A proposed solution to adjust for lost Bitcoins: wallet 'heartbeats'

[ascent]

As we all know, the true number of Bitcoins in circulation will always be some unknown number less than the total number of Bitcoins mined. This is not ideal. Wallets can be lost, deleted, or the underlying media on which they are stored on can be damaged beyond recovery.

Are Bitcoins in it for the long haul? Or are they just a five year experiment?

I'm proposing a solution: wallet 'heartbeats'. I'm not sure if it is technically compatible with the existing software infrastructure, but I think it might be. If we define a heartbeat as connecting to the network, then perhaps wallets should give a heartbeat at least every seven years in order to remain valid. Any coins in a wallet that has not connected to the network for seven years become invalid and are made available to be remined, by some method that allows for their easy mining. Because I don't fully understand the mechanics behind the software, I don't know if this is possible, but if it is, I believe the idea has merit.

[Garrett Burgwardt]

What about people who just want to have a savings wallet? I have one hidden away that I don't want to bring online for ~30 years.

It would be stupid to have coins lost because you forgot to connect to the network.

Additionally, there's not really a good way to have a decentralized way to do this.

Tl;dr this has been debated and most people think it's a terrible idea. If you want to make a version of bitcoin that does this go ahead. I have my doubts about its success.

[ascent]

You can't connect your savings wallet to the network once every seven years?

Clearly, your coins are worthless if you never connect to the network. For you, though, 30 years is appropriate. However, good luck in finding hardware that will support the USB flashdrive (or where ever it is stored) in 30 years. Seven years is realistic, and not a burden to you.

In the banking industry, accounts with no activity are closed after seven years. Is this really that unreasonable? It insures that bitcoins won't slowly disappear. Also, given your long term outlook (30 years), then it stands to reason that you believe Bitcoins are going to survive. If so, then let's really look into the future. With the slow but inevitable attrition of Bitcoin circulation, assuming lost Bitcoins are never recovered, what then becomes of knowledge regarding the entire system? That knowledge slowly evaporates, given the complete inability to know whether Bitcoins are lost or simply out of circulation.

[bittersweet]

I posted similar idea before, except with shorter time but coin sitters hated it. I still think it's a good idea.
I don't think it will ever happen with Bitcoins, but it might be a good idea for a new, better cryptocurrency.

What about people who just want to have a savings wallet? I have one hidden away that I don't want to bring online for ~30 years.

Don't you think it's a bit unfair if you just sit on coins for 30 years without a single transaction while OTHERS provide security for the network 24/7, also for you? If heartbeat would need a transaction fee to be accepted, that would mean the miners would be paid also by those who just hoard money for years.

It would be stupid to have coins lost because you forgot to connect to the network.

Forget to connect once per 7 years???!

Additionally, there's not really a good way to have a decentralized way to do this.

It's very easy, Bitcoins with transaction older than 7 years can't be spent. So heartbeat transaction would be basically transaction back to the same address done automatically by the client for coins that are for example more then one year old. If it got older, the numbre of coins would be simply mineable again.

It would also help keep transaction chain reasonably short.

[FreeMoney]

As we all know, the true number of Bitcoins in circulation will always be some unknown number less than the total number of Bitcoins mined. This is not ideal. Wallets can be lost, deleted, or the underlying media on which they are stored on can be damaged beyond recovery.

Are Bitcoins in it for the long haul? Or are they just a five year experiment?

I'm proposing a solution: wallet 'heartbeats'. I'm not sure if it is technically compatible with the existing software infrastructure, but I think it might be. If we define a heartbeat as connecting to the network, then perhaps wallets should give a heartbeat at least every seven years in order to remain valid. Any coins in a wallet that has not connected to the network for seven years become invalid and are made available to be remined, by some method that allows for their easy mining. Because I don't fully understand the mechanics behind the software, I don't know if this is possible, but if it is, I believe the idea has merit.

Why would you want to add trouble to make some people lose coins? What is the upside of this?

[FreeMoney]

I posted similar idea before, except with shorter time but coin sitters hated it. I still think it's a good idea.

What about people who just want to have a savings wallet? I have one hidden away that I don't want to bring online for ~30 years.

