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Author Topic: Attrition: is there a solution? Does anyone care?  (Read 2359 times)
DonMon
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June 10, 2011, 02:59:09 PM
 #1

Does anyone in the Bitcoin community (developers, miners, users) care about the fact that Bitcoin is completely unsustainable as a long term currency??  (Loaded question I know...just wanted to get your guns drawn):

Attrition of bitcoins in the form of crashed hard drives, forgotten passwords etc. is ongoing and continuous (at what rate no one knows for sure).  Sure, we've got some supply trickling in right now in the form of the block rewards...but ultimately, it's only going to go in one direction (towards zero)...and that is unsustainable in my eyes no?  How can we all tout bitcoin as the ultimate currency when it is destined to fail at some point in the future?  (And yes, I know about the 8 decimal points...which is a hard-coded limit which means at some point we can't slice and dice the BTC anymore...)

I am also aware that the 'rules' of the game are already 'hard-coded' i.e. no reintroduction of money evah...EVAH!  But wouldn't it make sense to ensure that we at least didn't have a reduction of the money supply?  I know, I know, it was intended to be deflationary over time...yeah well WHY?  That system has NEVER been tried on a large scale before (to my knowledge) we don't know how that system will react either (in contrast to our current flawed inflationary system)...wouldn't it have been more prudent to create a system that ensures the continuous existence of the 21,000,000 (once we got to that point that is)...

I know we can't change the rules now (can we?) but wouldn't it be a good idea to have say a 5 or 10 year limit on inactivity of any given Bitcoins (ie from the last known transaction time in the block chain.   This time duration would be verified by the network as another condition of a valid transaction.  If the last time those bitcoins were traded was more than 10 years ago then the transaction is invalid.  Since these 'dead' coins are now prevented from being spent by the network, the network can then reintroduce an equal measure of coins by way of block reward to miners?  Is this possible?

Everyone's client could also give them a timer for their oldest bitcoin(s)...all they would have to do is perform a 'proof-of-ownership' transaction (to themselves of course) to restart the 10 year clock.

I know it is downright BTC heresy to suggest anything that would cause 'new' coins to come into being (even if it is a direct swap for 'dead' ones...but i'm just asking if it is possible...to institute a change like this at all...or is every set in stone so to speak? 

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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benjamindees
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June 10, 2011, 03:01:14 PM
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Short answer: No.

Long answer: See the deflation thread.

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June 10, 2011, 03:07:22 PM
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People tend not to lose things of value. And if/when they do, it harms nobody but them. An economy cares not how much money it has, for prices adjust accordingly. So long as the quantity of money doesn't drastically change in one direction or another in a short timeframe, the market will be just fine.
DonMon
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June 10, 2011, 03:09:05 PM
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Short answer: No.

Long answer: See the deflation thread.

Okay...thank you for your auto-fire response (do you have a bot for the word deflation or something? Smiley)

But i'm not concerned with the broader inflation/deflation discussion so much as how is bitcoin not doomed to become unusable once too many bitcoins are lost, bit-rotted etc....and we can no longer split the sub-atomic particles of the remaining few BTC?

It might be covered in that thread of course...I did only read the first couple of posts...can you give me the coles notes version if that is the case?

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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June 10, 2011, 03:15:56 PM
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....and we can no longer split the sub-atomic particles of the remaining few BTC?
that will always be possible, there are programming libraries to handle zillions of digits Wink

the bigger question is, why you imply  that it is a problem. the value of something is not the price tag - the price tag is just what someone is (possibly) willing to pay for it. in reverse, the value of one btc is the "sum" of what it is able to buy you.
DonMon
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June 10, 2011, 03:21:48 PM
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....and we can no longer split the sub-atomic particles of the remaining few BTC?
that will always be possible, there are programming libraries to handle zillions of digits Wink

Yes..I was not under the impression that no one thought of a ninth (or higher) decimal.  Smiley

I'm still not clear on HOW this type of change would get instituted into the system...if a hallmark of bitcoin is that it is set in stone...then HOW could a change to additional decimal places even be allowed (however trivial of a change it is.)


Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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June 10, 2011, 03:24:38 PM
 #7

I know we can't change the rules now (can we?) but wouldn't it be a good idea to have say a 5 or 10 year limit on inactivity of any given Bitcoins (ie from the last known transaction time in the block chain. 

I'd be pissed if I "went away" for 10.5 years and came back to find my buried Bitcoins worthless.
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June 10, 2011, 03:29:05 PM
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I'm still not clear on HOW this type of change would get instituted into the system...if a hallmark of bitcoin is that it is set in stone...then HOW could a change to additional decimal places even be allowed (however trivial of a change it is.)

Nothing is set in stone.  If a majority of miners decide to adopt a change, it will happen.  Something like adding resolution to the currency would be an easy sell.

"A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history." --Gandhi
DonMon
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June 10, 2011, 03:34:37 PM
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I know we can't change the rules now (can we?) but wouldn't it be a good idea to have say a 5 or 10 year limit on inactivity of any given Bitcoins (ie from the last known transaction time in the block chain. 

I'd be pissed if I "went away" for 10.5 years and came back to find my buried Bitcoins worthless.

If you knew that they had to be refreshed though...you wouldn't just leave them for 10 years would you?

Admittedly though, it IS kind of f'd to change the rules midstream like that...earlier adopters who accumulated and (may) have moved on might not catch wind of the change...and yeah..that'd be pretty unfair.

I guess it was more of a comment to shed light on the fact that however great and revolutionary this project is...it is ultimately flawed...I was looking for some insight into the flexibility of bitcoin to overcome these flaws...

And more generally...the whole flexible/inflexible dichotomy here....bitcoins inflexibility is a real source of its strength...but ultimately it could also have pre-written it's demise.
  

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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June 10, 2011, 03:35:48 PM
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I would actually suggest a fee to keep coins on an address. to be calculated every X blocks. A SMALL fee (0.0x% of the value). Lets say your address is generated in block goup X (being like 105000 blocks) then starting block-group x+3 at the end 0.0x% of the value is transferred over... to the solver of the block. retty much slowly drain totally inactive addresses.

Whoever has  coins avoids it (automatically?) by sending money from the block. Dead addresses slowly loose their value over a lot of time.
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June 10, 2011, 03:37:36 PM
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we know and it doesnt matter. if 2million bitcoins are all of a sudden lost then the price of all the other bitcoins will go up. If needs be more zeros past the decimal can be added.
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June 10, 2011, 03:38:42 PM
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I'm still not clear on HOW this type of change would get instituted into the system...if a hallmark of bitcoin is that it is set in stone...then HOW could a change to additional decimal places even be allowed (however trivial of a change it is.)

Nothing is set in stone.  If a majority of miners decide to adopt a change, it will happen.  Something like adding resolution to the currency would be an easy sell.

Alright good...what are the nuts and bolts of that change...who initiates it?  Gavin?  Is it a matter of individuals voting by their decision of what client to use?  

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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June 10, 2011, 03:45:14 PM
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It's not a problem at all: first, bitcoins can be subdivided infinitely, 8 decimal places is just an artifact of the current protocol...if everyone was dealing with ever smaller fractions of bitcoins, it wouldn't be a hard sell to get everyone to agree to upgrade the protocol and shift the decimal point...it would just need to be organized, well tested and planned out far in advance.  A lot bitcoin means that you lose one bitcoin of wealth and that wealth transfers to all other holders of bitcoins (in the form of making their bitcoins ever so slightly more valuable due to a now smaller supply).  This is a beautiful thing compared with a fiat currency where a lost bill transfers wealth from you to the central bank (and from there to the initial recipients of newly issued fiat currency).

