Bitcoin Forum

The miner delivers the computation needed to secure the network.

Who enjoys network security ? In the first place those with significant holdings in BTC.
This makes me think that a demurrage (cost of storage) should be imposed on holdings that is to be distributed to miner.

Note that older transactions (means older money) enjoy higher security and until they do not move disallow pruning the merkle tree, therefore also imposing added bandwith on the network. These observations support a demurrage too.

Demurrage would also foster trade since storing money is associated with cost. Note that if storage cost is benefited to miner, then this is not inflationary and but mining (that delivers value to everyone) more attractive.

You dont get tired of throwing this idea around, do you?

If this was implemented Bitcoin would be a lot less atractive, it would not take off and basically wold make mining a lot less profitable.

You would wish it was implemented if miners realize that doing it is not profitable without it and stop securing your old coins.

If they did that, they'd have to stop securing their own coins too.

Honestly, I hope some p2p competing currency to Bitcoin appears, so they go down this route (or inflationary route, or any of the ideas that promote consumerism) so everybody can see how that currency collapses and we are done with all this discussions.

Please, go start your own currency with this system. Thanks to Satoshi and the open source code its very easy.

A miner who stops is likely to cash out too using an exchange.

Please do not get me wrong, I want this experiment to succeed and am not envying old money.

It is just economics. The system has a cost of electricity and hardware, costs have to be reallocated to those benefit.
I see two ways: Transaction costs and Demurrage. It is important to keep transaction costs low for wide acceptance.

It only need to be a tiny cost but it has to be.

Two questions:

1) Why are you so obsess on promoting consumerism inside Bitcoin? (Almost all your posts relate to this idea).

2) What would stop anyone from moving their bitcoins from one account to other so they dont become "old"?. They would not even have to offer almost or at all fee because they dont care if they stay without processing a lot of time (even better because they will be "younger").

Thanks for taking me seriously.
I am long time goldbug and no inflationtionist nor consumerist. The design of bitcoin is brilliant for a reserve currency. It try to make it suitable for trade too, because without entering the merchants and customers it will starve.


That would already a benefit to the system since the Merkle tree could be pruned. Encouraging such an action is one of the reasons to introduce a cost of storage.

The solution could be e.g.: a minimum transaction fee paid to miner of the block that is a function of age of the source.

I just watched your post history.

You say that you dont want to promote consumerism, but your proposal does just that. People would have an incentive to spend their bitcoins in things they would not have buyed in normal conditions. They would buy things they dont really need just to get rid of the bitcoins. That is the definition of consumerism.

Also, I believe that your changes go against stablishing Bitcoin as a long term real currency for merchants and customers. Here is why:


And then what would be the incentive for saving? If you do that you turn bitcoins into something that nobody wants to hold for very long because it depreciates with time. Therefore it will start a process of people starting to spend their bitcoins as quick as they can, turning into a inflationary spiral forcing merchants to stop accepting bitcoins. It would be the edn of Bitcoin.

There is a reason why you only see depreciating currencies as a very local and short term experiments or forced by governments. Its because they dont work.

There is a difference between consume and investment. A tiny cost of storage on money does not make you buy something you do not need, but makes you think on how to recoup it by e.g. running a miner that earns that and thereby securing the network.

A storage cost does not necessarily eliminates saving incentives, since all things relative. If storage cost is smaller than the effect of built in deflation then it does not change the game.

Remember that even holding gold has a storage cost either explicit for the vault or implicit by the chance that it could be stolen or lost if not in vault.


Just a side note: Gold standard was a depreciating currency in fact for thousands of years. It depreciated by the fact that new kings used to clip the old coins.

Yes, so?


Really? You really think the reaction to the majority of the people would be: Hey, lets install a mining rig! The ones that wanted to would anyways, and the rest would not anyways. Your proposal is just an incentive to spend bitcoins quickly, triggering a inflationary spiral.

Btw, you keep using this languate like tiny cost, small transaction, it needs to be done, etc... The fact that you add a subjective adjective to give the impression that it would be acceptable or that kind of rethoric does not impress me. Its a bad sign when debating someone actually.


