Proposed solution to "lost coins"

[knightmb]

Bitcoins are infinitely divisible. Just update protocol to store value in a 128 bit integer instead of the current 64 bit integer. That would satisfy the decimal place need for a loooong time. When you bring back lost coins, you dilute the aggregate value of everyone's bitcoins, similar to what happens when the Fed prints USD.

I see this come up a lot, Bitcoins are not infinitely divisible.

Each bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places.

0.00000001 is the smallest amount you can spend. If you remove the decimal point it becomes easier to visualize with whole numbers.

There is a 2,100,000,000,000,000 max cap for currency. As of this posting, every block found creates 2,500,000,000 currency.

64bit unsigned integer can achieve 18,446,744,073,709,551,615 or 9,223,372,036,854,775,807 signed in size.

So let's compare the two:
18446744073709551615 unsigned
vs
2100000000000000

or
9223372036854775807 signed
vs
2100000000000000


As you can see, there is plenty of room in the 64bit space for more currency, not a limitation on storage space for the digits. The 21 million limit is just an arbitrary number chosen out of thin air. Unless the rules of the system are changed again to use more digits, I don't think you can spend a transaction for 0.0000000000000000000000000000000000001 and it get processed by the network.

[1715228033]

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1715228033

[JoelKatz]

A recycling scheme would mean at some point that risk would be removed.

You don't have to recycle for that, you can just take them out of circulation with certainty. This avoids the economic distortion of transferring wealth to whomever your recycling gives the coins to...  so don't conflate recycling with being sure what the supply is, they're separate issues.

For a currency that uses proof of work to prevent double spends, I think it makes the most sense to use it to replenish a mining reward pool. But I'm not intending to address the distinction between locking the coins and recycling the coins. I actually think it doesn't matter.

[Hei_]

1. Propose a terrible idea and ask people to tell you why it's terrible
2. Be told why it's terrible
3. Get pissed
4. ? ? ?
5. Profit

!

[kjj]

Bitcoins are infinitely divisible. Just update protocol to store value in a 128 bit integer instead of the current 64 bit integer. That would satisfy the decimal place need for a loooong time. When you bring back lost coins, you dilute the aggregate value of everyone's bitcoins, similar to what happens when the Fed prints USD.

I see this come up a lot, Bitcoins are not infinitely divisible.

Each bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places.

0.00000001 is the smallest amount you can spend. If you remove the decimal point it becomes easier to visualize with whole numbers.

There is a 2,100,000,000,000,000 max cap for currency. As of this posting, every block found creates 2,500,000,000 currency.

64bit unsigned integer can achieve 18,446,744,073,709,551,615 or 9,223,372,036,854,775,807 signed in size.

So let's compare the two:
18446744073709551615 unsigned
vs
2100000000000000

or
9223372036854775807 signed
vs
2100000000000000


As you can see, there is plenty of room in the 64bit space for more currency, not a limitation on storage space for the digits. The 21 million limit is just an arbitrary number chosen out of thin air. Unless the rules of the system are changed again to use more digits, I don't think you can spend a transaction for 0.0000000000000000000000000000000000001 and it get processed by the network.

I'm sorry, but you have this backwards.

The fundamental unit in bitcoin is 1 BTC, not 0.00000001 BTC.  Right now, the protocol operates in integer units of 0.00000001 BTC, but that is an accident of history (that is, the scaling factor in the first release was 100000000, and we haven't changed it yet).

Changing the scaling factor in the client would be no big deal, because 1 BTC before would still be 1 BTC after.  Renormalizing in the other direction, so that 1 satoshi before = 1 satoshi after, but 1 BTC before = 0.001 BTC after would be a disaster (and thus never gain any support).

[astor]

A recycling scheme would mean at some point that risk would be removed.

You don't have to recycle for that, you can just take them out of circulation with certainty. This avoids the economic distortion of transferring wealth to whomever your recycling gives the coins to...  so don't conflate recycling with being sure what the supply is, they're separate issues.

For a currency that uses proof of work to prevent double spends, I think it makes the most sense to use it to replenish a mining reward pool. But I'm not intending to address the distinction between locking the coins and recycling the coins. I actually think it doesn't matter.

