Because as the network grows, the resources required to store those many old transactions grow at least as much.  New clients must download and verify each of those transactions for as long as they persist.  A single transaction with 400,000 BTC costs exactly the same amount to store as the same transaction with 50 BTC; but one person with holdings totaling 400,000 BTC spread across 8000 transactions imposes 8000 times as much burden of resources upon the network.  The idea is to encourage that person to consolidate his holdings into fewer transactions, without forcing him to do so, as he can still choose to leave them where they are if he is okay with 8000 times as much storage fees as is necessary.  It also has the effect of partially compensating the miners for the resources that those many transactions consume; not just 8000 times as much disk space, but 8000 times as much bandwidth for every new client that connects to that node to download the existing blockchain.  Currently, it still doesn't matter; because the miners are more than compensated for these things with the block reward and blockchain pruning is not yet implemented anyway.  I'm just thinking ahead.

Traders are also already charged for this privilege.


I don't contest that, which is why I thought the idea (someone else's) to charge the demurrage rear-loaded upon eventual spending was brilliant.

It's only so expensive now because the economy that it represents is so small, and the inflation rate is so high.  That ratio will change with the growth of the economy and the first block reward cut.

This is not quite what I intended.  Older coins are not more expensive than newer coins.  Several dispersed transactions holding one person's funds is ore expensive than fewer transactions holding that same total.  It just tends to be more likely for older transactions because savers who have more bitcoin in total than is required for regular trade have a security incentive to spend the most recent matured coins before the older coins.  The default client behavior is to spend the oldest transactions first, but this can be changed; and thus it will if the incentive for savers to keep the bulk of their funds in many older transactions as compared to a few consolidated transactions.  I don't want the costs of storage to be very high, because I still want Bitcoin to favor capital accumulation.  It's just that there still needs to be some incentive for those early adopters to consolidate their holdings rather than keeping 400,000+ BTC in 8000+ transactions of 50 BTC apiece.

A max limit doesn't make any sense, however.  The fee needs to be roughly equivalent to the problem in order to encourage the desired behavior; which means that it needs to increase relative to the age of the transaction.

I think hitting every account for every block is a bit excessive.  Perhaps every account every retarget block instead.  Still, I think that there should be a delay of some kind.  Transaction fees already imply some period of storage.  At least a month, even credit cards give you 30 days "grace".

That said, if there were some way to asses this in an ongoing fashion, that would be preferable from an economic standpoint; I just don't think that is possible from a technical standpoint.

No.  Inflation is really the limitless growth of the monetary base, and works like a tax upon the currency's user base.  This hits savers the hardest, and is not relative to their costs.  Demurrage does not devalue the currency overall, and I'm trying to compensate the miners/network for the unfunded costs of long term storage of capital accumulation.  It's not a high cost, really.  But there is a cost, and it would be ideal to have a mechanism that can approximate the costs of capital storage found for other sound money systems.

That's the issue in a nutshell.  I don't really believe that it's a near term problem, as this probably can't even become an issue until the block reward is pretty tiny.  We are talking about 40 years at least.  Still, by that time the system will be too entrenched to introduce any demurrage.  I'm trying to predict a possible issue, long range.

Feel free to do so.  If you can trade keys off network you are not a burden to the network, and someone is going to pay the demurrage fee eventually for them and you.

And your mother said you couldn't afford it.

I mean put the rule into the default fee structure for inclusion into the fee paying section of the block.  Any transaction that pays less than the minimum is just a tip and still must wait to be included into the free section, if at all.  Not that a transaction that expects a minimum fee fails a validity check and fails to propagate.  Although that could be a form of enforcement of demurrage.

Yes, the minimum fees can be ignored by users, but it is not in the self interests of miners to accept transactions that should be paying a minimum fee based on published fee schedules agreed to by miners.  Some will always accept the transactions regardless, but they are a charity, contributing to blockchain security without expectation of compensation.

Yeah, there are better ways to earn bitcoins, just as there are better ways to save US $ than clipping coupons.  Start a business.  We need more economy, not more miners.

