Is this idea to counter lost bitcoins possible?

[bitfreak!]

No. As the currency supply increases, the effective inflation rate decreases (because it's equal to M/S where M is the constant minting rate and S is the growing currency supply). The deflation rate will likely stay constant because people having more are going to lose more. This way the equilibrium will be achieved, when the deflation rate equals the inflation rate and they cancel each other out.

That is a just a bunch of guess work, and the simple fact is that your basic premise undermines the principles bitcoin was built on as a limited quantity digital commodity.

[Rotsor]

That is a just a bunch of guess work

The only guess is that the coin loss rate somewhat grows with the money supply growing. I think that's a safe guess. You're not going to claim otherwise, are you?? Never mind that, it's wrong.

and the simple fact is that your basic premise undermined the principles bitcoin was built on as a limited quantity digital commodity.

Right. Which is the reason why neither yours nor mine solution are going to be a part of Bitcoin.

[grue]

ffs, stop double/triple posting to bump up your thread.

[bitfreak!]

and the simple fact is that your basic premise undermined the principles bitcoin was built on as a limited quantity digital commodity.

Right. Which is the reason why neither yours nor mine solution are going to be a part of Bitcoin.

What I'm suggesting does not undermine the principle of limited quantity in any way. It only suggests a way to maintain a more stable money supply instead of one which deflates infinitely.

[DeathAndTaxes]

Your proposal undermines the principal that transactions are irreversible.  Reversibility is a slippery slope.  The optimal growth rate of a money supply would be the rate of economic expansion.  How far is it from "we must remine coins to avoid losing them" to "we must have a cartel of elite miners adjust the mining (and coin destruction rate) in order to maximize economic output.  We can call this the "federal mining reserve".

You seem to not realize that your proposal as dubious and impossible to implement as it is still wouldn't achieve a stable money supply.  As posted in the other thread. If the money supply shrank by 0.2% per year over 150 years the supply would be ~740K BTC in 2162.  If 200K BTC were lost in the first year (more than that have never been moved after being mined in the first year) you would be looking at a massive annual inflation being forced onto a system which has adapted to gradual deflation of the course of decades.   I can't think of anything which would cause MORE volatility and chaos.  Even after that first year it would be boom and bust cycles as coins weren't lost in a continual basis there were spikes and peaks.  So the money supply would not only NEVER be fixed (it would never reach 21M BTC not once ever) it also wouldn't even be STABLE.  Inflation would not only be high some years it would be chaotic and random.  33% one year, 8% the next, then 27%, then a period of 4-5 years with 1% inflation, then a giant spike up 40%.  Utterly crippling to any economy.  Worse it would be totally pointless.  If Bitcoin is still around in 150 years it means it MADE IT.  It doesn't need fixing.  Ironically after 150 years of success it would likely be the "fix" which killed it.

[Meni Rosenfeld]

I would like to mention in this context something which does not get the attention it deserves.

It is plausible that the currently used version of ECDSA will be broken eventually. When weaknesses start to be found people will start moving their coins to more secure addresses. But the lost coins will remain where they are, and when it is finally broken, whoever does it will find himself with a huge treasure of coins. This isn't stable and is not how Bitcoin is supposed to work.

I think we need to consider agreeing that some time after the signature algorithm shows weaknesses, we will delete all old coins to which the keys were lost. It's either that or have them all suddenly move to one party.

[Peter Todd]

I would like to mention in this context something which does not get the attention it deserves.

It is plausible that the currently used version of ECDSA will be broken eventually. When weaknesses start to be found people will start moving their coins to more secure addresses. But the lost coins will remain where they are, and when it is finally broken, whoever does it will find himself with a huge treasure of coins. This isn't stable and is not how Bitcoin is supposed to work.

I think we need to consider agreeing that some time after the signature algorithm shows weaknesses, we will delete all old coins to which the keys were lost. It's either that or have them all suddenly move to one party.

For the record, I think discussion of that kind of thing is appropriate on the main development board. While technically it's a different cryptocurrency it's plausible that necessity would demand such a move and it's also plausible that the user-base would consider the economic principles as not changed enough to matter. After all, the assumption is the coins are lost, therefor ensuring they stay lost doesn't change anything for the majority of coins. Equally such a scenario is likely to have at least a few years of advanced warning as mathematics advances.