What you're saying is absolutely correct.  You're the only one who makes sense in this discussion.

The point of destroying or recycling old coins is to reduce the risk involved in estimating the total number of coins in circulation.

The less risk there is in estimating this, the less risk needs to be hedged, and the cheaper it becomes to do transactions in bitcoins.

[TalkingAntColony]

Bitcoins are infinitely divisible. Just update protocol to store value in a 128 bit integer instead of the current 64 bit integer. That would satisfy the decimal place need for a loooong time. When you bring back lost coins, you dilute the aggregate value of everyone's bitcoins, similar to what happens when the Fed prints USD.

I see this come up a lot, Bitcoins are not infinitely divisible.

Each bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places.

0.00000001 is the smallest amount you can spend. If you remove the decimal point it becomes easier to visualize with whole numbers.

So if we changed the protocol to use a 128-bit integer for the Tx value as opposed to the current 64-bit integer, you are saying we couldn't use the extra bits for more decimal places? Why not? Yes, we would also have to update the "scaling factor," but we coud keep 1 BTC = 100,000,000 satoshis, and 1 satoshi = 100,000,000 or so integer units of the 128-bit integer.

Think of it like this: 1 BTC represented as a binary 64-bit integer (how it is now):

Code:

0000000000000000000000000000000000000101111101011110000100000000

1 BTC represented as a binary 128-bit integer:

Code:

00000000000000000000000000000000000000000000000000000000000000000000000000100011100001101111001001101111110000010000000000000000

21,000,000 BTC represented as a binary 128-bit integer:

Code:

00000000000000000000000000000000000000000000000000101100011110000001111101110000100011000101000010011111010000000000000000000000

So you see, with a 128-bit integer and the scale factor 1 satoshi = 100,000,000 128-bit integer units, we can add more decimal places. There are still many unused bits on the left, so we could use a larger scale factor for even more decimal places.

[Tehfiend]

Wow it only took a week for some legit discussion to appear, better late than never . I love talking about bitcoin so thank you...

JoelKatz has explained the intention behind this idea much better that I did initially. The reason I wanted to redistribute lost coins via mining was to maintain the intended circulation of coins since I assumed there was a lot of thought that went into the distribution system and lost coins seemed to undermine that. I know a lot of people lost a lot of early coins and, for the reasons stated above, not knowing the TRUE number of coins in circulation bugged me but like I said yesterday, I no longer have any concern about this since I'm certain all of this was considered. Satoshi is much much more clever than I and if he felt this was an issue, he would have already built recycling into the protocol. I also feel that in a hundred years, we'll be able to easily determine how many "early coins" were lost with close to 100% certainty since the age of coins is public and it would be doubtful a coin would go untouched for that period of time. For now, we'll just have to stare at the HUGE pile of old coins and wonder how many might be suddenly dumped on the market and how many are lost forever...

[astor]

To me it seems that just declaring them unspendable is the option that changes incentives/rules the least.  Giving the coins to miners changes the rules.

Imagine that this situation happened when 99% of the coins were mined and suddenly 10% of coins were going to be given to miners, giving them 10x as much as before this decision.

Doesn't make much sense to me.

Edit: The change that does the least change in incentives is to announce that there will be a window of spendability that reaches X years back at all times, where X > the oldest coin.  Then no coin is invalidated now, but a rule that keep uncertainty bounded has been introduced.

[misterbigg]

Some how, some way, we need to teach every noob how to use the search function.  Maybe they should all have to prove they know how to search for a topic before they get out of noob jail? Moderators, can we make this happen?  Just some sort of test where they have to use the search function once before they are allowed to post "new" topics?

This is wishful thinking. If you really want to solve this problem, require that anyone who wants posting privileges post a bond, in Bitcoins. Some nominal fee like $25 worth of Bitcoins. If they break the forum rules, like posting something that could have been found via search, they forfeit the bond. Problem solved.

[Tehfiend]

To me it seems that just declaring them unspendable is the option that changes incentives/rules the least.  Giving the coins to miners changes the rules.

