring a heartbeat eliminates that problem and allows valuations to be more certain over time.

More importantly, and perhaps most importantly, the accuracy of valuations over time based on circulation will be relatively constant.

I think this is worth considering if a new bitcoin-like protocol and hash chain is ever developed. I think it would be out of the question to try to add this to the current hash chain and client -- disrupting settled expectations like that would be one of the worst things imaginable for bitcoin's reputation.

It would be simple to solve from a technical perspective. All of this would have to be part of the original protocol though:

1) A lifetime would be defined for bitcoins, say 7 years (defined as a precise number of seconds to avoid leap years, leap seconds, and the like). Once a bitcoin had stayed unclaimed for 7 years, it would be subject to reclamation.

2) When each block is issued, any unclaimed bitcoins created or last transferred in blocks with timestamps more than the defined number of seconds ago become subject to reclamation. (Automatically, nothing need be put in the block to indicate this.)

3) To avoid an incentive for miners to fake timestamps a bit ahead, the actual reclamation must occur some fixed number of blocks after the bitcoins become subject to reclamation. (Say 50.)

4) On the block 50 after the block with the timestamp that made the bitcoins reclaimable (or on any subsequent block should a miner fail to reclaim a block), the miner may insert a reclamation transfer, transferring the unclaimed bitcoins to his account.

To avoid reclamation, simply transfer your bitcoins to another bitcoin account that you also control. (Or 'transfer' them to the same account, if that's legal.)

My final point, essentially the nail in the coffin is this:

Assuming nothing else destroys Bitcoin and its success is so phenomenal that it lasts a very long time, it is absolutely guaranteed to self destruct over time when the uncertainty of the ratio of coins in savings vs. coins that are lost is so great, that it will become impossible to realistically valuate them, thus rendering them unusable as a trading instrument.

In fact, it's clear that whole studies will arise, and papers will be written trying to estimate the rate coins are lost, attempting to create models that can valuate Bitcoins. But the studies will be based on hot air, because nobody will really know which coins are lost. Estimations will be made, and then those estimations will be rendered useless when some huge wallet is dumped on the market.

Then papers will be written trying to measure the rate at which coins previously thought to be lost are actually 'discovered' and dumped on the market. Terms will arise to label such events, such as 'sleeper' wallets, etc. Economists will be vexed, to be sure.

I have written a solution for the problem you want to address in this thread:

http://forum.bitcoin.org/index.php?topic=20866.0 (http://forum.bitcoin.org/index.php?topic=20866.0)

Some people still will not like the idea of transactions eventually expiring to be reclaimed by anyone, but I think the practical value of guaranteed 0% inflation/deflation is a good argument for the proposal.

I just read this thread again, twice, to make sure I understood where you went wrong.  This post is the key:


Your entire argument is based on the notion that someone could calculate in advance the value of a bitcoin by dividing something by the number of coins available.  This notion is false; value is what the market will pay you.

The market performs price discovery, and it uses only participating coins to do so.  Coins that are not participating, whether they are lost or saved, do not factor into prices at all.  The uncertainty over the amount of coins remaining in the system has no particular effect on values.

If the value of bitcoins increases on the market, a feedback system will draw coins out of hiding to reach a new equilibrium.  If they decrease, feedback will push them back into savings.  This equilibrium will be somewhat higher or lower depending on how many coins are actually lost, but this does not indicate uncertainty of value, and it will not destabilize the system.  This change in equilibrium actually represents a transfer of the value of the lost coins into all of the remaining coins.

Oh, and read this (http://forum.bitcoin.org/?topic=13.0), particularly question 6 and the reply.

There may be merit to what you're saying, but are you positive it is addressing this scenario:

The problem is that the ratio of saved coins to lost coins becomes less knowable over time, while at the same time, the ratio of coins known to be in circulation to the coins that are currently not in circulation (lost or saved) becomes smaller and smaller, which leads to a system that becomes, at the extreme, so uncertain that it is unusable.

Oh no no no no no you got it all wrong.  See, someone saves 10,000 coins for 10 years, finds them and then BAM!! instant market imbalance!!  :o :o :o

/joke

In all seriousness though, there are new and interesting economical ramifications with a constantly inflating currency.  Though I can't say for certain, it doesn't seem likely that the above scenario will disrupt the economy in any substantially negative way.  In real-world terms, think "homeless man finds out he's actually rich". http://www.thedailybeast.com/cheats/2011/06/19/homeless-man-finds-out-he-s-rich.html

I don't understand why you think that knowledge of the number of coins available is important, nor why you think that the lack of that knowledge causes instability.  You keep stating it as if it were self-evident, but it clearly is not evident to other people, so you need to explain.

You're missing the point. These aren't issues that will affect you or me. But as a model to endure the ages, it is guaranteed that over time, the ratio of coins known to be in circulation to the coins that are of unknown status will decrease from a number that is orders of magnitude greater than one to a number that, near the end, will be a number that is near zero.

That is the whole point. The dynamics of the system is guaranteed to change radically over a very long period. Why is that a desirable design characteristic? The short answer is, it is not.

I'd laugh, but this comes up a dozen times a day from people that aren't joking.

Personally, I blame high school science teachers.  If there was one concept that I wish that everyone I met understood, it is the concept of a dynamic equilibrium.  So many people are unable to understand that those 10,000 coins sitting out helped increase the value of the circulating coins, and they will have the inverse effect when (or if) they come back into circulation.  Yes, this causes an imbalance, but in a feedback system, such as an economy, this result is an adjustment, not an explosion.

The stability of a system where 10 million coins are in circulation and no more than 1 million are unaccounted for is much greater than a system where 1000 are in circulation and 10 million are unaccounted for. By unaccounted for, what we mean is, are they lost or being saved? We cannot know.

If 1000 coins were in circulation right now, we know that about 6 million are saved, as opposed to lost. This is a reasonable assumption. This assumption must become murkier over time. We do know that coins will be lost, until every coin is lost. But we don't know the rate, nor will we ever have a more accurate estimate of it than we do now.

What we know for certain is that our estimate of the ratio of coins in circulation compared to the number of coins either saved or lost is guaranteed to become less accurate over time. In its extreme, that ratio approaches zero. And when that ratio is near zero, the currency is unusable.

So, please address the following two points:

1. Show that somehow, the ratio will not approach zero, as I claim it must eventually.
2. Assuming you cannot address point 1, show that the currency is usable when the ratio is near zero.

Why?  Why is it unusable?  You keep saying this, but you offer no reasons why it might be true.

Because when the ratio is near zero, the number of Bitcoins in circulation is small. It is so small, that some discovered dormant wallet can be huge by comparison, which can have a drastic effect on the wealth of all current users of Bitcoins. There is no way to know what might happen, but it is certain that it could happen. Because it is certain that there is extreme uncertainty when the ratio is near zero, there is little inclination to put faith in Bitcoins.

But conversely, when the ratio is much larger than one, as it is now and as it is in the beginning stages of any protocol that does not allow reclaiming of inactive wallets, then we operate with the knowledge that most coins are not lost, and thus can be put into circulation.

This is not difficult, but it is important to understand.

Since Bitcoins are (nearly) infinitely divisible this is a moot topic. Even IF enough of them could be destroyed to change the market - you can always just form a new block chain, which is inevitable anyway.  
See https://en.bitcoin.it/wiki/Units
You keep coming in here telling all the pros to listen over and over again, but you never actually ready any of the replies.

Refreshing coin can be 100% automatic, when you start Bitcoin client, it can check automatically if some coins weren't used for a year or two and refresh them with a simple automatic transaction (or ask user). How is that inconvenient?


I think ascent is right and just because Satoshi didn't think about that 2 years ago doesn't make it bad idea. I think there are many bad design decisions Satoshi made, for example the rate of Bitcoin generation that made the system look like a pyramid and made people who generated blocks with cheap CPU when nobody used this money the most wealthy ones (please don't tell me about investment risk of mining with CPU on your home PC).

But I agree that Bitcoins should stay like they are. If better cryptocurrency will be developed, Bitcoins will slowly lose value and disappear eventually, though some hobbyists will probably still generate blocks just to keep it alive.

Absolutely so. Coin loss, even delibrate coin loss, has always been part of Bitcoin.

Several times, Satoshi proposed deliberate coin burning as a way to use Bitcoin for escrow ("deliver the goods, or else I burn the coins that would otherwise be your payment") or document timestamping ("burn some coin to record a document's hash in the block chain").

Here are some references:
http://forum.bitcoin.org/index.php?topic=750.0
http://forum.bitcoin.org/index.php?topic=645.msg7712#msg7712
http://forum.bitcoin.org/?topic=2162.msg28533#msg28533

The number of coins is totally arbitrary, as they can just be subdivided to the necessary level of precision. Bitcoin could function with any number of coins (even less than one, if the number of decimal places is increased).

Coin loss is nothing to worry about (provided that it's not your own coins being involuntarily lost, of course).

Assume 1% lost coins per year. Probably, it was a lot higher initially, but we're talking from now on.

That means it'd take 229 (log(0.1)/log(0.99)) years before we lose one decimal of precision.

I believe there is some theoretical merit to your argument. Bitcoins are different from gold in that they can actually easily be destroyed. But we will never know if they are.

This means that while we may now argue that bitcoins are more stable than gold because we don't know how much gold there is while we do know that there will never be more than 21 million bitcoins, the argument might be reversed in the far future: If only 1000 bitcoins were in circulation anymore, their value might be enormous. However, it might drop steeply on "rediscovery" of a 10,000 bitcoin wallet, just as today the price of gold would drop steeply were someone to discover a giant new goldmine.

Indeed, this might be seen as a theoretical problem in the concept of bitcoin. However, it is not likely to become a practical problem, because the more valuable bitcoins become (I hope we agree that this could only be a problem if bitcoins become hugely valuable), the more securely will they be guarded in general. This means that even the 1%/year loss ratio assumed by someone above is unrealistic. Indeed, the annual loss RATIO will probably tend towards zero fast enough so that the total number of bitcoins in circulation (or longtime storage) will fall ever more slowly towards a big percentage of the intended amount of 21 million. Which means that your problem will probably never become a problem. Interesting point though.

Clearly, you have not read my replies if that is your response.

How ironic.

Read the replies. Bitcoin divisibility has nothing to do with the matter at hand.

Assume?

What about malicious attacks, viruses, natural disasters, power failure, & plain old stupidity.

We just had an exchange get hacked, where 7% of all bitcoins in existence were being manipulated by a single attacker.

See, I'm reading the thread and it sounds like this is part of the problem you're stating.

So to restate, there are coins that are lost and coins that are hoarded. Just focusing on lost coins,there shouldn't be an issue. Because the value of the remaining coins would climb and, if necessary, the coins can be bit shifted to increase the overall supply.