It changes the game. You might argue that not enough, but it changes the game.


Bitcoin can be stolen as well so that cost does not apply here. As for the rest, I might own gold and not be paying any storage. But still, I dont see your point. The fact that gold has the phisical need of being sotred and some people pay for that service does not change the fact that with Bitcoin is not necesary and any competitor that tries to impose that cost will have to fight against Bitcoin, that does not.


I dont support the gold standard, and there are a lot of types of gold standard very different from each other. I dont really get your comment.

You have avoided addressing the problem of the inflationary spiral. Why would merchants accept a currency that they can not hold for long (or its devaluated) when anyone can easily create a currency that has the same properties except for the fact that it does not depreciate over time. How would your currency compete against that? (there is a reason why this kind of currencies are imposed and do not last long if done voluntarely). If you think it can, you should start your own currency and prove it.

You are right that my proposal does not make people do the right decision. I meant that storage cost might give the incentive to both not only consume.

It would redistribute money, not create any new. I do not see how it would be inflationary.

Valid point, thanks I will watch my tongue.

Yes, but not in the meaning of eliminating savings incentives. I propose it to pay those providing security of savings.

If you do not protect your gold (paying no storage means likely that), you run the cost of probability weighted loss.


If BitCoin does not offer competitive incentive to do the computation, miner might switch to an other chain that does.



My point was that there were long periods with depreciating currencies.

As for the inflation I adressed above.

I suggest we think about how to add even more attractive features to Bitcoin, usability enhancements or added features like the trust chain I also suggested.

For the Merchant BTC is not a store of wealth but a medium of exchange. He is more concerned of transaction costs, since moves much more money than he earns.

Transaction costs might become high explicitly because miner demand more profit or implicitly because unprofitable mining stops and network security endangers transactions.

It would not redistribute money in the typical sense that word is used. It would incentivate spending it instead of saving it.

It would be price inflationary because people would not want to hold it. If you destroy the demand for the currency, even without changing its supply, its value goes down because you are changing the demand.


Which is not addressing my point, since I said that said currencies do not last UNLESS imposed by force.


With the clarification I hope I make clear what I mean and you can answer to it.


But someone at some point will have to accumulate bitcoins in order to make big investments, like expanding the business. You are penalizing this type of behaviour and I predit that a lot of merchants will choose a currency that does not penalize saving if given the choice.

I honestly hope that some competing currency to Bitcoin with depreciating or inflationary characteristics appears so you and anyone else can see for yourself.


If miners do become annoyed with people having bitcoin savings, they can always refuse to process their transactions unless they give a big fee, which would be similar to your propposal. There is no need to impose it beforehand. If miners really become annoyed as you claim they can already react to it with the present implementation.

You might not like the direction of transfer but the proposal does not change the quantity of currency therefore is not inflationary through money creation.
Let me address your remaining argument the demand for currency: 
People demand for currency in my opinion for purposes including:

- medium of exchange
- store of wealth

You argue the store has to come for free. I think that:

1. usability for storage is not eliminated by storage costs since all things relative. As long as it is competitive with other storage forms does not change the game. You will not buy anything for saving that depreciates faster.
2. if store is for free people will use it primarily for that purpose and seek an other way to do exchange. Which is bad for BTC economy to grow.

Yes. In this case the force is the second law of thermodynamics. Bitcoin savings exist because energy is continually expended to keep them secure.  If savers do not pay for that somebody else does or the systems stops and saving destroyed.

I should have said depreciation of saving not currency. I think this is causing the disagreement. Neither me nor you want a depreciating currency that is actually inflation.

Cost on storage of savings is perceived by the saver as depreciation of his wealth but this is his view only. The miner who receives the storage cost perceives the same as return on investment. The currency in whole is not affected, this is not currency depreciation.


It would not be too late to balance out BItcoin between interest of saver and miner. Now these groups are nearly the same, that is why no one moans. If chance is missed, yes that gives room to competition.

Yes, I already said that. Its not monetarely inflationary, it is price inflationary.