Imagine that this situation happened when 99% of the coins were mined and suddenly 10% of coins were going to be given to miners, giving them 10x as much as before this decision.

Doesn't make much sense to me.

Edit: The change that does the least change in incentives is to announce that there will be a window of spendability that reaches X years back at all times, where X > the oldest coin.  Then no coin is invalidated now, but a rule that keep uncertainty bounded has been introduced.

Why exactly do you feel it's so wrong to change the incentives in this fashion? If recycling was added now with a 100 year shelf-life on coins, there would be PLENTY of time to account for the added mining incentive coming way down the road. I know some are concerned that transactions fees won't be enough incentive to secure the network down the road and this would add to the incentive without increasing the intended supply of coins. Again, I no longer think this is needed but like to play devil's advocate...

Some how, some way, we need to teach every noob how to use the search function.  Maybe they should all have to prove they know how to search for a topic before they get out of noob jail? Moderators, can we make this happen?  Just some sort of test where they have to use the search function once before they are allowed to post "new" topics?

This is wishful thinking. If you really want to solve this problem, require that anyone who wants posting privileges post a bond, in Bitcoins. Some nominal fee like $25 worth of Bitcoins. If they break the forum rules, like posting something that could have been found via search, they forfeit the bond. Problem solved.

Solve what problem? The problem of bitter vets having to scroll past a topic they've already discussed? I have a solution that's much easier. Just ignore posts that you are not interested in participating in. You could also just link to the previous topic which would take just slightly longer than posting a complaint. Or you could contribute and help educate the new generation of bitcoin enthusiasts.

[kjj]

To me it seems that just declaring them unspendable is the option that changes incentives/rules the least.  Giving the coins to miners changes the rules.

Actually, leaving it alone is the option that changes the rules the least.  Putting a lifetime on coins is a huge change, regardless of what happens when they expire.

[astor]

To me it seems that just declaring them unspendable is the option that changes incentives/rules the least.  Giving the coins to miners changes the rules.

Imagine that this situation happened when 99% of the coins were mined and suddenly 10% of coins were going to be given to miners, giving them 10x as much as before this decision.

Doesn't make much sense to me.

Edit: The change that does the least change in incentives is to announce that there will be a window of spendability that reaches X years back at all times, where X > the oldest coin.  Then no coin is invalidated now, but a rule that keep uncertainty bounded has been introduced.

Why exactly do you feel it's so wrong to change the incentives in this fashion? If recycling was added now with a 100 year shelf-life on coins, there would be PLENTY of time to account for the added mining incentive coming way down the road. I know some are concerned that transactions fees won't be enough incentive to secure the network down the road and this would add to the incentive without increasing the intended supply of coins. Again, I no longer think this is needed but like to play devil's advocate...

This isn't really a big deal, but it doesn't give a predictive income for miners.  If the early Satoshi coins are recycled during one year, it will be an enormous boost for miners and then a gradual drop.  There is no reason to have such an irratic payback curve.  People would invest in rigs like crazy that year and throw the rigs in the garbage the next year.

Fixing the transaction issue can be done by either increasing the transaction costs, or as a general tax, called demurrage.  This depends on whether people think it is ok to have "freeloaders" own bitcoins without paying for the maintainance of the network, or not.

[nedievas]

Not sure if this is the best place to post this but I was thinking about all of the lost coins this morning and had an idea that may or may not suck.

What if extremely stale coins got recycled? For example, if an address has not be touched in X years then Y BTC from it gets added to the next block reward. Not sure what a good age and ammount/% would be but perhaps 10 years. Would be trivial to move your coins every few years to keep them "fresh" and wallets could automate this and have warnings as well. With a system like this, no coins would ever be permanently lost and would add some reward to miners down the road. OK now tell me why this is a terrible idea...

X should be minimum 75 years. That's 1 life

[justusranvier]

Let me make sure I understand the premise of this proposal.

In order to avoid the potential for inflation caused by someone suddenly discovering a large stash of old coins and spending them all at once, you're going to wait for some predetermined amount of time and then suddenly give large stashes of old coins to the miners so they can spend them?