The purpose of this heartbeat then, is actually focused around hoarders, early adopters who have a large number of coins and for some reason want to keep them rather then entering them into the system. And to force them into the market, is that it?

As the adoption of Bitcoin increases, and the prices rises, the incentive to protect them against loss or theft will increase proportionally. This is something that I don't see people taking into account when they say that loss and theft will be a huge problem.

No, that's not it. I will not keep repeating myself. Read my replies. Especially those that discuss ratios and uncertainty.

If you keep repeating yourself over and over, the problem may not be with the listeners but with how you're stating your answers :)

Anyways, I read and re-read this and there's a lot of back and forth.

But I'll try this once again:

Your assumptions are:

• Eventually all bitcoins will be lost
• That the uncertainty in the amount of bitcoins that are available will effect the price.
• The reason it will effect the price is that there is a potential of an unknown wallet created back in the dawn of time that will be discovered that, after all this time, will be large enough to dramatically shift the market.
• And that trade will halt because of this potential uncertainty which will only increase with time.

am i closer?

Shit.  I had a whole reply typed out, but the stupid forums limits the posting rate, and I managed to lose it while going back to try again.

The short version is that I now understand your point.

But I don't necessarily agree that instability is inevitable.  Holders of unusually large wallets from days past will have an incentive not to crash the system.  And as coins are actually lost, the increase in value of the remaining coins will give an incentive for people to recover coins that aren't actually lost, but merely hiding, keeping the ratio of "thought lost" to "actually lost" at a reasonably low level.

So, yes, over time, the loss of coins could cause uncertainty, which could cause instability.  But I don't think that those are inevitable.

This will be an interesting experiment.

Hey I think we're coming to a consensus here!

It all comes down to whether or not you believe that increasing uncertainty over time about the total number of bitcoins in circulation is going to be significant enough to warrant anything being designed into the protocol to fix it.  I do agree with you that in all likelihood, the uncertainty will not be significant during our lifetime, or even our grandchildren's lifetimes, so maybe it's not something worth worry about at all.

On the other hand, I find it intellecually satisfying to have rules built into the system to create the perfect knowledge that there are never any lost bitcoins, only hoarded ones.  And it would give me satisfaction to know that whatever problems that I haven't even thought of yet that would be caused by the increasing uncertainty of lost bitcoins, are not something I have to worry about at all because there is no such problem.

That's why I said that the 20 year rule sound like a great idea to me.  But I can certainly also agree that it comes at a cost - people have to be aware of it and work around it or lose their bitcoins eventually, and also the rule would have to be propogated out into the network (but we'd have 20 years to do that!) - and I can understand the argument that that cost is not worth it for the very small benefit that it brings.

I like this idea, because I would like to know what coins are lost vs. hoarded and it would compress the block chain slightly.  I dislike this idea for every other reason.

Maybe it would be better as a 100 year rule?  If the goal is to prevent the eventual degredation of the bitcoin market due to lost coins, but people are worried about people losing their savings because they didn't re-up their transaction every 20 years, what about making it 100?  Then on the geologic timescales where this problem matters, the solution is still there, but received bitcoins during any one person's lifetime will not be lost due to this rule (any inheriters of the bitcoins will simply have to transfer them to their own account, which they would probably do anyway).  Of course when people start living significantly longer than 100 years ...

Here is another aspect to consider.

Over time, people tend to find ways to break, or at least reduce, the security of hashing functions.  We understand this, and the bitcoin community is capable of replacing the hashing functions used in the bitcoin system.  This will probably need to be done every decade or two until the end of time.

Cryptographers are very conservative, and they have a tendency to declare a hash "completely broken" long before any real attacks are possible in the field.  Typically, the lag time is several years, because attacks are first found against crippled variations of the hashes actually in use, and then extended until they reach the production version.

Protecting the blockchain is easy enough to do in this environment.  An extension is proposed to allow the next great hashing function to be used, starting with some block a year into the future, and the community will agree because the change is in their own interest.  The appropriate block arrives after roughly a year, and the network accepts the newfangled hash as genuine.  Past blocks are still secure, even though the hash used on them is now weak, or even broken, because their information is included in the new hashes.

Transactions are likewise also safe, since the hash of the Merkle tree will be updated at the same time.

But, what about keys in wallets?

The only way to replace them is to send them out onto the network with a transaction that uses the new hashing system.  Old ones can't simply be updated, because they contain scripts that permanently embed the hashing function in use when they were created.  They must be spent between the time that a new hash becomes available to the scripting system and the time that the old hash becomes breakable in practice.

Realistically, this interval will be decades, or more likely centuries.  But, I think that this compares favorably with the time needed to lose enough bitcoins to matter, assuming that they matter at all, which is far from demonstrated.

So, unless we reach a total dead end in cryptanalysis, old coins will gradually become recoverable.  This is unlikely to cause problems for genuine savers, because they will be able to spend their way into the new hashing systems as they become available.  But coins that are really and truly lost today will gradually gain new life, as the effort required to recover the keys to them decreases relative to the value of the coins lost.

Again, this assumes that future progress in cryptography and cryptanalysis follows more or less the same progression that it has so far.  It could turn out that SHA256 really has no weaknesses that allow anything but a total brute force attack.  But that doesn't seem likely, and we have plenty of time to figure it out.

Yes. But I would say that the third bullet need not be just one wallet. Collectively, the unknowns becomes greater over time, and that leads to the fourth bullet.

It seems to me that a well designed system would attempt to maintain as relatively constant over time the dynamics of the system. By that, I mean, behavior. I am in no way implying that the valuations should be constant, only that, collectively, valuations made today, or at any point in the future, no matter how far, are made with information that is relatively uniform in quantity. Granted, some noise and fluctuation in the quantity of information is expected. But the system should not be designed with the built in guarantee that uncertainty will increase over time.

This is a really great point.  All that someone would need to do to recover lost bitcoins is to have a computer fast enough and/or cyptography good enough to figure out what public key hashes to a bitcoin address, and then what the corresponding private key is for a public key.  While this might not be possible now, maybe it will be in the distant future, and then anybody who didn't re-send their bitcoins to themselves using the better cryptographic methods of the future will simply have their bitcoins taken from them.

So maybe this problem solves itself eventually, although I still wonder how long it will be before SHA256 is easy to hack.  My guess is 40 years or more.

The idea is interesting, but I'm not convinced that the uncertainty will ever be large enough to overcome the system.

My reasoning is this. Lets take a thought experiment where someone suddenly appears in the near future with 11 million coins. What would the impact be? Well if he does nothing with it, then there is no impact. If he attempts to sell all of it, inflation occurs and the prices of items will rise as more currency floods the market. If an attempt to flood the market occurs then the currency will spread around until an equilibrium is restored. What happened the other day with mtgox was an aberration of an immature market place. Rapid fluctuations should have placed a freeze on the market so that a reason for the change could be determined. I can only imagine a future where bitcoins are more common that there will be far greater regulation in exchanges and market places over what goes on.

And the further out I extrapolate the greater the discrepancy may be, but I can never see a great enough of a discrepancy to be concerned.  Because I mentally always come back to the thought that the market will adjust.

Wow, this flame-infested thread has grown into some stimulating discussion.

My take:

1. (see above) there will likely be no increase in uncertainty beyond a certain point which lies way above 10m coins IMHO).

2. the degradation of hashes is a very nice idea that will probably strengthen the first point.

3. this makes it unlikely that building any specific "reclaiming" into the protocol will be necessery or desirable. nor would it make the protocol any more "beautiful" or safe, because added complexity leads to unforeseen and mostly undesirable consequences as a rule.

4. still, why don't you start a new coin with this measure in place? because, even if 1-3 were invalid, adding this rule would still violate the trust of everyone invested in (the idea of) bitcoin-as-it-is.

It is guaranteed that the number of total number of lost Bitcoins tomorrow will be greater than or equal to the total number of lost Bitcoins today, until the end of time, or until there are no more Bitcoins. There is no point in disputing it. We can argue all day long about what the rate of loss will be, but we'd only be guessing.

We also have no idea about what the future holds for methods of saving wealth, but let's assume that there will at least be the following places in which your wealth can be stored:

• Material items: land, gold, products, etc.
  
• Currencies
• Securities

If Bitcoins are successful, then we can assume the following:

• some individuals will store none of their wealth in them
• some individuals will store some of their wealth in them
• some individuals will store most of their wealth in them

Based on the discussion here, it should be clear that the chance of the Bitcoin supply suddenly and rapidly increasing by a huge amount relative to its perceived supply is much greater in the future than it is now. Given that, the repercussions are obvious: if such an event occurred, Bitcoins will be worth much less. In my second bulleted list, it should be obvious which group will be unaffected, and which group will be wiped out.

Given that the third group in the list will be wiped out, logically, they won't exist, if they are prudent. From that, it follows that over time, the notion that Bitcoins are a prudent means of storing wealth will lose traction.

I think this proposal has a lot of promise.  I doubt that it would get incorporated into this version of the block chain but maybe a competing chain will pop up with it.

Markets work best when all participants have access to the same information and the more complete the information is, the better markets are at setting an accurate price.  Having coins that could be lost or could be being hoarded adds uncertainty which negativily affects the price.  If one trader knows that a certain set of coins is lost when everyone else thinks they are hoarded he has an advantage in the market.  Letting everyone be certain that lost coins will eventually be recovered makes pricing more accurate in the same way that letting everyone know that there will be at most 21 million bitcoins makes the pricing more accurate.

There are also sound technical reasons to do this.  There is no agreed upon way to switch hashes or encryption keys even though at some point we will need to.  After switching, current clients and miners will still have to be able to process new transactions signed with old keys which means that code will have to be kept around forever.  Code that is old, rarely used and poorly maintained is a prime place for a hacker to look for weaknesses.  If we could say with certainty, after block number XXX there will be no more transactions using old coins we could then remove that code.

I think this is an excellent point which I missed previously because of all the distraction related to restoring the lost coin and the common misconception that the loss of coin itself is a problem.  I think you undermined your argument in the first post by arguing for more than was strictly necessary to achieve these ends.

To remove the uncertainty you simply need to take the coins out of circulation forever, it's not required that they be remined.  Otherwise you end up with another kind of uncertainty: e.g. say bitcoin manages to deflate to the point where 1 BTC = $1m in todays relative value... and a ton of lost coins miss their long hearbeat and show up mining. So no matter what algorithm you choose for dishing out the expired coin it could end up making mining ludicrously and socially destructively valuable compared to any other occupation. Even if there is a long delay from the point where the coin expires to when it shows up again that just moves around the point at which everything blows up.

In some ways your proposal as stated only removes uncertainty in that it makes sure the pessimal case _always_ happens: that after the currency deflates due to high usage, lost money appears out of the abyss and screws everyone up.

