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Author Topic: Losing coins forever  (Read 1267 times)
coastermonger
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February 01, 2013, 01:38:20 PM
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As of now, there will only ever be 21 million bitcions in circulation.

I'm told that this is usually an inconsequential fact, due to the fact that bitcoins can be subdivided into 8 decimal places (and these can be expanded in the future if needed)
But, is that really the most convenient of routes?

In the far future, lost coins may add up to a very big problem.  Currently, I know of no way in which a truly lost coin can be returned to the market.  Imagine someone with thousands of BTC in their wallet for instance, if their computer crashes, or they die, or forget their password, or they accidentally send the BTC to the wrong address, their bitcoins can become unrecoverable.  Implicitly, this increases the value of all the others because now there are BTC that can never be spent, but it's difficult to track this. 

So what happens decades from now, when a truly significant number of coins are lost? 

Does the system ever have a sense for how old coins really are?  Is it a good idea to find them and re-introduce them back into circulation after an appropriate time?  Or are we faced with an ever-dwindling supply of coins?

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February 01, 2013, 01:44:22 PM
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Does the system ever have a sense for how old coins really are?

Yes, you can see in the blockchain, when coins from a address where received and send.

Is it a good idea to find them and re-introduce them back into circulation after an appropriate time?

No!

I have a casascius coin. Just imagine after 10 Years the system "decides" to remove its value.

Or are we faced with an ever-dwindling supply of coins?

Yes.

All previous versions of currency will no longer be supported as of this update
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February 01, 2013, 01:45:07 PM
 #3

As of now, there will only ever be 21 million bitcions in circulation.

I'm told that this is usually an inconsequential fact, due to the fact that bitcoins can be subdivided into 8 decimal places (and these can be expanded in the future if needed)
But, is that really the most convenient of routes?

In the far future, lost coins may add up to a very big problem.  Currently, I know of no way in which a truly lost coin can be returned to the market.  Imagine someone with thousands of BTC in their wallet for instance, if their computer crashes, or they die, or forget their password, or they accidentally send the BTC to the wrong address, their bitcoins can become unrecoverable.  Implicitly, this increases the value of all the others because now there are BTC that can never be spent, but it's difficult to track this. 

So what happens decades from now, when a truly significant number of coins are lost? 

Does the system ever have a sense for how old coins really are?  Is it a good idea to find them and re-introduce them back into circulation after an appropriate time?  Or are we faced with an ever-dwindling supply of coins?

Search before you ask, this question has been asked repeatedly, repeatedly, repeatedly, repeatedly, and repeatedly

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February 01, 2013, 03:07:35 PM
 #4

As of now, there will only ever be 21 million bitcions in circulation.

I'm told that this is usually an inconsequential fact, due to the fact that bitcoins can be subdivided into 8 decimal places (and these can be expanded in the future if needed)
But, is that really the most convenient of routes?

In the far future, lost coins may add up to a very big problem.  Currently, I know of no way in which a truly lost coin can be returned to the market.  Imagine someone with thousands of BTC in their wallet for instance, if their computer crashes, or they die, or forget their password, or they accidentally send the BTC to the wrong address, their bitcoins can become unrecoverable.  Implicitly, this increases the value of all the others because now there are BTC that can never be spent, but it's difficult to track this.  

So what happens decades from now, when a truly significant number of coins are lost?  

Does the system ever have a sense for how old coins really are?  Is it a good idea to find them and re-introduce them back into circulation after an appropriate time?  Or are we faced with an ever-dwindling supply of coins?

If you're concerned about this take a look at freicoin. Unless coin destruction outpaces 5% per year, freicoin converges against a constant accessible monetary base.

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February 01, 2013, 03:10:26 PM
 #5

Asked and answered many times.  Use search function.

Simple version it isn't an issue.  Bitcoin is highly divisible and with a small protocol change (if necessary) can be even more divisible.
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February 01, 2013, 03:27:44 PM
 #6

I guess in some (tens of) years with powerful computers the private keys for current addresses will be cracked and those coins (that will not move since) will return to the system
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February 01, 2013, 08:31:19 PM
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I guess in some (tens of) years with powerful computers the private keys for current addresses will be cracked and those coins (that will not move since) will return to the system

This is indistinguishable from theft and thus not a desirable outcome.

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February 01, 2013, 08:59:08 PM
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I guess in some (tens of) years with powerful computers the private keys for current addresses will be cracked and those coins (that will not move since) will return to the system

This is indistinguishable from theft and thus not a desirable outcome.

Also impossible baring some flaw in ECDSA and/or RIPEMD-160 SHA-256.  If such a flaw does develop it likely will be over years or decades giving active owners plenty of time to move funds to new higher security addresses leaving only the coins which can't be moved.
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February 01, 2013, 09:04:03 PM
 #9

In the far future, lost coins may add up to a very big problem.

You might like to read the following and then reconsider this idea:

http://mises.org/money.asp

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February 01, 2013, 09:05:58 PM
 #10

https://en.bitcoin.it/wiki/Myths#21_million_coins_isn.27t_enough.3B_doesn.27t_scale

https://en.bitcoin.it/wiki/FAQ#But_if_no_more_coins_are_generated.2C_what_happens_when_Bitcoins_are_lost.3F_Won.27t_that_be_a_problem.3F

https://en.bitcoin.it/wiki/Myths#Lost_coins_can.27t_be_replaced_and_this_is_bad

https://en.bitcoin.it/wiki/Myths#Finite_coins_plus_lost_coins_means_deflationary_spiral

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February 01, 2013, 09:08:17 PM
 #11

For this to be a "problem" the "world" would have to lose all 21,000,000BTC.

This is clearly a nonsensical assertion because...

The likelihood of such loss happening is zero.

Ask yourself, how in the world would all of the current BTC owners "disappear"?

I am sure small amounts of gold get destroyed during circulation. (It is a very malleable metal)
Do you see anybody throwing tantrums over the matter? No...

The Bitcoin world can easily absorb this type of negligible losses so please go ahead and focus your thinking on something else.

Thanks!

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February 01, 2013, 10:23:52 PM
 #12

That and also the value of bitcoin is not based on the total supply of bitcoin but on the liquid supply of bitcoin.  Someone who is stubbornly sitting on their supply of bitcoin does the same thing as someone who loses their coin.  Considering the liquid supply is a small percentage of the whole supply, adding some coin to that non-liquid supply would not affect the price much.  The market is also constantly correcting for all variables.  While lost bitcoin may play some part in the price, other factors would overshadow it.
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February 02, 2013, 02:26:52 AM
 #13

Implicitly, this increases the value of all the others because now there are BTC that can never be spent

You must see that as being a problem.  Please explain.

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February 02, 2013, 05:17:21 PM
 #14

Implicitly, this increases the value of all the others because now there are BTC that can never be spent

You must see that as being a problem.  Please explain.

It's a problem because I sent a few bitcents to an address I no longer have a key for Tongue (no it's not easy to do, I was just doing some tricky things and got sloppy).  But no, it's not a problem for bitcoin as a whole.

https://www.bitcoin.org/bitcoin.pdf
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