[Tehfiend]

This isn't really a big deal, but it doesn't give a predictive income for miners.  If the early Satoshi coins are recycled during one year, it will be an enormous boost for miners and then a gradual drop.  There is no reason to have such an irratic payback curve.  People would invest in rigs like crazy that year and throw the rigs in the garbage the next year.

Fixing the transaction issue can be done by either increasing the transaction costs, or as a general tax, called demurrage.  This depends on whether people think it is ok to have "freeloaders" own bitcoins without paying for the maintainance of the network, or not.

IMO it would be predictive income. In 100 years we would know exactly how many coins will be recycled and there are many many different ways the coins can be recycled to address these issues. One method would be to base the number of coins recycled per block as a % of the transaction fees included since that will be the only block reward in 100 years. So for example if it was 10% and there are 10BTC in transaction fees included in a block then an 1 additional BTC would be recycled. That would make the increased block reward very predictable and stable. That's just one of many different ideas...

X should be minimum 75 years. That's 1 life

I agree, I think 100 years is good since it should be > 1 life

[Tehfiend]

Let me make sure I understand the premise of this proposal.

In order to avoid the potential for inflation caused by someone suddenly discovering a large stash of old coins and spending them all at once, you're going to wait for some predetermined amount of time and then suddenly give large stashes of old coins to the miners so they can spend them?

Nope, read the post I made above. They obviously wouldn't all be given away to miners in one block lol...

[gmaxwell]

But I'm not intending to address the distinction between locking the coins and recycling the coins. I actually think it doesn't matter.

They are distinct, and it does matter. One transfers wealth from the economy at large to miners and one does not.  You might want to argue that it's reasonable to make the transfer, but it's easy to point out scenarios where it would be harmful. ... So I just suggest that if you want to talk about the uncertainty issue you do it in terms of the pure form, not one which is also mixed up with a wealth transfer.

[TierNolan]

Actually, leaving it alone is the option that changes the rules the least.  Putting a lifetime on coins is a huge change, regardless of what happens when they expire.

It seems possible to me that miners might just decide to delete old parts of the block chain.  If miners tend not to accept old coins, then other miners might decide not to risk including them.

Worryingly, this is actually a soft fork, since you are not adding a new feature to the network.  You are making the network more strict.

[JoelKatz]

Let me make sure I understand the premise of this proposal.

In order to avoid the potential for inflation caused by someone suddenly discovering a large stash of old coins and spending them all at once, you're going to wait for some predetermined amount of time and then suddenly give large stashes of old coins to the miners so they can spend them?

No. In order to avoid the costs associated with the risk of someone suddenly releasing a large stash of old coins, you'd wait a predetermined amount of time and then add those coins to a pool that would be released to miners at a known rate.

This would have two benefits:

1) It would avoid "bursty" mining. When the block reward is zero, people might not mine until sufficient transaction fees build up to make it worth it (because idle hardware draws less power). This could make the block generation rate much less predictable.

2) It would avoid costs associated with a less predictable monetary supply. Anything that could be harmed by a change in monetary supply would have to spend money to hedge this risk and some productive activity that otherwise might take place will be discouraged because of those increased costs.

There are certainly good reasons to criticize this idea, but please understand it first. (And, of course, it should definitely *not* be added to Bitcoin now. Upsetting people's expectations by fundamentally changing the rules now is the last thing Bitcoin needs.)

[Zeke_Vermillion]

I see no need to recover lost coins. If they are lost, then the only meaningful recovery (restoration to their owner) is impossible. There is a real issue that gradual waste of bitcoins over many years will eventually, by laws of mathematics, result in there being almost no bitcoins remaining on wallets where people can recall the keys. The only solution to that is to change the software to allow new coin creation at a rate that equals or exceeds such loss. However, it is impossible to know what that rate is. At the end of the day, I think the real solution is one provided by the market -- if over some years bitcoins fall into the cracks between the couch cushions until there are too few left for any real use, hard forks and alts will take up the slack in payment processing bandwidth. There is no need to take any action with respect to bitcoin software today, as this will happen whether we like it or not.