However, I don't think that "heartbeat it" _or lose it forever_  violates any of the system invariants in the way that "keep printing" as proposed explicitly by SgtSpike,  and jon_smark. Nor does it create the possibility of a crazy gold rush appearing randomly in the future. (Heartbeating, incidentally would simply mean forming a new transaction, not an explicit heartbeat event.)

The obvious time to implement this would be at the same time as doing a cryptosystem upgrade, as the first expiration could be timed to adequately prevent a bunch of actually lost coins returning from the grave as ecc keys are cracked.  It would be easily argued for then because people will easily see that the failure to implement it will allow the lost coins to return and blow the economy up.

I would expect the only debate at that point would be over if it should be a one time cutoff or a rolling one.

Try the following: Add 1/1 + 1/2 + 1/4 + 1/8+ 1/16 ...  forever
It is guaranteed that the number you get tomorrow will be greater than or equal to the number you get today, until the end of time, or until you stop adding. Still, if you give me 2 bitcoins today, I will give you the sum that you get in bitcoins anytime. See what I'm trying to say? There will never be a problem. Don't try to fix a system that ain't broken.

I totally don't understand what you're saying, at all. Bitcoin attrition will happen until there are no more Bitcoins. It may take a million years, but it will happen. As loss occurs, uncertainty increases. That is a problem.

To everyone,

The issue is increasing uncertainty, which progressively renders Bitcoins an unreliable vehicle for commerce activities and storage of wealth. The reason why is stated in this thread more than once.

It may take near an eternity for that uncertainty to become a real issue, but the mathematics are sound, which calls into question whether a system really needs increasing uncertainty designed into it. The solution is to require Bitcoin holders to connect to the network in some form or another, probably on a timeframe on the order of several years or even decades. This is not unreasonable. We all live with this requirement in regard to bank accounts today anyway, without feeling overly burdened.

It is one thing to accept that a currency may become unsound in the future because of external events. This is reasonable. However, it is questionable that a currency, by its own internal design, should be allowed to become more uncertain over time precisely because of its own internal design.

I just realized something.  All of the current money systems in the world today are already more uncertain than bitcoin will ever be.  Bitcoin actually gives us boundaries on the uncertainty which do not exist in the real world.  The amount of bitcoins that might potentially show up on the market tomorrow is strictly limited by powerful mathematics.  The amount of dollars (or whatever) that might potentially show up on the market tomorrow is limited by human discipline.

And we know which one has a better track record.

http://i285.photobucket.com/albums/ll62/Findalis/zimbabwe_100_trillion_dollar_bill.jpg?t=1247168399

This isn't really true. Towards the end of Bitcoin's life, the ratio goes towards zero, which means that a near infinite change can occur.

However, if some form of the heartbeat is implemented, then things really are good.

The ratio for dollars is zero right now.

True, but there is only one entity that could dump a quantity that is many times the current number of dollars in circulation, and they do have an interest in not doing something too drastic.

In the case of Bitcoins, as the ratio goes towards zero, the number of entities that could dump an amount many times Bitcoin's perceived circulation onto the market will be unknown, and their motivations will be unknown.

If history is any guide, they have every incentive to do this, just not all in the one day.  The value of each and every fiat currency not currently in use ended up at zero.  Actually, a lot of metal currencies ended up turning into fiat currencies through debasement, and then end up at zero.

Did you see the image I posted?  It wasn't caused by some unknown entity, it was caused by the entity in control of that currency.  And it wasn't for unknown motivations, it was caused by a desire to spend money that the entity did not have, a motivation common to everyone.

For further amusement, I chuckle that you find the system-preservation motive sufficient when applied to a type of entity with a 100% track record for destroying currencies, but reject (or at least ignore) the same motive when applied to an entity with enough coins to ensure that he and his family live like kings for all eternity so long as they don't destroy the system that is willing to give them goods and services, essentially for free.

I know all about Zimbabwe's currency. That's not the point.

The point is: what would you do if it was the far future and the apparent circulation of Bitcoins is about 1,000, and as a result, due to the public's general fear that 10,000 or even 100,000 Bitcoins could be dumped on the market tomorrow, people, in general, when receiving payment in it, immediately cash it out for something else, driving its value down even further? Would you place much of your wealth in it? Would you be so confident that nothing might happen tomorrow?

Or, would you prefer a version of Bitcoins that mandates heartbeats, thus ensuring the above situation could never occur for all time?

Do you know about every fiat currency ever tried over the last 4 thousand years or so?

The point is:  what do you do if it was today and, due to the public's general fear that 10 trillion or 100 trillion dollars could be dumped on the market over the next year or two, people, in general, when receiving payment in it, immediately cash it out for something else, driving its value down even further?

To answer your questions, I would not "put my wealth" in it, not for your reasons, but because I never do that; I know the difference between money and wealth, it involves using one to buy the other, but I'll let you sort out the details on your own.  And yes,  I would still be pretty confident, for reasons already explained, by me and several other people, in several unique and colorful ways, all of which you have ignored.  And finally, no, I still prefer a system that is capable of neither destroying nor redistributing bitcoins.

Perhaps in the year 3535, people will rue the day we rejected your idea, but I'll leave that to them.

Why the preference?

I'll answer your question. I don't hold Zimbabwe currency or currencies like it. On the other hand, some currencies are rather stable, and are fine for holding for periods of time. Bitcoins, while volatile, are an interesting investment, and there's a strong chance they will rise significantly. But in the end, they will become unstable.

Given a choice, I would much prefer to hold a version of Bitcoins that requires a heartbeat, for the reasons clearly stated above. I would have zero fears of losing it.

Because we finally have a system where what is mine will always remain mine (even after I die) unless I fuck it up myself.

I think you are very, very wrong about the bolded part.  You know my opinion of the unstable comment, so I won't bother repeating it.

I started writing this post thinking that I agree with ascent but couldn't articulate the agreement.

Then I imagined the world where a car costs 0.00000001BTC. Then I imagined a news report that 10 BTC has been discovered by someone finding an old wallet.dat on grandpa's old computer. What would a discovery like that mean when all the bitcoins have been minted and the market has adjusted to the limited supply (including the lost coins)? Most likely that would result in inflation. As the supply of bitcoins increases, the prices will rise. We'll be where we are now with USD and other currencies. As coins get lost the system will have to adjust because there will be not enough coins to go around. As coins get more expensive, the hoarders will release them into the system, thus stabilising the price.

What ascent seems to object to the most is the fact that nobody knows how much currency is available. Everyone knows that there's no more than 21M, but no exact numbers. Supposedly, this leads people to be uncertain about the currency. As long as the algorithm is strong and new money cannot appear from nowhere, there's no uncertainty. Just because you know that I have 1K BTC, doesn't mean you can be certain how I will use it to take advantage of the market. When the story unfolds in such a way that earning 0.01 BTC per year is enough for you, the fact that I gained 10BTC will have no radical immediate effect on you. I'll just be able to employ 1000 of you which would keep you feeling happy. There will not be an overall uncertainty, just like not everyone thinks that there will be a war tomorrow.

When 10BTC is enough to employ 1000 people for a year, I believe I will take all the necessary steps to make sure I, or my descendants, do not lose the funds. Any coins lost today, will have such a big bounty on them in the far future, that it may be the biggest driver of innovation in cryptography with an aim to recover lost/inactive coins. Inactive wallets that are not kept up-to-date with technology will be more easy to compromise and the BTC will enter the circulation again.

I know there are wallets being lost today and I'm not uncertain about BTC. I think BTC is still good.

No, they are not. That is why I showed you the geometric series, which is an infinite series of positive values that add up to a constant, even if you keep adding FOREVER.

Saying that more and more bitcoins get lost does NOT mean that the number or ratio of bitcoins still in circulation goes towards zero! Not at all. That is the point. It might mean that, but in all probability it does not mean that. If fact, as I have pointed out above, the yearly ratio of bitcoins lost is bound to converge toward zero very fast, which implies that the number of bitcoins still in circulation will remain above a large constant, say 10 million, FOREVER. That is why your problem will never be a problem.

Cryptographic weaknesses can be also seen as an argument FOR coin expiry.

Bitcoin protocol is flexible enough to allow transactions with different levels of security: you can use different hashes, require multiple signatures etc.

Even now two different kinds of transactions exist: ones with explicit public key and ones with public key hash.
First is resilent to hash collision attacks, while second, perhaps, makes attack harder because you first need to figure out public key.

So, if you refresh your money by sending it to yourself from time to time then it helps to keep it fresh and secure as transaction might use more secure protection available in new version of client. Even if algorithm is the same refreshing could help if somebody was working to find public key hash collision for years, for example: they will have to restart their work from scratch.

Some people here say that market forces will force people to refresh their coins and if they don't then coins might be eventually reclaimed by code crackers.

But they forget that not everybody is a cryptographer so they cannot carefully assess risks. Even if there is a recommendation to refresh coins from time to time they might choose to ignore it.

If, however, coins expire after a certain time (say, five years) then they WILL have to plan for it and reconnect their wallets periodically.

And this also solves security woes (e.g. if some old algo can be cracked with ease, what will we do with old outputs which use it -- let code crackers to get obscene number of coins OR block them forever OR block & redistribute to miners? It is much better when it is known beforehand).

And it also nicely solves size of block chain problem (it doesn't grow forever as old blocks can be simply dropped), it solves deflation problem making money supply more predictable and it gives additional awards to miners which might help to reduce transaction fees. (If there are no awards they might charge obscene high fees.)

And it only causes problem for people who want to keep their wallets offline for decades.

Well, keeping them offline is not the brightest idea:

 * crypto algorithms do not provide 100% unbreakability guarantee, they merely make sure that attacker needs to spend a lot of computation resources. But if you leave challenge for decades, with a good incentive to break it, and given advancements in crypto-analysis it becomes possible that attacker will have enough resources.
 * To get your money back you need software which still understands your wallet but can use new network. It is very well possible that it won't be available.
 * Storage media are not designed with that much durability in mind. CD-R and similar things rot in few years unless you buy expensive archive-grade ones, which might be rated for 25 years of storage. But nobody will guarantee that it will actually last for 25 years. Flash drives are not designed with durability in mind. Neither are hard drives. People cope with this by refreshing their archives from time to time, but if you refresh archive, can't you also refresh coins?

So absence of coin expiry only helps people who follow bad security and archival practices.

I agree with you that it is a weakness of the system that there are no ways to distinguish whether a coin is loss or simply hoarded. From the economic view, it may raise concern of sudden discovery of the old wallet in the future. However, your solution is not good and it is too complex to be accepted into the current protocol.

My proposal: Unmoved Bitcoin with age more than, say, 40 years are marked as lost and cannot be used for further transaction.