No. Bitcoin storage is not free btw. I argue that you should not impose a artificial fee on storage. If miners decide that they dont want to support long time savers and want to charge them a more expensive fee, that is alright with me, but there is no need to have it by default. Let the miners decide their business model as they see fit.

And please stop putting words in my mouth.


It is a historic fact that savings promote long term growth, while economies that penalize savings go into consumption frencies that stop growth.

But lets avoid discussing your opinion and my opinion, and let the miners and users decide by themselves.


I stopped reading at second law of thermodynamics.


There is nothing stopping the miners from implementing this by themselves if they see its needed.


Please start the competition. I really do want competition to Bitcoin.

You reject listening to scientific arguments and repeat dogmas.

I wish for a living standard not for a religious community.

I think you are right, the current modell will not work. Bitcoins are perfect for hoarding, but at the same time it is expected that only those using it for consumption will pay the price for keeping the network secure. It seems very unlikely that this will be enough to me. However, it is only the miners who get to vote on how this is solved, so my guess is that eventually there will be some kind of tax. Either from the existing bitcoins or through inflation.

Im an engineer. I know how to recognize between science and charlatanery.


 ??? I as an atheist wish for the same. I really dont understand what all this have to do with monetary policy.

This was a rather weak argument. Try again.


We are not talking about monetary policy, but allocation of costs of a system of common interest.
Your unconditional but weakly argumented support for savings at no cost sounds like a dogma.

Thanks for the support.

I would personally rule out inflation, if miner are paid by saver and trader there is no need for it.

Miner are currently paid with newly printed money, if anything this is inflationary.

No, Im actually done. When I saw that thing about the second law of thermodinamics I realize where you are comming from and the fallacies you believe in. That theory about energy and money is false and its easily demostrable. Its not science, not even close. But I decided some time ago to not loose time with people that dont want to reason. Anyway, good luck.

I am not aware of a theory you seem to refer to linking energy with money, and If I were, I was unlikely supportive of that.

I do however believe that energy is needed to keep Bitcoins alive and secure. This universe will not make an exception for Bitcoins.

The discussion is about who picks up the bill for that energy.

Ok. Then its my mistake and I apologize for jumping to conclussions. I read second law of thermodinamycs and I though you were a monetary wacko. I re-read it and see now what you meant.

But I think its a bit meaningless, someone could argue that the miners are there to keep the transactions valid, so only people doing transactions should pay. At the end of the day you can argue all you want, but the best path of action is to leave it to the miners to decide how they want to fund themselves. And if someone is not happy about it, he/she can jump in and compete with them (or start a new currency with more like-minded miners).

Savings in Bitcoin are actually old transactions. Their security is proportional to the processing power that was committed to the chain since they were transacted. That processing power had real cost to those operating the network. This is the storage cost I refer to.

My proposal is to charge cost of storage by applying a minimum transaction cost proportional to the age of the source and amount for a new transaction.

I  need no philosophy or monetary policy behind  the proposal it stands on economic logic.

I am initiating thinking, I belive is rational, this is how things change or fork.

Yes, that were already payed.


But it is not up to you to decide what type of cost should happen. Let the miners (and up to some point users) decide what is the best course of action. Why do you want to impose your criteria over the rest? Whats wrong with letting miners (and up to some point users) decide the best way to handle the costs (and benefits) of the network? When you let people decide on their own you get amazing creative solutions.

No, one can not pay for storage in advance since the use time is only measurable in retrospective.

I am a miner and personally think the solution I suggest is rational, and some might find it even amazing and support.

Thanks for your time, your questions helped me to develop and present the proposal.

I admit it is not addressing a pressing problem until miner using home equipment feel adequately rewarded with freshly minted money. But better have a plan for the time thereafter.

Im a miner as well, and I think you (and everybody) should keep in mind that Bitcoin is a voluntary currency. Anyone can drop its use at any time, so its very important to offer a good product (the product being money) and to keep confidence. You might be used to fiat currency, but people dont use it because they like it, they use it because its a monopolly. If you start abusing with the Bitcoin users, a lot of them might drop the currency, specially if there is competition (other voluntary currencies, maybe similar to Bitcoin). Its of no use to have more of something that has little value.