[Rudd-O]

The beauty of Bitcoin is that it is voluntary. You can fork it and implement your idea, see how it goes. Like e.g. freicoin. Want taxable Bitcoin? You can just implement it. It won't apply to existing Bitcoin, but if your ideas are sound, others will choose your coin over Bitcoin. Being voluntary, no one can impose new rules after the fact that could damage existing money holders.

I love that.

[SimonL]

bitfreak,

When I first started using Bitcoin I knew exactly what I was getting in for. I have also heard these tired arguments over, and over, and over again. I can tell you without a doubt that when I signed up to use Bitcoin, I signed up to use it in it's CURRENT state. What I mean is that Bitcoin, as it stands now, is in heavy favour of those that possess Bitcoins. What you are essentially saying by "feeing up" "lost" coins, is you want to swing it the other way BACK towards those that don't have Bitcoins yet, you want to ease some supposed deflationary spiral that will work against those that don't hold Bitcoins. What I know is this, right now, my Bitcoins are MINE, not the networks, not Satoshi's or the developer's, not some government's, not the UN's, MINE.

Now YOU come along, the white knight that you are, and want to "help recover lost coins" by making everyone that did the right thing, ring in their coins on a regular basis. I don't give a damn if it's 200 years, it's not the time factor, it's that fact that you have decided to strip us of a right bequeathed to us when we decided to use Bitcoin, and that is the IRREVOCABLE power to transfer possession of coins from one person to another. You want a constant financial census so that you know where all the money is, you want to know who still has control of what, and how much is being used, otherwise it gets stripped from the legitimate coin holders. I never signed up for your BS, and I can tell you right now, if this idea ever did get entertained, I'd sell up in a heartbeat and move to a chain that didn't treat coin holders like schoolchildren that had to sound off for attendance unless they wanted detention.

[FreeMoney]

Considering that the vast majority that will ever be lost are already lost all this proposal does is make the supply increase wildly when these coins are eligible for 're-mining'. Whereas from here everything is smooth. Never gunna happen. The idea of even potentially taking away someone's multi-generational savings is disgusting anyway.

[TalkingAntColony]

While coins (I.E. values of certain addresses) may be lost, no true value is lost to current bitcoin users. Since bitcoins are infinitely divisible, an entire economy could run off of 1 BTC. All the "value" in the bitcoin market would be stored in that 1 BTC and not the "lost" coins. Bringing back lost coins would redistribute the value in the bitcoin market away from the current users in an unfair way. Redistributing the coins proportionally to current users would be equivalent to doing nothing, as has been previously stated, because the total value in the bitcoin market would remain the same. It is like when the Fed prints USD, the total value of the USD market is the same, but some of that value is redistributed to the newly printed money (and taken away from everyone else.

[DeathAndTaxes]

I would like to mention in this context something which does not get the attention it deserves.

It is plausible that the currently used version of ECDSA will be broken eventually. When weaknesses start to be found people will start moving their coins to more secure addresses. But the lost coins will remain where they are, and when it is finally broken, whoever does it will find himself with a huge treasure of coins. This isn't stable and is not how Bitcoin is supposed to work.

I think we need to consider agreeing that some time after the signature algorithm shows weaknesses, we will delete all old coins to which the keys were lost. It's either that or have them all suddenly move to one party.

I don't think we need to agree to that at all.  Who makes "you" (to mean not just you but anyone who feels they have the authority to control the wealth of others) to decide when wealth should be confiscated in order to protect others.  You are the bitcoin "elite" you need to protect others by confiscating their wealth?  You are talking about the role of a state.  The elite protecting the masses by confiscating wealth through force.  Bitcoin is dead if/when the "self proclaimed elites" out of fear decide they need to protect it by confiscating wealth.

[Peter Todd]

I think we need to consider agreeing that some time after the signature algorithm shows weaknesses, we will delete all old coins to which the keys were lost. It's either that or have them all suddenly move to one party.

I don't think we need to agree to that at all.  Who makes "you" (to mean not just you but anyone who feels they have the authority to control the wealth of others) to decide when wealth should be confiscated in order to protect others.  You are the bitcoin "elite" you need to protect others by confiscating their wealth?  You are talking about the role of a state.  The elite protecting the masses by confiscating wealth through force.  Bitcoin is dead if/when the "self proclaimed elites" out of fear decide they need to protect it by confiscating wealth.