Imposing a time limit has many advantage over the supposed infinite time model:
1. All cryptography keys in use today need to update periodically, for security reason. Leaving the same public key in block for a long time will simply increase the risk of being hacked. So moving the Bitcoin into a new wallet could secure their Bitcoin.
2. It allows the network drop old blocks.
3. This proposal can be implemented very easily with few lines.
4. The proposal implies that value of the lost Bitcoin will be automatically go to all others wallet.
5. It allows the differentiation between lost Bitcoin and hoarded Bitcoin to reduce uncertainty.
6. They should know that Bitcoin can be lost so that they wont put everything into Bitcoin.

There is no such need to reclaim the lost Bitcoin or allow for new mining. Otherwise, if there is 100000 Bitcoin lost for 40 years, you just give the miner with the ability to manipulate the market which make no difference with someone who discovers it. Also, the time interval is should not be too short, say, 1 year. It will only create an instability for the Bitcoin economy. For example, you might want to destroy others wallet in order to maximize your own profit.

Using the proposal, everyone else is actually gaining a very tiny value of their own Bitcoin and it is the most fair method to handle lost of Bitcoin. Remember that the creation of Bitcoin out of nothing is simply a way to make an initial distribution of Bitcoin, there is no need to mining in a sustainable system anymore in the future. I know someone do not like to see that the decimal in their account is smaller and smaller over year. But it is just a game of number, you should really divided by the maximum number of Bitcoin.

If 99% of bitcoin is marked as lost, we can simply multiply 100 to the balance in the bitcoin client.  :D

Hey guys, I have an idea!

You should collaborate on a new block chain using these rules. I seriously doubt you're going to convince enough people that this belongs in Bitcoin, but you can start a competing crypto currency with whatever changes you want. Bitcoin is open source, go build something!

I never stated that a constant or near constant number of Bitcoins would be lost per year or per unit time. What I said was this:

M = total number of Bitcoins ever minted
C = total number of Bitcoins not lost
L = total number of Bitcoins truly lost
t = time

Per any unit of time you wish to use, L at t + 1 will be >= L at t.

Logically, then, L will get bigger over time. From that, it follows L will eventually approach M.

Let's assume that you agree that a certain percentage of unlost Bitcoins will be lost every year. Is that not an unreasonable assumption? No matter what number you choose, if you continue with the following calculation, the end result is the same:

C at t = M
C at t + 1 = (C at t) * x where x = some constant number less than 1.

how about some service that does the heartbeating for you? someone might still find the login info to that on grandpas old laptop...

Bzzzzt. You fail to factor in the value of a bitcoin. As the value increases, the rate at which they are lost will decrease, as people will take additional measures to secure them. If R_L approaches 0, L will approach some value less than M.

No, this is not logical. This is an error in your thinking. Just because something becomes less and less, doesn't mean it will eventually become zero. This is a little tricky to grasp for the non-mathematician, but is nevertheless true and important.

You could have symbolic links between addresses and unix-like permissions.

As long as the symbolic link exists the BTC would be transferable remotely from address to address without the original wallet. Bye bye lost coins.
Unix permissions would also prevent the theft that occurred at MtGox by allowing you to block transactions not authorized by you. You would pre-generate transactions which would be filled in by MtGox. That is you would control MtGox from the client. MtGox would not be able to create transactions without your wallet being online and sending requests.

Problem, criminal?

I think I'll work on this. After JSON is fully the format of the system. At this point I can't navigate the code like others can.
Unix permissions: Receive, Send, Operate

Oh, I see now! I'm not a mathematician, therefore, I can't grasp the concept fully. First of all, it does not need to become zero for the problem to exist. Secondly, the key point is "approach zero". I shall now use the same intonation as your post above: I realize this is tricky for you to grasp, therefore, I suggest that instead of trying to sideline the argument into whether the supply will reach zero or some quantity that is not exactly zero, which is a wrong assumption on your part anyway, that you reconsider the real premise put forth in this thread, and find a means to object to it, instead.  That is, if it's not too tricky for you. ;)

You assume that bitcoin has a problem with availability or granularity. Both is horribly false in the forseeable long term future.
The price of a bitcoin unit of a certain deciaml within the p2p accounting system is set via supply and demand and zero via regulation, which is a key selling point of bitcoin.
You are trying to add an automated regulation mechanism to solve a problem that doesnt exist, a very uncompelling case.



You have been around for a week, maybe some humility would help?

Not when people like you come in and start talking about divisibility. Read the thread. It has been stated numerous times that divisibility has nothing to do with it.

It's really annoying to have someone say that I assume something, when I have clearly stated the opposite. You only undermine your own reputation, and undermine it further by claiming the importance of tenure. And you wonder why I don't care how long someone has been around. Content matters. Don't hide behind tenure. I would accord equal respect to any member based upon what they are saying, not how long they have been around.

No, the root of the problem that you are trying to find and cure would be divisibility. Your initial posting is full of "i dont know" and in that regard very valid. You fail to actually identify a problem yet want to make a connection mandatory, however long the duration might be. Bitcoins will be valued at supply and demand related rates. This is possible as long as divisibility is sufficient, hence the problem you are trying to cure is not there. You try to solve a problem that doesnt exist by introducing a system that gives alot of people with offline savings a maintenance overhead that is neither desireable workload wise nor smart in the pseudo anonymous context. But of course, you wouldnt know about that.

If in the very long term bitcoin is still around, the system can be branched to adress that issue without changing the rules, if 50+% of the network agrees to it. You would know that if you would take time to understand a system before suggesting LOOONG term solutions for LOOONG term issues that may or may not be there.

How will the market value bitcoins when the total number in circulation is unknown?  Does it matter how deeply the bitcoins can be divided if no one knows if there are 10 million bitcoins in circulation or 20 million?

This is an honest question.  Maybe someone with a better grasp of economics can tell me if it matters at all whether the total number of units of a currency that exists is known or not known; maybe it doesn't matter because people value the currency based on its current supply, by which I mean the availability of units of currency to purchase, not on the total number in circulation.

Like I said before I personally would find it satisfying to have a system where no units of currency could ever be lost and with Bitcoin we could have that; but practically speaking the difference between 0.5% deflation and 0.0% deflation is probably not very important on anything other than millenia time scales.

It's amazing how many people insist I think divisibility is an issue.

I don't. You still haven't addressed my point that as the value of a bitcoin increases, the incentive to protect it from loss (or theft, but that doesn't decrease the bitcoin in circulation) increases. This, I think, will lead to the slowing of loss over time.

Right now that incentive is being expressed by feeding this thread not protecting better.

I am not so sure.  If bitcoin becomes widespread in use, then I would think that there would be a spreading around of bitcoins more than anything else.  So if right now there are 10000 people with an average of 200 bitcoins each (just to pick some numbers), then if bitcoin becomes very popular then there might be 1000000 people with on average 2 bitcoins each.  Now there are many, many more opportunities for people to lose bitcoins.  We can see that even today with a high value of ~$20 per bitcoin, some people lose them due to carelessness (the recent heist because a person didn't bother to encrypt their wallet file comes to mind), and even web sites that were pretty much printing money (mtgox) don't do a good job of securing their coins and (possibly - hopefully!) killed their goose that was laying golden eggs.

So clearly just because bitcoins are valuable, it doesn't mean that there won't be careless people who lose them.  And if you spread the bitcoins around, there will be less value to lose per individual 'wallet', but many more wallets.  I personally think it's kind of a wash, and I would expect a constant rate of loss that actually exceeds that of paper money since digital currency like bitcoins is so much easier to destroy (with a single keystroke you can destroy a large quantity of bitcoins instantly; with paper money you'd probably have to throw a big suitcase into the ocean or something, which takes alot more effort).

The end result of this thread could be better protection if people like you would just go away and leave the discussion to people willing to discuss new ideas without resulting to trivialization and demeaning them.

I agree that this whole issue is solved by simply marking coins as lost. I also agree that we will have to do this eventually. The great news is, unlike the proposal to reintroduce the coins, this is actually compatible with the current blockchain! For this to work, we don't need to have everyone upgrade, we just need over 50% of the miners to agree not to include any transaction using expired coins into a block and reject any block that does. We could literally implement this policy today. Because of that, I feel that there is no reason to worry about this until it becomes an issue. Whether that issue is advances in cryptanalysis or because more than 10% of the Bitcoin supply is in an unknown state, is irrelevant.

bji has it one hundred percent correct. If the value of Bitcoins is to rise, it will be due to increased adoption, and more likely, widespread adoption. Remember, the increasing value today is due to speculation that they will become a useful vehicle for commerce, not because they are currently a useful vehicle for commerce.

Widespread adoption will result in increased value, but as bji says, it will not likely result in a decreased rate of loss. In the far future, widespread use might mean hundreds of millions, or billions of users. Regardless of increased value, due to diminishing numbers in circulation, the increased user base will cause any one wallet to likely have a relatively constant average value, based on external economic factors. This wallet value will be no different than average values of checking accounts and wallets in use today. Increased valuations of Bitcoins is unlikely to mean that any one wallet in existence is protected at a security level greater than a wallet today.

The widespread use, if it comes to fruition, will mean exposure all across the world at a high density level, and even the Solar System, if we are talking about the far future. Bitcoins will be subject to all the same accidents that can befall physical objects today, such as natural disasters (how many Bitcoins were lost in the recent Japanese tsunami?), but Bitcoins are also subject to loss via mechanisms that usually aren't an issue with normal physical objects: hardware failure of the hosting device, software viruses, accidental deletion, malicious deletion, and so on.

I contend that the most likely vector for Bitcoins to gain widespread use will be if they supplant the unstable currencies of the Third World, usable on smartphones, allowing near instant commerce between the citizens of the Third World, across state lines. This is the exact scenario which creates a situation ripe for loss, but is also likely the only real hope Bitcoins have for mass adoption.

If Bitcoins fall out of favor, either due to competing currencies, the increasing uncertainty that has been described here, or actually fail to gain widespread use, then the speculation which attaches an increasing value to them today will not guarantee a high valuation for them in the future,.

It might sound condescending. But it's not. It is really a concept that is hard for non-mathematicians to understand, because people rarely get to think about infinite things.

See, you still haven't understood it: The number of active bitcoins will NOT "approach zero". Not at all. It will approach some large positive number. Ofcourse, it is hard so estimate the exact number today, but I believe it will be more than half the number of total bitcoins, that is more than 10.5 million.

I suspect you're not a mathematician, otherwise you wouldn't make such a fallacious statement. It makes you sound doubly condescending. 10.5 million, eh? Funny!