Don't you think it's a bit unfair if you just sit on coins for 30 years without a single transaction while OTHERS provide security for the network 24/7, also for you? If heartbeat would need need a transaction fee to be accepted, that would mean the miners would be paid also by those who just hoard money for years.

It would be stupid to have coins lost because you forgot to connect to the network.

Forget to connect once per 7 years???!

Additionally, there's not really a good way to have a decentralized way to do this.

It's very easy, Bitcoins with transaction older than 7 years can't be spent. So heartbeat transaction would be basically transaction back to the same address done automatically by the client for coins that are for example more then one year old. If it got older, the numbre of coins would be simply mineable again.

It would also help keep transaction chain reasonably short.

So you think holding coins and doing nothing is bad, but holding coins and paying yourself once a year suddenly makes you worthy to keep coins?

[bittersweet]

Why would you want to add trouble to make some people lose coins? What is the upside of this?

Shorter transaction chain, money for miners would come also from hoarders (for heartbeat transactions), practical knowledge what coins have been lost and less deflation over time (if not refreshed coins would go back as mineable coins).

So you think holding coins and doing nothing is bad, but holding coins and paying yourself once a year suddenly makes you worthy to keep coins?

No, I think it would be nice if hoarders would have to pay a little transaction fee once per year (for example) to those who keep the whole system running and ready ALSO FOR THEM.

[£]

Why would you want to add trouble to make some people lose coins? What is the upside of this?

I don't think the goal is to "add trouble" or to "make some people lose coins", I think you might have misunderstood the aims here.
With a finite amount of Bitcoins available and a slow erosion of that number through loss the upside is longevity of the Bitcoin idea.

[ascent]

Why would you want to add trouble to make some people lose coins? What is the upside of this?

Because the system is incomplete and deficient without it. As for trouble, it's not clear to me what trouble is being made. Furthermore, it's actually a favor to savers to insure that their wallets actually function.

[Luke-Jr]

It might be more viable if we allow refreshes without the private key. Worst case, someone malicious refreshes lost coins...

[SgtSpike]

A better solution:  Don't let the 50-coin reward run out.

It technically makes inflation unending, but eventually, the rate of lost coins will average out to the rate of new coins generated.  Viola!  Problem solved.

[jon_smark]

The first question you need to answer is what exactly is the problem this proposal is aiming to solve?

Sure, knowing the total number of bitcoins that have been lost makes for interesting trivia, but is it really worth the hassle and the inconvenience?

Therefore, this strikes me as a bad and purposeless idea.  (And mind you, I'm stating this as someone who would support some pretty fundamental changes to Bitcoin.  For one, I think the fixed 21 million cap is generally a bad idea, and I would very much prefer that the mining reward would stay at 50 BTC forever.  However, I do have a strong motivation for such a change.)

[jon_smark]

A better solution:  Don't let the 50-coin reward run out.

It technically makes inflation unending, but eventually, the rate of lost coins will average out to the rate of new coins generated.  Viola!  Problem solved.

Yes! Yes! Yes!

A permanent 50 BTC reward would solve quite a number of problems.  First, miners would always have an incentive beyond fees, which would make fees lower.  Second, it would eliminate the scarcity psychology that encourages hoarding, speculation, and the formation of bubbles.  This in turn would encourage people to actually spend their bitcoins, which will be essential if we're ever going to have a vibrant economy.  And finally, a constant reward means that inflation rate would asymptotically approach 0% without ever quite reaching it.  Therefore, inflation would still be so low that Bitcoin would remain for all intents and purposes a good store of value.

Mark my words: if Bitcoin does not introduce some limited inflation, some other P2P digital currency will do it and eat Bitcoin for lunch.

[SmokeAndMirrors]

This is a good idea.

Let's look at a scenario where we've got 20 people, each with about 10k bitcoins they've acquired over 10 years. These 20 people all happened to die in the next few years (car accidents, heart attacks, cancer, whatever). That is 200k bitcoins that are instantly taken out of circulation. With a continuing trend, over enough years bitcoins will fade out and the whole communities dreams of bitcoins replacing our current currency is destroyed. At this point in time, sure.. 200k doesn't seem like a lot when there are plenty to go around because they're still being generated. Once 21m coins are reached, the amount of "lost" or forgotten bitcoins will start to add up quickly.