That's all well and good, but if ECDSA is ever broken there will very much be an elite group confiscating wealth whether you like it or not. The question is how much wealth do we allow to be confiscated? Some of it, or all of it?

[DeathAndTaxes]

That's all well and good, but if ECDSA is ever broken there will very much be an elite group confiscating wealth whether you like it or not. The question is how much wealth do we allow to be confiscated? Some of it, or all of it?

What would be elite about this group.  If ECDSA is broken wide open without warning Bitcoin is effectively dead anyways.  Massive amounts of wealth would be transfered before any such new address type could be created.  The probability of that happening is roughly zero.  What is more likely is that ECDSA is "compromised" meaning that one can attack it faster than brute force (although still needing massive, massive amounts of computing power).  One would essentially see "mining" of existing addresses a process which probably would take on the order of decades to "confiscate" all of it.

That is far better outcome than some cartel of "elites" forcing their will on the people in order to protect them.  I have enough government already.  I don't need another one to worry about INSIDE my currency.    If the consensus is stupid enough to allow such a rule to be passed they will allow other rules to be passed in the name of "security" and honestly it means the population is too dumb to keep Bitcoin secure.  Bitcoin is dead IMHO if it happens but I hope that will never happen.

[Peter Todd]

What would be elite about this group.  If ECDSA is broken wide open without warning Bitcoin is effectively dead anyways.  Massive amounts of wealth would be transfered before any such new address type could be created.  The probability of that happening is roughly zero.  What is more likely is that ECDSA is "compromised" meaning that one can attack it faster than brute force (although still needing massive, massive amounts of computing power).  One would essentially see "mining" of existing addresses a process which probably would take on the order of decades to "confiscate" all of it.

That is far preferable than some group of "elites" forcing their will on the people.  I have enough government already.  I don't need another one to worry about INSIDE my currency. 

You're right that ECDSA will not be broken overnight; theoretical weaknesses will be found first, and those weaknesses will turn into something more concrete in the span of a few years. But your idea that the weakness will just be an issue of "attacking faster than brute force" is dead wrong: the margins between insecure and secure are enormous, yet this actually means that successful breaks tend to go from "theoretically broken" to "totally broken" in one step. This is nothing like mining as we know it, because the rate at which that happens is totally uncontrolled. In addition, without a plausible plan to deal with a problem like that we will see the value of Bitcoin collapse as the ECDSA weaknesses get closer and closer to an actual break.

Like it or not in such a scenario killing off probably-lost coins is reasonable and the user-base has a real chance of agreeing to it. Or to be precise, the user-base will decide to adopt an alt-coin to replace Bitcoin that has those rules and and decide that the alt-coin has value and Bitcoin does not.

This has happened before: the value overflow bug was "fixed" by everyone deciding to adopt a new alt-coin overnight, that happened to be almost identical to Bitcoin but without that broken rule. That alt-coin was so popular, and reasonable, we call it Bitcoin.

[bitfreak!]

The beauty of Bitcoin is that it is voluntary. You can fork it and implement your idea, see how it goes.

I don't want to create a new fork of bitcoin, I have no intention to do so, nor the skills to do so. I want to make bitcoin more economically sound and stable over the very long term. Sure, the network could continue operating with only one BTC, but that is not healthy or sound in the long term. The fact this argument has been turned into some vendetta against a cartel of elite bitcoiners is absolutely ridiculous.

[TangibleCryptography]

You're right that ECDSA will not be broken overnight; theoretical weaknesses will be found first, and those weaknesses will turn into something more concrete in the span of a few years. But your idea that the weakness will just be an issue of "attacking faster than brute force" is dead wrong: the margins between insecure and secure are enormous, yet this actually means that successful breaks tend to go from "theoretically broken" to "totally broken" in one step.

Please provide a single example.  It took roughly 15 years for MD5 to go from theoretical attack to "fully broken" and even today it requires a huge amount of computing power to cause a MD5 collision.  At each improvement of the attack it still required a huge amount of computing power but the speed improvement over brute force grew by magnitudes.  Almost like mining but in reverse ("difficulty" declined over time).   Note this doesn't mean MD5 should be used, there simply are better safer algorithms but the idea that it went from academic to "instahack" with negligible computing power is simply innacurate.