Assuming 6.5 million Bitcoins (we could assume 21 million if you want, it makes no difference), and a rate of loss of one percent per year, which I will admit is probably high, we get the results listed below for one thousand years. I don't see it stopping at 3.25 million. It does not matter what we set the rate of loss to, it will not stop at half. So please, don't ever make assumptions about your understanding of math vs. mine, again, ever.

And yeah, you are condescending, and apparently, not even right, by a long shot.

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year: 2830 1713.061389
year: 2840 1549.262014
year: 2850 1401.124795
year: 2860 1267.152149
year: 2870 1145.989690
year: 2880 1036.412534
year: 2890 937.312918
year: 2900 847.689002
year: 2910 766.634738
year: 2920 693.330715
year: 2930 627.035871
year: 2940 567.080002
year: 2950 512.856989
year: 2960 463.818668
year: 2970 419.469289
year: 2980 379.360506
year: 2990 343.086842
year: 3000 310.281590
year: 3010 280.613108

Please, try not to get bitter. Yes, you are right: If 1% of bitcoins were lost every year, their number would (slowly) approach zero. But that is not a realistic assumption, as pointed out above.

You have, however, repeatedly asserted that from the pure fact that the number of bitcoins will not increase over time it follows that this number approaches zero. That is not the case. That is all I tried to point out. If you are of the opinion that this number will approach zero, you should argue why that might be the case. A constant ratio of loss would be such a reason. But you have not argued anywhere why such a constant ratio is a realistic assumption.

Now, even if what you call "uncertainty" were to increase, consider the interesting case of gold: We have no idea how much gold there will be available in a few years. That is because huge amounts of it lie around in space waiting to be mined. Still, I have not noticed any uncertainty in gold prices. Actually, there are people going around claiming gold to be the most secure monetary standard there is.

That is true, but don't you think it would just be cool to have the only currency in existence that simply could not be destroyed (on anything other than catostrophic scales of course; if the earth were blown up by Vogons then obviously bitcoin would be just as gone as dollars at that point)?  I think it would be just another really cool aspect to bitcoins that make them that much more interesting and appealing as a form of currency --  100% guaranteed 0% inflation/deflation of the monetary supply.  That's just so cool and bitcoin has a chance to achieve that; obviously there isn't the mindshare for this now due to all of the naysayers but maybe someday in the distant future the bitcoin user population as a whole will move to new rules that make bitcoin truly non-inflationary/non-deflationary ...

Besides, gold is a ridiculous analogy. When gold is submersed in water, it is not destroyed. It's not destroyed by fire, either. Nor by hitting it with a hammer. When it is buried, upon rediscovery, it is obvious what it is. Not so with Bitcoins. When Bitcoins are lost amongst rubble, they just look like mangled computer hardware, kind of like that scuffed flash drive I saw in the parking lot the other day. Who's going to bother resurrecting such a thing, not even knowing if it's worth it to do so? A gold coin in the parking lot is obviously recognizable, though.

Also, gold is also not accidentally deletable, so to speak. It's not subject to computer viruses, either.

I think the burden lies upon the defenders of Bitcoins to bring forth some better arguments. And leave the sniping one liners behind.

Yes, it is a realistic assumption, as pointed out above by both bji and myself.

Since you dont understand the system, let me repeat slowly:

a) zero can only be reached if there is no longer sufficient divisibility to allow supply and demand simply take care of that by in a sense DEFLATION. as long as divisibility is assured the practical use of bitcoin will not be affected at all
b) if a trend can, in the far future, be anticipated that there might be a looming issue on the horizon, a fix to that issue, however that fix may be, can be introduced to the mainline client. if that is a "vote on branching" or something different does not matter, the tools to fix it are already there
c) why does every random person who seems to be in the "explore bitcoin phase" set his first and foremost task at solving longterm issues for bitcoin before even grasping basic concepts or the currency

You apparently have absolutely no idea what is being discussed here in this thread when the term zero is used. Zero is referring to the fact that the ratio C:M can in theory approach the value of zero, where C is equal to the number of coins known to be in circulation recently, and M is the total number of coins minted. From this, it follows that L + S = M - C, where L is equal to the number of coins lost and S is equal to the number of coins saved in the long term. While the sum of L + S can be determined, the ratio of L to S cannot, thus creating a situation over time in which as the ratio C:M approaches zero, the uncertainty increases as to the actual valuation of Bitcoins, due to the fact that the possibility of a quantity of Bitcoins many multiples of C could be introduced into the market, a situation that is not really possible in the early stages of Bitcoins, thus introducing by design a monetary currency which changes its dynamics over time independent of external economic forces.

Divisibility is not the issue, and it's annoying when people bring it up.

If anything, the question is the rate of loss, and whether it is constant over time, or decreasing, or even increasing. Some individuals here contend that as Bitcoins increase in value, greater effort will be made to prevent their loss. However, I contend that in order for Bitcoins to increase in value, they will have to gain widespread use, thus their increase in value actually results in a diffusion where the average wallet size is no greater than any average wallet or bank account today, which means that there is no reason to assume a decreased rate of loss over time.

This is an insulting and unnecessary remark, but unfortunately I have discovered it is typical of the community here. Sad, really. What basic concepts have I not grasped?

I have to say that I agree.  I have also come to these forums with ideas and found that there is no shortage of people who just want to shit on any idea that they didn't come up with themselves.  I think that there are some people who don't really want to think any further than whatever Satoshi wrote in the white paper.  That dude was so smart that he must have thought of everything, right?

For what it's worth, I do think that Satoshi's ideas were pure genius; but I also don't think that there aren't any more good ideas to be had.

Who's saying there are no more good ideas to be had?

All we're saying is that this isn't one of them.

If you really think it is, create a fork of the client and/or blockchain and see if people use it. You're not going to shoehorn this fix for a non existent problem into Bitcoin.

Actually most people are doing more than saying that this is not a good idea.  They're also needlessly insulting, demeaning, and trivializing the concept and its main proponent.  I'm just calling it like I see it.

Um, wouldn't creating a fork of the client and/or blockchain and see if the people use it exactly BE shoehorning this fix into Bitcoin?

Or do you think that Bitcoin is just the prototype client that everyone has been using?

No, it wouldn't. Shoehorning the "fix" into Bitcoin would be lobbying for it's inclusion into Bitcoin. If you really think it's such a good idea, then create an alternate version of the client with the change. If people think it's a good idea, they will use that instead. That might not be such a great idea due to the possibility of forking the block chain, so maybe you want to create an alternate block chain instead with this and possibly other rule changes, and see how it fares in competition with Bitcoin. The code is open source, quit complaining and start coding.

Demurrage is a cost associated with owning or holding currency over a given period of time. Bitcoins already have demurrage.

Please, everyone, you are invited to propose sound arguments against this idea sans the excessive fanboy attitude.

Ummm, if you lost your coins, you already paid the cost. However, if you didn't lose the coins, then lift your finger every seven years. True, you can argue that there is a cost to lifting your finger, but you'll gain it back in spades by using a currency that people can continue to have confidence in for all time.

Are you saying it is a security issue because you run the risk of losing your coins by connecting to the network?

Why are you so adamant that this be incorporated into Bitcoin, rather than a block chain of your own design?

It's pretty obvious that few people (if any) other than you and bji want this "feature".

This is already implicit within Bitcoins. Bitcoins are essentially worthless unless spent, and yet we have those who argue against the very function necessary to derive any value from them anyway. All this talk about their anonymity, and yet everyone lives in fear of connecting their nearly anonymous hoard to the network.

Furthermore, if you're so paranoid about connecting to the network, then divide your hoard into multiple wallets where each one is of little interest to those nefarious organizations you fear are watching you, and stagger their connections over time. And automate this division if you wish - I'm sure software would be developed to assist you in this process such that the burden placed upon you would be minimal.

I think a better dialog would ensue if you would describe what you think is the most likely scenario for Bitcoins in the future. This would include your best guess of their future valuation, and the reasons for your estimated future valuation. As a defender of Bitcoins, you can then justify its current design as much as you want.

What? No. Everybody who bought, mined, or sold for Bitcoins did so because they liked the way it works. You want to change the way it works. If you're so sure that your guess (and that's all it is) is correct, then why not start a competing block chain with the rules you describe? Actions speak louder than words.

I'm not going to play guessing games regarding the future of Bitcoin. It is however a fact that as the value of something increases, the effort that goes into protecting that thing increases.

Actually, as has been stated, for the value to increase, it will require wider adoption. Wider adoption means the value is spread among more users. And the key point here is: when you have 1 million users who possess a digital file that contains 100x where x is valued at y, or 100 million users who possess a digital file that contains 1x where x is valued at 100y, you still have the same total value per user, and thus, rationally, each user applies the same measures to safeguard it, regardless of the value of a single unit.

Honestly, is that your argument? That the increased value of Bitcoins will result in an overall increased effort to safeguard it?

Distribution of bitcoins is not homogeneous. That is your first invalid assumption. Some people will have a lot of coins and will in all likelyhood be willing to spend some of it to create additional security infrastructure for Bitcoin. I can't imagine any security infrastructure good only for those with lots of bitcoins, or any benefit to them for keeping it to themselves. Especially since greater security could lead to greater adoption and a higher price.

Yes, that is my argument. What is your aversion to creating a fork with your changes?

I'm not complaining.  But this is exactly the kind of demeaning comment I was talking about.  Do you always have to end every post with an insult to someone?

There are people who like to improve the game rather than just run away and play their own game.


Then I respectfully invite you to not participate in this thread anymore.  Seriously, it's not doing any good.  And for the record, while I agree with ascent's assessment of the problem, I also believe that it is not likely to be an issue for a long, long time and am personally in no hurry to see any solution applied at the moment.

Seriously? All you've been doing is complaining about people shitting on this idea. Some ideas deserve to be shit upon. If you can't handle that, it's not my fault.


Look at the responses in the thread. Very few people want this "feature". Thus, it is not an improvement from the perspective of the current user base. The only rational thing to do, if you (not you, ascent) continue to insist that this is valid fix for an actual problem, is to implement it yourself and show people that it works.


Yeah, I'm done. I can only say so many times in so many ways that I really don't think you will find support for this idea, and if you really want it done, do it yourself. Too bad I can't hide this thread from my "unread replies" page.

You seem to think that you are using a currency system with a contract that states the rules are fixed and will never change.

You should re-read the rules of bitcoin because you have missed a big one.  The rules are set by a majority of the miners (with the consent of the majority of people sending/receiving transactions).  If the majority of users vote to change the rules (by using software that implements new rules) then the rules are changed.  You know (or should know) this and implicitly agreed to it (by using bitcoins), it is part of the system and has been from day one.  Your bearer certificate example is simply not relevant.

Joining the party late here, but has anyone compiled meaningful statistics on how old the oldest coins are? If, at some point in the future, it turns out that a very small fraction of coins have either been lost or have never been used for X years, then it may be in the interest of the majority of users to adopt this new strategy.