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DonMon
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June 10, 2011, 03:57:10 PM
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It's not a problem at all: first, bitcoins can be subdivided infinitely, 8 decimal places is just an artifact of the current protocol...if everyone was dealing with ever smaller fractions of bitcoins, it wouldn't be a hard sell to get everyone to agree to upgrade the protocol and shift the decimal point...it would just need to be organized, well tested and planned out far in advance.  A lot bitcoin means that you lose one bitcoin of wealth and that wealth transfers to all other holders of bitcoins (in the form of making their bitcoins ever so slightly more valuable due to a now smaller supply).  This is a beautiful thing compared with a fiat currency where a lost bill transfers wealth from you to the central bank (and from there to the initial recipients of newly issued fiat currency).

I agree it would be an easy sell but some Q's:

-Who's 'selling' it exactly?
-How does this 'change' process work?
-Has a significant protocol change occurred in the system already?  If so, what was it and how did that go?  If not, why do we think a protocol change would be smooth?
-Are we all beholden to the code changes made by Gavin?
-What happens when 49% use a new client with a new protocol and 51% of users don't?  They cannot exchange with eachother?

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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June 10, 2011, 04:15:02 PM
 #15

It would be pretty easy to double the precision.  And we literally have many decades to plan the change.

If you really want to know, the block header includes a block version number, currently 1.  All we have to do is define a new block using longer words for values, and call it block version 2.  Then wait 10 or 20 years until the vast majority of clients have been upgraded.

Essentially every one of these threads is started by someone that doesn't understand how deep we can really go with the 8 digits we already have.  A single bitcoin will be worth something like a million dollars before the final digit is worth as much as a penny.

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DonMon
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June 10, 2011, 04:33:26 PM
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It would be pretty easy to double the precision.  And we literally have many decades to plan the change.

If you really want to know, the block header includes a block version number, currently 1.  All we have to do is define a new block using longer words for values, and call it block version 2.  Then wait 10 or 20 years until the vast majority of clients have been upgraded.

Essentially every one of these threads is started by someone that doesn't understand how deep we can really go with the 8 digits we already have.  A single bitcoin will be worth something like a million dollars before the final digit is worth as much as a penny.

No I was fully aware of decimal place technology Smiley  I'm not new to the maths.  I was just under the wrong impression that the protocol was very resistant to change.  So the answer to my initial post is NO no-one cares, because YES there is a solution:  Bitcoin Changes.  And apprently does so by new client adoption? 

[Secretely a little terrified by that: I mean over 50% of people in the US did voted for W...twice! (okay, at least once though) Smiley]

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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DonMon
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June 10, 2011, 04:37:22 PM
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If you really want to know, the block header includes a block version number, currently 1.  All we have to do is define a new block using longer words for values, and call it block version 2.  Then wait 10 or 20 years until the vast majority of clients have been upgraded.

And yes I really did want to know!!  I wouldn't have asked otherwise Smiley  thanks for answering.

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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June 10, 2011, 04:39:46 PM
 #18

Each change to the system will be adopted or rejected according to whether it is beneficial or not.  Adding digits will (at some day in the future) be worth more than it costs, and when that day comes, it will happen.  Other changes, like adding inflation by rigging the generation rules, will never be useful, and so we can consider that rule to be written in stone.

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DonMon
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June 10, 2011, 05:12:55 PM
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Each change to the system will be adopted or rejected according to whether it is beneficial or not.  Adding digits will (at some day in the future) be worth more than it costs, and when that day comes, it will happen.  Other changes, like adding inflation by rigging the generation rules, will never be useful, and so we can consider that rule to be written in stone.

Alright, fair enough...so let's get back to the nuts and bolts of how that will happen exactly...so someone codes a change to the block header as you suggest to allow additional decimal places and ups the revision to '2' from '1'....how does that initially get injected into the block chain...won't the existing network throw it out as invalid?  Wouldn't you need over 50% of clients on board immediately in order to make that change?

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

185GGNi36zxtFmJ4zaKthBfzsb4yoYWnHD
DonMon
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June 10, 2011, 05:21:58 PM
 #20

OP... What is the smallest Certificate of Deposit available? Do people still use them? You bet they do.

Not getting your point.  Can you use a few more words?

Two peanuts walked down the road and one was a salted...boom goes the dynamite!  Here's my hat on the ground..

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