As another example SHA-1 was deemed "compromised" in 2005 however even today a collision attack takes 2^61 operations.  Although this is 524,288x faster than brute force (2^80 operations) it is still hardly useful in the real world.  2^61 in Bitcoin mining terms would be on the a difficulty on the magnitude of 536 million.*  Granted SHA-1 and SHA-256 are incompatible ciphers but it is useful to illustrate that even SHA-1 as compromised as it is for 8 years still requires a staggering amount of computing power to find a collision.  For example if Bitcoin were a SHA-1 hash of the public key and the entire network of Bitcoin miners repurposed their hardware to cracking addresses they could (combined) find a collision for roughly 1 address per day (that excludes the public private key generationt time so realisticly it might be more like 1 addresses every 2 days).   Granted under such a scenario it would be wise to split up coins into smaller addresses, and work towards a solution but the idea that it would result in millions upon millions of coins being compromised in a matter of seconds is just hyperbole.

Third example (and this is the big one).  DES (digital encryption standard) was a precursor to AES.  A theoretical vulnerability was discovered in 1991 however it was AFAIK never used in any attack because DES was simply brute forced.  By 1999 at a construction cost of roughly $250,000 the EEF built a dedicated DES cracker which could break any DES cipher in less than 56 hours (50% probability in .  While this the fastest from theoretical to useful attack and done at the lowest cost I would point out two things.  It still took years to develope and a $1M machine (circa 1998) would only be able to compromise a handful of addresses per week.  Also DES was known back at its inception (1975) to have a fatally short keylength (only 56 bits) this greatly amplifies the effect on any attack because there is so little headroom.  56 bit is is brute forceable even with no attack given enough money and time so any attack vector would almost immediately pay "dividends".

http://en.wikipedia.org/wiki/EFF_DES_cracker
 

TL/DR:
Please name a single mainstream cryptographic algorithm (not some security through obscurity or proprietary solution created by an novice) which was broken wide open in a single step.

[bitfreak!]

What I mean is that Bitcoin, as it stands now, is in heavy favour of those that possess Bitcoins. What you are essentially saying by "feeing up" "lost" coins, is you want to swing it the other way BACK towards those that don't have Bitcoins yet, you want to ease some supposed deflationary spiral that will work against those that don't hold Bitcoins.

Oh here we go again with the profit argument. Yeah lets just ignore this idea of stabilizing the money supply just because you ELITE BITCOIN HOLDERS with a crap load of coins can make a profit from it.

And your logic is completely flawed anyway, because people not holding coins are hardly going to give a shit about something which will happen 100 years from now. I do in fact hold bitcoins, and quite a few of them, so this move would not be in my best interest.

What I know is this, right now, my Bitcoins are MINE, not the networks, not Satoshi's or the developer's, not some government's, not the UN's, MINE.

No one is saying they aren't yours. You can easily keep them if you take the effort every 100 years to show the network that those coins are still active. I mean what is so blasphemous about this if it can help stabilize the money supply. Oh the horror...

[paraipan]

You don't understand bitcoin completely @bitfreak!, please revisit the official paper or the wiki a few times more before trying to "improve" the system. Thanks

[scrybe]

The beauty of Bitcoin is that it is voluntary. You can fork it and implement your idea, see how it goes.

I don't want to create a new fork of bitcoin, I have no intention to do so, nor the skills to do so. I want to make bitcoin more economically sound and stable over the very long term. Sure, the network could continue operating with only one BTC, but that is not healthy or sound in the long term. The fact this argument has been turned into some vendetta against a cartel of elite bitcoiners is absolutely ridiculous.

Please explain why Bitcoin must continue indefinitely and never become a scarce commodity? Are you implying that there will never be another successful innovation in payments or money, or at the very least a BitCoin2100 with a fresh blockchain? Your insistence on the immortality of bitcoin is a fundamental logic error. At some point it will be as useless as US Confederate money, and possibly FAR more valuable as a museum piece at some point after that. I certainly don't expect 2012 USD paper bills to be traded at face value in 2265, assuming that USD means anything then. Assume that history will continue to march on and try your reasoning again.

There is also the point that you appear to be willfully missing. BitCoin was created with a fixed set of rules that a lot of folks are vested in, changing those requires a consensus, so your proposal is unlikely to ever get acceptance for "BitCoin." Some other crypto-currency might like the idea though, but if you are not interested in finding some developers to work with on that, how do you expect us to take your development proposals for mainline Bitcoin seriously?

You might as well give this one up, you are obviously going against consensus rather than establishing one.