IMO it's worth talking about this now, but we won't know whether it will be beneficial for the majority of the network until at least X years have actually passed, so it's not worth considering such ideas until we have the raw data.

Arguing whether it feels like a good idea or not without actually crunching the numbers is a flawed way of looking at things. Let's see some research folks.

It'd be nice if bitcoin supply was fixed at 21 million rather than deflated over time.

The major down-side to this is how it would affect things like Casascius coins. People would need to redeem their coins at least every 7 years, which takes away from their usefulness as a savings vehicle.

Maybe an option could be given to lengthen the period of time that a particular set of bitcoins doesn't require a heartbeat, to for example, 30 years, by paying an extra high transaction fee. That would be a sufficient amount of time for Casascius coins to be useful. Paying to have your coins re-minted once very 25 years I don't think is overly costly and probably necessary any way as the hologram and the material that the private key is printed on could start degrading after a couple of decades.

Any way, there's next to no chance of a change this big being made, if only due to the programming complexity of doing it right, never mind community disagreement, but FWIW, I think it'd be good for bitcoin.

This is certainly not true. Miners do not have absolute authority over bitcoin's rules. In fact, they exist only for one reason, and that is the only thing they can decide: they ordering of transactions. They decide over bitcoin's history in the global ledger, but can only accept otherwise valid transactions into it. They have the power to postpone transactions, possibly indefinitely, but cannot change the rules that make a transaction or a block valid.

There are some rules that are fixed. Obviously, they could be changed if 100% of users and miners alike agreed to, and every single one would upgrade. But that doesn't surprise anyone, I hope. Among the things that cannot be changed is the maximum allowed miner subsidy (which is current 50 BTC per block, and halves every 210000 blocks), or the structure of transactions.

Lost bitcoins don't need any solutions.

+1 for just not letting the block reward run out.
Besides the problem of lost coins it also solves a big risk of most miners quitting when the reward dies out (nobody really knows that transaction fees will be enough) and the network is going to be vulnerable to attacks.
What are we really loosing? The block reward will not introduce that much inflation, because the absolute value of bitcoin produced will be less and less when compared to the total amount of bitcoins out there, and a tiny inflation is much better than limited amount of coins ever causing deflation (because of wider and wider bitcoin adoption, which is inevitable), because that only stimulates hoarding!



No, BeeCee1 is right. The miners do decide. Even if everyone else would screw them and start a new currency, who would mine? Miners are the only ones that will ultimately make the choice.


Well just a visible majority of *miners* is needed. If things would require 100% of everyone to agree, nothing would ever get done and nothing would ever get changed )). When the majority changes, the rest will have to upgrade or stay behind with a worthless chain, even if they would change a rule that you call "fixed". (I mean it is only fixed because the majority likes it right now. There are no contracts or any guarantees of any kind.)

+10
No more so than lost gold.

The block reward design seems correct to me. I certainly wouldn't want to change that before the first decrease happens, and we see the ultimate result. My suspicion is that after it happens, we'd all like to keep the block reward decreasing as planned. Supply & Demand will rule the day, and scarcity will likely provide more value than continuing the subsidy rate.

I have not read every post of the thread, I apologize if I repeat some already discussed idea.

After laughing hard at the proposal I startes thinking that such an idea (i.e.: reclaim unused coins after some time, let's say 20 years) could have one interesting upside:
assuming that it's a miner that claims the unused (or lost) coins that could help address (or ease) the issue of mining when the base coins reward approaches zero.

So the miners would get all the fees of the transactions plus all the coins of "expired" transactions: that kind of reward (when existing) would reward the miner without inflating the money supply.

Another benefit could be reducing blockchain bloat allowing deeper pruning, but I'm unsure on that point.

A mighty wizard we need to put a powerfull anti-resurrection spell a on this forums.

I mean all the ancient magical topics get revived over and over and over again by young, foolish necromancers. We can't have this kind of power roaming freely the middle-earth. It may awaken the dead from their graves !

Just integrate Bitcoins (the solution to everything).  Topics older than 30 days become locked.  A bot puts a final locking post on the thread w/ a revive Bitcoin address.  The cost to revive is (days since last post - 30)^2  / 100 BTC.    The spell cost will keep younger wizards out of trouble (unless they have deep wallets). :)

I came here to say something similar to this, yet after reading the posts about people wanting the block reward to never end… now I'm a bit scared.

Should I one day find that the block reward has been extended or continued indefinitely, I would sell any and all coins under my control and dissolve or exit any Bitcoin related business which I am involved in.

This actually a totally awesome idea.
+10

I'm not sure if something like this should be implemented but if, I sugest time until coins expire should be average lenght of human live

A decreasing bitcoin supply lends to price instability, because there will be a greater oscillation between the market thinking the supply is too deflationary to promote a large bitcoin economy, and the market thinking bitcoin value will skyrocket due to growing usage and decreasing supply.

It also creates more uncertainty as a larger percentage of the bitcoin supply goes off-line, with a possibility, but not a certainty, that a large amount will come back into use suddenly when someone discovers an old wallet.

Re-issuing lost coins improves bitcoin's security at a time when block rewards will be much lower, and it will do so without inflating the bitcoin supply. With lost coins, either present bitcoin holders can be rewarded with deflation, or people who mine bitcoins can be rewarded for contributing to network security with bitcoins.

The latter can actually increase the value of bitcoin more then rewarding bitcoin holders with deflation, for the three reasons mentioned.


I would too, but this is a far cry from calling for block rewards to be continued indefinitely. With this, there would never be more than 21 million bitcoins, and any one that keeps track of theirs would never suffer inflation.

Any way, rest assured, there's zero chance of this being implemented. There are a lot of potential problems with this proposal too that haven't been explored since no one is taking it seriously enough to really try to find holes in it.

Oh God, not this post again.  Can you people please try to understand that saying something doesn't make it true?

Shouldn't his post be moved to the topic "deflation and bitcoin - the last words on this forum" ?
We can't have the same discussion over and over and over and over and over and over and over and over and over and over again, can we ?

Entire world economy could function using a handful of Bitcoins. 

There aren't 21M coins.  There are  21 quadrillion finite units (each worth 1E-8 BTC)  that's 2,100,000,000,000,000.

Total global money supply is ~$60T.  If entire world used Bitcoin as a one world currency then each satoshi would be worth ~3 cents.  Under any more realistic scenario a satoshi is worth a tiny fraction of a penny.  Even a 99% loss of coins would make a Satoshi sub 1 cent.

If due to deflation 1 satoshi ever became larger than the min unit necessary for commerce (for many countries that is ~$0.10 or $0.05) the number of sub units could be increased.  i.e. instead of min unit of 1E-8 it would be min unit = 1E-9 or 1E-12.

There is absolutely no reason to seize coins which haven't been used in a "while".  It is theft.  Pure and simple and worse it isn't even necessary.

While I agree completely on your position and explanation (every quantity of money is sufficient and perfectly functional for a good economy), I do not agree that this can be considered "theft":

- refresh the deposity every 10 years (or every 1 million blocks, or whatever it is) is simlple to do by hand and completely automatable, so without any risk of "theft"

- reclaim of lost bitcoins must be made from miners, and so it needs a lot of work for it, and this gives them incentive to mine. So this enables to have less transaction fees.

It doesn't matter how easy it is to avoid theft, taking/confiscating property without due process is theft.

You have no RIGHT to the property of others.  Period.  If someone makes a deterministic wallet based on a passphrase and then say gets sent to prison for 30 years you should have a right to their personal property because they didn't use it?

Confiscation of property without due process is theft.  I don't care if it is 1 year or 10,000 years.   Worse it is theft that isn't necessary.  Users should have confidence that coins they acquire are theirs and theirs alone without exception.

Ok, you make a point here.

I agree.

I think the OP has a point. There might very well be a problem, and no matter how we end up solving it, we should have some solution ready.

(If you intend to post in this freshly resurrected thread, please read the whole thing first. The potential problem being discussed isn't entirely clear in the first few pages.)

Not if the currency is designed to work that way. It depends on how set in stone you think the Bitcoin rules are at this point. The answer, I'd imagine, is "very". Still, you can't just decide that the particular cryptographically secured tokens that make up this experimental new type of currency constitute property in the "You wouldn't steal a car" sense.

"Theft", by the way? By who? Is the open source accounting project governed by a group of software developers and majority consent that you decided to participate in knowing that that's how decisions were made robbing you?

Prisoners don't have access to computers?



You mention "due process". Is Blizzard taking away my +5 Sword of Swordery because I forgot to anoint it with orc spleens last Thursday theft? Why not? Because of the EULA? What if Bitcoin had a similar "we are not responsible for whatever happens to your money as a result of changes to the protocol adopted by means of majority consent" agreement? Would that change your opinion (of the "theft" aspect, at least)?

If you want to get really technical, they're not taking your money. You are free to stay on the old chain with everybody else who thinks the new rules are bad.
Don't get me wrong, I think implementing some sort of stale coin expiration should be a last resort. A big, red "use only if absolutely necessary and with the consent of a significant majority (which is the only way it could possibly be implemented anyway)" button.
Would it be theft, though? Absolutely not. No more than the government reclaiming a plot of land from somebody who's been missing for the last 100 years.

It isn't a problem, it will never be a problem.  The entire global economy could function on 1 BTC.

Confiscating property is theft.  You don't own anything on Blizzard's servers.  Those conditions are made perfectly clear.  Anything you do on their servers remains their property.  If you don't agree then you can choose to not use Blizzard's products.


But it wasn't designed to work that way.  Bitcoin was designed to be IRREVERSIBLE.  This isn't a minor protocol technicality it is a cornerstone of the entire social contract between participants.  Bitcoin tx can never be reversed.

There are no problems with lost coins. And there will be no problems with it.

This currency is designed to work fine even if 90-99% of coins are lost.

Looks like you are living in a very strange country :)
Average prisoner don't have even a phone, decent food or good healthcare.

Yes, I hope this change will never win the "voting" :)

In many parts of the world leaving "lost" land as is may me bad, but no one will be hurt by "lost" bitcoins.

Fixed that for you.  If every single BTC already mined was lost today, the currency would still work just fine.  In 200 years, long after the subsidy was done, even if only a single satoshi remained, the currency would still work.

Bitcoin uses a scaled integer representation.  We can change the scale factor to renormalize, if needed.  We will almost certainly do it to match future CPUs many decades before we need to do it for economic reasons.

What difference does it make how many bitcoins there are or how many are lost? And as mentioned before what if the bitcoins are just offline?
The overwhelming majority of mine are NEVER online and may remain so for 20 years. I would be awful pissed if one day I cashed some out, only to find they have been given to someone else because it was thought they were lost. It would be like someone re-selling my certificated stocks or bearer  bonds because no one knew where they were.
No thank you, lost means lost.

