Probable Dead Bitcoins

[charleshoskinson]

I've been studying the blockchain for a bit and I'm thinking about developing a metric to label bitcoins that are likely dead (ie the private key is no longer accessible). Do you guys have any advice for possible starting points?

[jackjack]

How can you know whether a coin is lost or kept for the long term?

[z12]

Well. If not used for a long time, It's dead. The only difference is it can be revived. However it does not have any influence in the market until it starts moving.
So... yeah

[charleshoskinson]

That's why it has to be a probabilistic measure based upon historical transaction rates combined with the time in storage. It is impossible to assert a deterministic difference between a bitcoin in cold storage and a bitcoin that is dead.

[charleshoskinson]

And yes there is an influence on the market once a coin has become dead, then supply is reduced. For a single transaction this isn't an issue, but we need to measure the rate at which this happens.

[Luno]

A wallet can change hands without moving, private keys are being traded, leave em alone!

[charleshoskinson]

We need to understand the impact coins that are inaccessible to the network will have on deflation

[westkybitcoins]

We need to understand the impact coins that are inaccessible to the network will have on deflation

Why? I certainly have no need to know.

If you're interested, by all means, carry on with trying to find a suitable metric (although I wish you luck on that...) but just know that any proposal that has someone try to "resurrect" (i.e., steal) my stored coins, or anyone else's, will probably end poorly.

[kokjo]

if you are trying to find "impossible" addresses, you could look for patterns and stuff that looks like words(ie, non-random).

[charleshoskinson]

Why? I certainly have no need to know.

If you're interested, by all means, carry on with trying to find a suitable metric (although I wish you luck on that...) but just know that any proposal that has someone try to "resurrect" (i.e., steal) my stored coins, or anyone else's, will probably end poorly.

Because I'm a mathematician and I enjoy economics. If the Bitcoin is to be studied academically and effect change in global monetary policy, then we need to understand fundamental things such as the rate of coin loss and better metrics for transaction volume. This is why bitcoin days destroyed was developed and why I'm designing a death metric for coins.

A recycling scheme would require a hard fork. We both know that isn't going to happen. Especially considering cold storage is popular.

[charleshoskinson]

if you are trying to find "impossible" addresses, you could look for patterns and stuff that looks like words(ie, non-random).

Bitcoin addresses do have a verification scheme built in that removes nearly all impossible patterns (1 in 4 billion change of failure). However, I am looking for addresses that were once legitimate and have received money, but the private key has been lost

[kokjo]

if you are trying to find "impossible" addresses, you could look for patterns and stuff that looks like words(ie, non-random).

Bitcoin addresses do have a verification scheme built in that removes nearly all impossible patterns (1 in 4 billion change of failure). However, I am looking for addresses that were once legitimate and have received money, but the private key has been lost

yes but if you remove the checksum, you could still put in random text. but the bitcoin would not be spendable afterwards.


in the other case, i would look at the address that are likely to be in the same wallet and see if they are active, other than that... there are only the option of seeing for how long the address have not been used.

[charleshoskinson]

The question is can we build a probability distribution that asserts within a confidence interval the chance a coin is dead. It should approach 100% after some set of iterations

[charleshoskinson]

Also cold storage coins would also suffer the same fate. It's not suppose to be a perfect metric. It is giving an effective bound on deflation from money taken out of normal circulation

[Stephen Gornick]

Also cold storage coins would also suffer the same fate. It's not suppose to be a perfect metric. It is giving an effective bound on deflation from money taken out of normal circulation

Nice round numbers likely aren't lost, so you probably want to have two different rules.  For example, a 7.23512343 coin that hasn't moved in years might be a lost coin, whereas a 250 BTC coin that hasn't moved over that same period of time is much more likely to be the address for a private key printed and stored in someone's fireproof safe.   Also, the value at the time it was sent will matter as well.  I would be more likely to understand that someone would have abandoned a wallet with 4.0 BTC in it in late 2011 due to having forgotten the exact encryption passphrase used, whereas today with a 4.0 BTC wallet it would be worth it to try a cracking utility to try and regain access to the wallet.

[scouzi]

A wallet can change hands without moving, private keys are being traded, leave em alone!

Who would accept a private key from someone knowing that the original ownwer could have kept a copy. I understand the concept between family members etc but besides that I don't see any advantages.

[John (John K.)]

A wallet can change hands without moving, private keys are being traded, leave em alone!

Who would accept a private key from someone knowing that the original ownwer could have kept a copy. I understand the concept between family members etc but besides that I don't see any advantages.

Take a look at Casascius coins and bars.

[Luno]

A wallet can change hands without moving, private keys are being traded, leave em alone!

Who would accept a private key from someone knowing that the original ownwer could have kept a copy. I understand the concept between family members etc but besides that I don't see any advantages.

In reality you always have to trust the party you buy a Bitcoin from if you want anonymity. If the guy you buy them from earned them on SR, they will come kicking your door in too, when they are looking into what the seller spend his coins on!

An untouched wallet or cascasious, where only mined coins are put in, is totally disassociated from any identity. In reality, if you spend it, it is no longer anonymous as if the guy you pay it to has his wallet linked to a bank account, someone can ask him where he got it from.

Thats the price of mainstream!

[charleshoskinson]

In reality you always have to trust the party you buy a Bitcoin from if you want anonymity. If the guy you buy them from earned them on SR, they will come kicking your door in too, when they are looking into what the seller spend his coins on!

An untouched wallet or cascasious, where only mined coins are put in, is totally disassociated from any identity. In reality, if you spend it, it is no longer anonymous as if the guy you pay it to has his wallet linked to a bank account, someone can ask him where he got it from.

Thats the price of mainstream!

If we did develop an effective metric, then it is likely we can include a voluntary cold storage database. I also like the idea of noting certain integer amounts like 10 or 250 are likely large term savings. I think we could create a normalized scale between 0 and 1 and assign the higher values preference in a probabilistic measure in relation to time. Thus if a coin comes from a known cold store address, then its chance of being labeled as dead is very low regardless of time. If it is some non-integer real value that has been transacted several times and suddenly stopped moving for a long duration, then the probability of being dead increases considerably.

[Spendulus]

We need to understand the impact coins that are inaccessible to the network will have on deflation

Then we also need to know the amount of fiat cash that is lost or accidentally destroyed each year, as well as the amount of gold that sinks to the bottom of the ocean and which could possibly be recovered.