[kjj]

Feel free to create a network that implements this idea.  I suspect that a couple dozen people worldwide will join you.

The rest of us have absolutely no desire to change from a system that is incapable of forcibly removing our coins to one that is.

[gmaxwell]

Once 21m coins are reached, the amount of "lost" or forgotten bitcoins will start to add up quickly.

Each bitcoin is currently divisible to 100,000,000 parts with the current software. If divisional granularity every became an issue the extra bit could be used to signal extended range.  This would be a simple, technical, and economically neutral change if it were ever required.

People who have invested resources and money into bitcoin did so with certain understanding and expectations of the dynamics of the system.  Your proposal would rob them of the expected return that was rationally factored into their decision.  Even if you'd benefit this time what reason would you have to expected that the _next_ change wouldn't rob you?   

There are some invariants in this system. Mess with them and you will completely and justifiably destroy all confidence in it. Other decisions are justifiable and are worth exploring but they should be explored in alternative systems (like beertokens) rather than by destroying this one and salting the earth for all similar systems.

[Garrett Burgwardt]

To all of you saying that the 50 coin reward should go on forever - lol.

I'll keep my bitcoins thanks. Feel free to search on the forums for inflatacoin, and use a gimped version of bitcoin if you'd like.

-Garrett

EDIT: Additionally, there's no need to worry about lost coins. See above about granularity.

And as for the 'hoarders' (savers) having to pay a fee to hold coins, what? That's absolutely ridiculous. As long as coins aren't moving they're causing no stress on the network. Think about what you're saying.

[ascent]

The point in reclaiming lost coins is not to:

1) Bilk unsuspecting savers out of their coins
2) Address any issues regarding granularity
3) Have fun with trivial data

The point in reclaiming lost coins would be to:

Know that the system, at any point in the future, possibly far future, has the same dynamics as it was intended to have at its inception. I believe you are mistaken if you think it will have the same dynamics over time if you do not allow lost coins to be reclaimed. Please read the following to understand the logic.

We know for a fact that coins will be lost. Take, for example, the Japanese earthquake and tsunami. Perhaps harddrives and flash drives were destroyed then. Also, there is the potential for failed electronics, unintentional and intentional deletion, etc. Logic says that this will happen and continue to happen for as long as Bitcoins exist. The logical conclusion, until the heat death of the Universe, is 100 percent loss.

Now, before we get into a debate about the Universe's heat death or the practicality of a system designed to last that long, let's at least entertain the idea that a robust and long lasting system is desirable. Given that, let's look at how the dynamics of the system change with a significant loss of coins from the system.

The system as it is now is designed to allow commerce and valuation to occur, assuming that valuations are based on the collective wisdom of the crowd, which is based on the notion that most all coins are not lost.

The system as it will inevitably be will not be as the above system is. Instead, it will be a system in which commerce and valuation occur, but based on the collective wisdom of the crowd operating on less information than when the system was founded. In other words, valuation will be based on a more uncertain model of how many coins are truly in existence.

The short synopsis: over time, valuation will become more uncertain and less able to assess the true number of bitcoins in circulation. Is that a good model?

[kjj]

The system as it is now is designed to allow commerce and valuation to occur, assuming that valuations are based on the collective wisdom of the crowd, which is based on the notion that most all coins are not lost.

No.  The system was based on the notion that the total quantity of coins is unimportant.

From day one it has been understood that coins could be and would be lost.  I'm sorry you missed this in your research, but coin loss was a design decision, not an accident.

[ascent]

Clearly, you are stating then that a design decision was made to allow for the loss of coins because the total quantity of coins is unimportant. That is simply an indication that you are not reading what I have written.

It is one thing to design a system that allows for division of coins into ever more granular tokens, and justifying a design decision based on that. That, however, does not address the issue of increasing uncertainty in the system as it evolves.

Please show me in the papers written on the subject where it explicitly states that a design decision was made to allow and encourage increasing uncertainty in the system over time. If you can do that, I will accept that the original designers intended increasing uncertainty over time.

Again, it's not about increasing granularity or increasing deflation, neither of which are issues. It's about increasing uncertainty.