Another thought:  What about just increasing the mining reward based on coins that haven't moved, but without destroying those old coins either?

For each coin that hasn't moved in 10 years, generate a new coin with the next block for the miners.  Have it be a rolling 10 year period.  And to prevent inflation, if adding more coins would bring the total number of coins that HAVE been used in the last 10 years up above 21 million, then don't add more coins.

Example:
- Joe loses a 20 BTC wallet in 2012.
- Jan loses a 30 BTC wallet in 2012.
- Jack loses a 10 BTC wallet in 2013.
- 10 years later, in 2022, a block is generated, and the mining reward for that block is 20 + normal reward.
- A mining reward of 30 BTC is also generated in 2022 for Jan's lost wallet.
- In 2022, Jan finds an old backup of her 30 BTC wallet.  She spends the coins.
- In 2023, no additional mining reward is given for the lost 10 BTC wallet, since the current coins circulated in the last 10 years is more than 21M (well, this would be assuming that all 21M coins have been generated, but still, you get the point).

So, it wouldn't ever cause much inflation of BTC beyond 21M, but it would help prevent deflation from lost coins.  I know some of you don't think deflation is a bad thing, but I do.  An ideal currency would be neither deflationary nor inflationary.

Holy hell, did either of you actually read the rest of the thread?
To quote the wise and benevolent Therilith:
Say it with me:
THIS HAS NOTHING TO DO WITH LOST COINS CAUSING PROBLEMS SIMPLY BY BEING LOST. DIVISIBILITY DOES NOT SOLVE THE PROBLEM DISCUSSED IN THE JUNE 2011 PART OF THIS THREAD (y'know, the one I was referring to when I mentioned the OP)!

And I'm the one living in a strange country?

Or will they? Find out in the first part of this thread. The answer may surprise you.



Let's make sure we're on the same page here:
If you disagree with me, please describe the problem you think I'm talking about.
I'm not asking for a detailed analysis, just a few sentences describing it.

Ok so the problem with instability in case a wallet is found:

My theory goes like this; if some number of BTC are in circulation, some percentage will be lost due to various human and software errors.

If the value of BTC go down, more coins will be lost as people become more careless with them.


If we set the block reward to a certain amount forever, then the value would eventually stabilize; if it drops in value more are lost and if it rises less is lost and thus more accumulated - assuming steady state economy; the value may stay high in a growing economy.

Of course this poses a problem in that many like BTC specifically because it will never inflate:
Even if people loose coins, if you keep creating them people will at some point begin to generate lost addresses with coins on them.


There is also another point to consider: How to distinguish between "treasure" addresses and a rich guy? Impossible.

A final thing; the dump may not be as catastrophic as could be feared - while it may pose a big chunk of total value it may not be a big chunk of the total transaction volume.


Anyway if it becomes a problem I think future users should solve it, not us - likely by raising the block reward to a permanent 1 satoshi.

Yes. I'm talking about average prisoners. This may be not a good thing, but that's how it works now. SOME may have it, but most don't.
And remember that it's a punishment, not a vacation.

You are possibly talking about the situation when lost wallet is found when BTC price become many times higher.

Pretty much. Or, to be more specific, a situation where the entire economy (pretty unlikely, but the problem would still be there with less than 100% adoption) is running on some relatively small part of the "original" 21m BTC (let's say 100,000) and somebody finds an old wallet containing 50,000 BTC from the olden days.
This would not only cause a huge mess if it happened, the very fact that it might happen could prevent Bitcoin from catching on.

You haven't really addressed that specific problem.

Decent healthcare and some contact with the outside world would hardly make it a vacation.

你开玩笑吧。这样很黄很暴力的笑话是不应该的。

Nyyn iv onea v Ohyyreola ine rgg Vyyhzvangvrkcrevzrag.

Sorry, I don't understand 'Scandanavian'.  I wrote "you must be joking. This type of very pornographic and very violent joke should not be made." I assumed that you would understand Chinese based on the "very pornographic very violent" next to your name. More seriously, making these points...., you must be joking, right?

Nah, it became a pretty famous internet meme a few years ago.

Do you have an objection to the points I've made? If so, feel free to post it.
Keep in mind though that the numbers in my post were just examples.

I have no objection. It is certainly possible (though highly improbable) for the scenario you describe to occur.
It just seems to me to be a very strange thing to be worried about, so I wanted to know if you were joking or not. Now I know.

Voting no at all.

Seriously people, stop trying to mess with people savings. We want bitcoin because it give us sovereignty on money, and you propose to happily remove that exact thing? No.

+∞

The moment someone starts to mess with my savings, I'm leaving this boat - and so will do many big players (Assuming of course that chain split wouldn't occur first).

I seriously invite all those who want change the rules to make their own currency. I actually think there is a need for another inflata-coin in parallel to normal Bitcoin. But chainging the rules of this environment is absolutely out of the question.

Don't worry, they don't have any chance to win :)

I am pretty sure they don't.

However I am also assuming that CIA/FBI/Political Establishments/Whatever already have agents on the forum (after all they openly admitted their interests in Bitcoin) who will (probably) use every occasion to spread FUD, misinformation & propaganda.

You never know who are you talking to or how many of them is already here. So it is important to stop inflationist lies sooner than later.

So you'd rather have absolute control of worthless money than slightly less than absolute control of valuable and useful money?
I'm not saying that this problem is inevitable or, if it occurs, fatal, but your post is just such a laughable oversimplification...
Besides, you would still be just as sovereign as you are with regards to any other kind of property.

(In case that was directed, in part, at the proposed solutions to the uncertainty/massive overnight inflation problem:)
Do you seriously think that a fork that introduces short term (mostly emotional) discomfort to solve a potential long term problem would have any chance of catching on?
Believe me, I'd love to live in a world where that was the case, but I don't. And neither do you.

Yes, I seriously believe that when you make something good, and it is free and open source, people will come and support you.
That is the way Free Software works, it always has been this way since the dawn of GPL and Linux. This time is not different.

So just make a better currency, advertise it, publish a whitepaper like Satoshi did, and repeat the success of Bitcoin. If your conception is worth it, people will follow. It is that simple.

But perhaps the problem is, that the conception is not worth it, and this is why stealing other people's money through "wallet heartbeats" or some inflationary bullshit will fail.

Yep. I would sell my BTC that day and move on to real estate, art, and my angel investing efforts.

You seem to have missed something important: A great many people are myopic gits. If you want to create a stable system with a large user base, it has to be myopic git-proof.

I suppose gmaxwells idea (https://bitcointalk.org/index.php?topic=20799.msg267555#msg267555 (https://bitcointalk.org/index.php?topic=20799.msg267555#msg267555)) would actually be a better solution. If you leave a pile of money lying around in a crowded mall completely unguarded where anyone can see and take it, you can't reasonable expect it to still be there when you get back.

Oh, and some obligatory sarcasm:
You want P2SH? Create a new currency and convince people to reprogram their apps, transfer their money and start over from scratch trying to promote it to the public.

How dare people try to keep everybody's money from becoming worthless!
Seriously, if you don't think there's a problem, explain why. If you have a better solution, explain it.
So far the only argument you've come up with is "Nu-uh!"

+1

Personally, I consider the coin creation function (50 BTC every 10 minutes, halving every 4 years) and rules for whether or not you can spend the coins you have (if, and only if, you can satisfy the scriptPubKey by creating an ECDSA signature then you can spend them) sacrosanct. Them's the rules of Bitcoin, change them and it ain't Bitcoin any more.

Extending Bitcoin to new and wonderful types of transactions is fine, and, actually, I believe Therilith could build most of what he wants on top of Bitcoin using pre-signed fee-only non-final transactions with a lockTime 10 years in the future.

Convincing people to agree to do that would be another thing all together...

I don't think you are interested in wonderful types of transactions, may be even the opposite.
Now the rules are more strict and inputs are being checked for being standard too :(

We had the chance to enable more opcodes inside P2SH, but it didn't happened...

Write up a proposal, start experimenting on testnet, recruit people to think really hard about how whether or not what you're proposing could be abused to compromise security or could make a denial-of-service attack easier...

I'm against changes that might make Bitcoin a tiny bit better, but if you've got a well-thought-out proposal for how to make Bitcoin much better in some way then I'll help you argue for it.

I agree too—

Though I would point out here that at some point in the future we may find that we need to upgrade cryptosystems for security reasons... and that if we don't _eventually_ deny the spending of coins sent to the old insecure system then we could well find that enormous deposits of zombie coins suddenly appear due to cracking and that their rapid unexpected introduction into the economy is very much not what anyone signed up for and could be disruptive.   So it would make sense to sunset insecure transactions.

Someone arguing for regular long-horizon sun-setting, instead of just a one time event, might have a lot more success arguing it at that time.  In particular, it would be much less bad if you know _in advance_ that you will have to heart beat your coins once a decade, then it would be to find out later that cryptosystem breaks mean you'll have to do it.

I see yuur point, but you are not entirely on topic.

The topic author is not suggesting to "sunset" coins for security reasons, but for some bullshit semi-inflational reasons, which is plainly wrong and destroys the sancrosanct rules of Bitcoin as Gavin said.

Once the cryptography behind Bitcoin gets broken, I am sure that majority will agree that something needs to be done about old, insecure coins. In that case, i suppose it would be possible to re-hash the old coins somehow with new algorithm by sending them to a upgraded address using upgraded client.

But that is a matter for completely different discussion.

This.  When (or more likely) if ECC is compromised the most likely scenario (based on prior crypto attacks) it likely will be a partial compromise.  That is private keys must be brute forced but can be done so millions or maybe even billions of times faster.  That means that the day 0 threat to Bitcoin will be minimal.  The network will operate for a while with "legacy" addresses and new "strong" addresses.

In time though those legacy addresses will represent a risk.  A method to sunset that risk may need to be devised.  Even then it will be controversial and require some thought.  To change the protocol today in such a fundamental manner is just asinine. 

Value is relative and adapt itself to its market. If the market is 21 millions unit, the value will adjust accordingly. If the market is 8.7 millions unit like today, the value will adapt itself.

Even if in 10 years from now, there's 10 millions Bitcoin available(because the rest is lost), the market will only adjust itself to the current supply. Bitcoin will worth more to compensate for the lack of Bitcoins. It's a hard cap market, where the supply is limited. Whether the cap is 21 millions, 5 millions or 150 millions, it is still a hard cap that will never be breached.

This wallet heartbeat plays around two important values of Bitcoin:
-The supply limit
-Individual control

Supply limit for $CAN is a soft cap. You have a limit that can be modified.
Supply limit for Bitcoin is a hard cap. You have a limit, you're stuck with it.