Don't forget, that was two clusters out of an unknown larger number of them, for which the hardware was already paid for capital.  Those fpga clusters that he speaks of were paid for by other projects, and would otherwise sit idle earning nothing between major projects if not for Bitcoin.  And they are way more energy efficient at hashing than even a GPU, which is way more energy efficient at hashing than a CPU.

Yes, android is a version of Linux.  Notice that none of the open source programmers here have released anything bitcoin related for the closed source OS's for smartphones.

Hard to say.  Too many variables to guess.



Depends on how cheap you can get it and what your electric costs are.  It would probably pay for itself if you can get a decent price for it, but unless you have free electric and AC or are heating with electro-resistive heat then it's almost certainly not going to cover it's own AC & electric costs.

I don't understand this at all.  Fee sharing doesn't change the dynamics, nor increase the likely total fees, of transactions.  It's just wealth transfer serving no obvious purpose.

Long term storage of capital is not free for the network, even though it might seem that way.  The network does suffer an uncompensated cost.  Namely, the ongoing replication of those deep transactions as new clients bootstrap and the ongoing disk storage costs, however small those might be individually, multiplied by the number of nodes.  What I'm suggesting is an incentive for capital accumulators to consolidate their holdings into fewer/newer transactions, allowing the network to 'compact' the blockchain.  Currently there is no incentive for early adopters, or anyone else with any substantial holdings, to spend their oldest transactions first.  This is the default action of the client, and this might be enough, but sooner or later someone is going to mod the client to allow users to spend newer coins first, because the deeper the transactions are the more secure they are.  There does need to be a cost for that kind of long term security, particularly if those holdings are spread across numerous transactions that cannot be pruned.  I do like the proposal of a miners' choice and rear-loading the fees.  It permits the well heeled bitcoiner to contribute to the security of the blockchain in a less direct manner, for the only miner that is likely to accept his old transaction without the demurrage fee is one that he owns or is otherwise closely associated with anyway.  If he is owner of a bitcoin bank, his old transactions can be spend or freshened without fee only if his own bank is doing the processing; implying that his financial actions directly benefit the security of the blockchain because that would have to be true for his transaction to be accepted for free in any reasonable period of time.

I have a proposal.  Using the rear-loaded, miners' choice model.  A minimum fee rule for any new transaction with inputs that are older than a year (in blocks) will have an alternative minimum fee based upon demurrage of one Satoshi ( .00000001 BTC) per retarget cycle (2016 blocks) for every input that exceeds one year since it's transaction was recorded.  This means that each input is charged for demurrage from it's inception, not the end of the first year, and the minimum fee for a new transaction with a single transaction exactly a year old would be at least .00000026 BTC.  This isn't much at all, but would still incentivise some savers to either freshen their savings once each year, consolidating their many transactions down to one while doing so, and potentially paying a transaction fee for the effort; or resolve to pay for the network storage costs upon release of funds.  This even gets demurrage upon off-network transactions wherein the private keys are traded instead, because no one saves money to never spend it, so sooner or later that has to happen.

This rule need not go into effect until the block reward is cut to 25 coins, giving the early adopters plenty of time to plan out their best course of action, most of whom will be consolidating numerous 50 BTC transactions into a single (bytewise small but BTC-wise large) transaction; permitting the network to prune even the block reward transactions from the old blocks, perhaps all the way down to the headers alone.

Also, this rule would be an alternative minimum fee, so if some other rule required a higher mimimum fee, those fees would not be additive.  It's just whichever minimum fee is highest that is required; or a miner willing to process your transaction for free.

Alright, I'm ready.  Tell me what you think, but please leave my mother out of it.

It's repeatedly hashing a collection of the transactions that have occured since the last published block, a header and a nonce.  It's looking for a hash lower than a target number that is adjusted to make the hashing intentionally difficult.  If it finds a hash that is under the target numer, your computer gets to add a special transaction to the block that it just created giving you a 50 BTC reward, and then it publishes the block that it has created to the p2p network so that other nodes can verify your success.

I don't think that it's "shitty", just that the genesis block is unique. 

Well, I have to admit that some of the concerns brought up here an in other similar threads have started to make me wonder if the situation can be improved, even though I don't really agree that it's truely broken.  I started a similar threat related to that in Economcs.

I've started a new thread related to this one in economics section.