Individual control for $CAN is shared. You can use it as you wish, but it's still the property of the Bank of Canada.
Individual control for Bitcoin is completely individual. You control it so much that you can print your own money, and you can delete your own money.

A wallet heartbeat will maximize the supply under the limit, but will never change the fact that you have a maximum, whatever the value is.
However, the wallet hearbeat will forever change the individual control of Bitcoin from "individual" to "shared".

I'm sure the intentions are good, but you're playing with the fundamentals values of Bitcoin. Changing one of these values means that it's not Bitcoin anymore. Making a new currency with that solution could be interesting, because it could offer a new set of values on the market. But you can't implement this into Bitcoin without denaturing Bitcoin itself.

A weakness, unlike a clean break, would automatically provide the sunset.  No action needed.

This thread has been interesting and has been much food for thought.
I hope all the opposition doesn't drive away the owner of the OP from Bitcoin.
Ideas being discussed even though they may have a low probability taking root is healthy and shouldn't be feared.
The idea that changing Bitcoin will kill Bitcoin is a fallacy. Here's why, it takes a pretty significant majority (specifically miners) to
accept a change like this. I would have to say that miners care more about bitcoin than anyone else. If they believe in an idea enough to
help implement it then there's no way it would kill bitcoin because it already has the backing and support of those who make it work.

Here's my thoughts on the proposal:
    Bitcoin is too knew to seriously consider implementing a fix for a supposed problem that manifests itself over a very long period of time.
The fact that it is working now is a miracle. Until events transpire that causes all bitcoin user to reflect over something specific, gaining a majority will be extremely difficult unless you have a lot of clout.
I say be patient and who knows how the culture here will change in a decade.

Personally, I believe an idea similar to yours will be seriously considered as the block reward is pushed extremely low.
The success of changing from bitcoin rewards to transaction fees is still theoretical. I'm not saying it will not work, but it is theoretical and has been the topic of much discussion.
If it does not work as some envision it then solutions will be seriously sought after. These potentially lost bitcoins may be the source to drive the economic engine of bitcoin for another 100 years after the reward is gone without exceeding the hard coded limit of approximately 21 million bitcoins.

So, be patient. the time for your idea may come.

I would put this in much stronger terms. The theory unambiguously indicates that changing from block reward to txn fees will fail under the current design unless mining becomes monopolized. A solution to this problem will need to be adopted eventually. There is a reasonable debate about what the right fix is and whether it is worth worrying about right now or not. The side that says txn fees will work as they stand is not supported by a theoretical argument.

We will return to this topic in 30 years, when it will be possible to verify these claims.

For now, stick to the matter at hand. And the matter is, we don't need any fix for a problem that neither does exist yet or it is certain it will ever exist.

Among non-lost coins I agree however "lost" coins will never be automatically sunset or moved by the owner to strong addresses because they are lost.  

Even then I am not saying action IS REQUIRED just that it MAY be required and certainly should be analyzed at that point.


The market will always adjust to the equilibrium price however such adjustments can be disruptive if there are large increases in supply or demand.  Those disruptions themselves can be damaging to the currency.

The other risk is that eventually "treasure hunting" becomes a more profitable venture that protecting the network.  Obviously that is in no-ones best interest.  Once again not saying it WILL happen but imagine a situation where ECC is significantly compromised.  As Bitcoin increases in value, the cost to brute force one private key falls (both due to deeper crypto flaws and Moore's law) the BTC per "GH/s equivelent" will rise.  If it is ever higher than block reward then it becomes more profitable to treasure hunt then protect the network.  Miners likely will do that leading to a tragedy of the commons scenario.  They may even form large hunting pools to reduce variance.

Still discussing it now is premature.  We don't know if ECC will be compromised.  We don't know how long such a compromise will take, we don't know how many coins will remain in compromised addresses.  If may never become "economical" to hunt for lost coins.  Even if it becomes economical the rate that lost coins are found may not be disruptive.  I am just saying that if ECC is compromised there MAY be a need for sunsetting compromised addresses.

If we did need to sunset "legacy" addresses I would advocate for permanent coin destruction rather than confiscating.  It removes the moral hazard.

The issue with the thread is it seems to things which are unnecessary are being advocated:
a) sunset addresses even if no compromise occurs
b) confiscate the wealth

Even if you agree that massive market disruptions are damaging neither are needed.  If the coins are spent after long inactivity and addresses algorithm isn't compromised then the coins were never lost.  It would be no different than Satoshi today dumping 1M+ coins on MtGox.  While not the smartest decision nobody has a right to say he "can't" and we need to confiscate the coins to make sure he doesn't.    If ECC algorithm isn't weakened there is no risk of large amounts of truly lost coins being "found".

On confiscation of wealth that is just asinine.  If the risk is not knowing if coins are truly lost then simply make them permanently lost with no profit to anyone.  The network doesn't need to have exactly 12.00000000000000000000000000000000000000000000 M BTC in circulation.   Giving the wealth to someone else creates a moral hazard.  Just destroy the coins instead.

What I want is a solution to the problem discussed in this thread. I'm not sure how what you're suggesting would accomplish that.
My defense of a sunset limit has been based on two things: It not being nearly as horrible and evil as some people seem to think and it being a potential solution to the problem. If the problem did not exist (which I still believe it does), or if someone could offer up a better solution, I would not support the implementation of said limit.

You say "market readjustment", I say "significant and harmful economic disruption". Both would be accurate.

"Don't try to solve the problem until it actually starts causing trouble".
Meh, I guess it'll be easier to convince people when they're actually staring death in the face, so to speak.

It makes absolutely no difference whether they were lost or not. The problem remains the same.

My guess is that a single entity will acquire 51% sometime during the next block reward cycle. (that is during the period when the block reward is equal to 25, starting in December of 2012). If the individual is malicious (admittedly unlikely), the developers will likely be taken by surprise and won't have time to save the blockchain. This idea of waiting for bitcoin to die before taking precautionary measures is foolhardy.

51% attack won't destroy the blockchain...
Also 51% is actually not enough to perform massive scale attack. You should have few percent more, which is highly unlikely (for example, if deepbit became the adversary, large percent of users would stop using it instantenously).

And we already have a contermeasure against 51% attacks - decentralized mining pools. If only people used them more often.

So increasing inflation by any means is not necessary. What kind of solution is that ? This is common thievery, nothing else.

But there is _NO_ problem. And there is _NO_ hard evidence that it will become a problem.

It won't take anyone by surprise, and the blockchain won't need saving. There's nothing to save it from. There's just not a whole lot of damage you can actually do with 51% of the hashpower. Block other people's transactions? The transactions will get through the instant you lose your 51%. Double-spend your coins? You'd need to double-spend a lot of coins at once to make it worth the amount of money a 51% attack would cost, because it only works once: as soon as your coins are first double-spent, everyone will realise that the network is compromised and will refuse to trust any future large transactions until it's clear the attack is over, at which point it's business as usual again. No precautionary measures are needed because the network is already designed to handle this threat.

Why would the attacker stop the 51% attack? Say you are Paypal or VISA or a government agency. Destroying the network is like squashing a bug. You built up 51% to destroy the network. It is a pretty fucking trivial investment from your perspective. Maintenance cost of the attack is trivial. There is just the upfront capital cost. In addition, by selling on the way up or postponing the attack date, the investment partially pays for itself.  Why would the attacker allow someone else to recapture 51%?  Why would anyone invest the resources necessary to recapture the network from a determined attacker? It is not likely to work since the attacker can invest resources too. Even if the martyr is successful, then he will still have wasted a large amount of money. I am skeptical that anyone will fuck themselves royally to save the currency.

The network's days are numbered.

1. You completely ignore sociological & geopolitical aspects of such an event. Such a large operation would be a direct proof that Bitcoin is a danger for current establishment, which could cause MASSIVE surge in publicity for Bitcoin, which would bring a lot of new people into mining business.

Every action has a reaction, you simply CANNOT ignore that.

Let's consider a scenario. Let's assume that FBI/CIA/Other US govt agencies start a new supercomputer, and gain 60% in one day.
But there is no action without reaction. China & other countries who don't like USA immediately assume, that Bitcoin is probably a danger to US dollar and because China really wants to get rid of dollar, they put one of their newly built supercomputers into mining Bitcoins, so dollar will fall even more quickly.
Also, other "wild" miners join the game - some (ideological) to protect Bitcoin, but most because USA admitting that Bitcoin is dangerous confirms that is it valuable. So not only the attacker's network share drops below 40 or even 30%, but Bitcoin value skyrockets.

2. Increasing inflation by sunsetting old coins is in no way solution to this.
So your entire reply is decidely not on topic (as is mine, unfortunately).

Now that I read your cogent argument, I'm convinced that China will step in to save the network. The network is not in danger at all and never will be. Hats off.

http://i.qkme.me/3oq8jw.jpg

(Well i guess I'm not used to people giving up so quickly in long discussions, but that's OK too)

Sorry for reviving a 2 month old thread but upon insight then lost bitcoins really wouldn't affect the bitcoin economy.

The lost bitcoins would be so negligible, even now it is definitely negligible.

Since bitcoins go up to 21000000 in integers, that's quite good. It also goes in the decimal places as well.

If .00000001 BTC became worth $1 in the future if it were globally adopted by many people, then you could easily revise the client to handle that in integers instead, and "move" the decimal place out.

Realistically, we can represent 2,100,000,000,000,000 units.

The amount of lost coins is probably very small, and you could just possibly add more decimal places in the future to bitcoin to accomodate rising deflation, which would make bitcoin theoretically infinite despite the "finite" 21,000,000 coins.

This is also a reason why introducing endless inflation would be such a bad idea.  

I wouldn't say the amount of lost coins is going to be negligible or small over time.
Just imagine 1 million Satoshi's coins (which AFAIK haven't moved yet) would be considered lost at some point. That's 5% of the whole Bitcoin economy no matter how much further you divide the units. Another half a million belongs to a dozen of other guys who jumped in early.

So this problem will have to be solved in the future, but we should also take into account how and when the original Bitcoin idea was introduced into our society. Having a limited amount of coins is very easy to explain to people tired of endless and unsustainable inflation carried out by their governments. People wanted a return to the Gold Standard and having a limited amount of coins is an easy sell. So I guess it was more important to get people attracted to a whole concept of P2P currency where they essentially control the rules of money generation and then later people themselves will decide what inflation rate and policy is best for them.

PS: Regarding Satoshi coins and another half-a-mil, I really believe that people who invented Bitcoin to save us from the current system will spend their millions of bitcoins for the betterment of humanity and peace on Earth :)

PPS: I do not support original idea of wallet heartbeats. I'd love to live in a remote village for 10 years and be sure that my coins are safe when I return back to civilization.