Recycle lost coins

[peak]

right now, the possibility of lost coins leads to the risk of an incalculable profit for everybody owning bitcoins. the possibility of recycled coins on the other hand leads to the risk of an incalculable profit for everybody mining bitcoins.
so you basically want to put an awful lot of work into it and make the protocol more complex just for trading one problem that isnt really a problem for another not-really-a-problem.
thats so meaningless you could probably convince the european union to fund it 

This can be fixed by share the demurrage uniformly.

[DrSammyD]

right now, the possibility of lost coins leads to the risk of an incalculable profit for everybody owning bitcoins. the possibility of recycled coins on the other hand leads to the risk of an incalculable profit for everybody mining bitcoins.
so you basically want to put an awful lot of work into it and make the protocol more complex just for trading one problem that isnt really a problem for another not-really-a-problem.
thats so meaningless you could probably convince the european union to fund it  

Increasing divisibility means increasing the amount of space taken up by the block chain. It's wasteful. We already have a problem with downloading the block chain as it takes days. We may very well have to increase divisibility of the existing 21 million if they become worth a great deal more. Lost coins would only compound that problem.

There is no accounting for entropy in this system. That's a problem. The reason this solution is better than increasing divisibility when needed is because this only needs to be done once.

And I'd rather make it more profitable for people doing work for the system than for people holding coins and doing nothing for it.

Think of it like a storage fee.

[jtimon]

First of all, the idea in the bitcoin show is not new. You may be interested in this thread:
https://bitcointalk.org/index.php?topic=9295.0

As some people pointed out, demurrage would solve this problem.
The only problem with the solution proposed here is with very durable stores such as bitbills. Apart from that, no one is punished, hoarders can move their coins from one address to another from time to time.

The proposed solution is also nice for storage (demurrage also solves the problem here).

Another good side effect is that lost coins would reward miners, something that some people say is critical:
https://bitcointalk.org/index.php?topic=6284.0

Freicoin also has perpetual reward for miners. Freicoin is different from maaku's proposal because it distributes evenly the demurrage charged between miners (after the maximum monetary supply is reached, the reward for miners is constant. Well the fees are still variable), instead of some of them being luckier than others. I still don't know why he wants his system to be like that.

[maaku]

Because my proposal trades that inconvenience to the miners with a reward for the user: those demurrage fees are treated as transaction fees, so their transaction is processed quickly and at less cost. These may be heretical words on this forum, but I'd rather reward the consumers in the economy than the miners.


But we should move this debate elsewhere if you want to continue it.

[DrSammyD]

First of all, the idea in the bitcoin show is not new. You may be interested in this thread:
https://bitcointalk.org/index.php?topic=9295.0

As some people pointed out, demurrage would solve this problem.
The only problem with the solution proposed here is with very durable stores such as bitbills. Apart from that, no one is punished, hoarders can move their coins from one address to another from time to time.

The proposed solution is also nice for storage (demurrage also solves the problem here).

Another good side effect is that lost coins would reward miners, something that some people say is critical:
https://bitcointalk.org/index.php?topic=6284.0

Freicoin also has perpetual reward for miners. Freicoin is different from maaku's proposal because it distributes evenly the demurrage charged between miners (after the maximum monetary supply is reached, the reward for miners is constant. Well the fees are still variable), instead of some of them being luckier than others. I still don't know why he wants his system to be like that.

Then perhaps we should have demurrage for coins which haven't been moved in 10 years, rather than uniform throughout the bitcoin economy.

[maaku]

Then perhaps we should have demurrage for coins which haven't been moved in 10 years, rather than uniform throughout the bitcoin economy.

If all you are trying to do is recover lost coins, that's fine. But that's really more of an added benefit to demurrage, whose primary purpose is much more expansive.

[ctoon6]

for anyone who has read my post, can they say anything that is wrong with it, because i think it could really work.

[dinker]

A better Lost Coins recycling program:

Instead of losing all 50,000 coins at once if someone forgot about it for 3 years...

Make it so you lose only 10% of coins that's been idleing for 1 year

so an address with 50,000 coins would have 45,000 after 1 year, 40,500 after 2nd year... and so on

if this is indeed lost BTC, eventually it will gradually be redistributed into the econ again...

if this is someone's idle address, he would still be able to recover more than half of it after 5 years.

[jtimon]

for anyone who has read my post, can they say anything that is wrong with it, because i think it could really work.

I'm not sure I understand your proposal. Is it demurrage only for very old or small accounts?

[ctoon6]

for anyone who has read my post, can they say anything that is wrong with it, because i think it could really work.

I'm not sure I understand your proposal. Is it demurrage only for very old or small accounts?

the basic idea is every bitcoin address will give up a % of coins to the person who makes the next block once all coins have been made. there is never a declining reward for blocks, coins will always eventually get recycled, and it discourages hoarding the currency. the amount you loose per block would be very small, but if you were to just keep your coins over the course of about 6-10 years, you would have nothing left if i did my math right.

additionally it resolves the issue of the chain getting too large, because over time, all the coins in old addresses will be gone anyway, so you only need a trusted person to include a valid block in a client that gets you started.

[jtimon]

What you describe is demurrage. We have a forum for a fork of bitcoin with this feature.
We've not implemented it yet. In fact there's many open discussions.
For example, you say "once the maximum base is issued", I prefer from the beginning. Most people want a 4% or 5% rate, you're proposing 10%. The curve of generation, the maximum base (some people think that it shouldn't exist and the supply of money should be elastic), charge the demurrage automatically or at the moment of the transaction (so that the demurrage acts as a tx fee for the miner instead of being part of a constant reward), etc.
If you're interested, please visit: http://www.freicoin.org/

[ctoon6]

What you describe is demurrage. We have a forum for a fork of bitcoin with this feature.
We've not implemented it yet. In fact there's many open discussions.
For example, you say "once the maximum base is issued", I prefer from the beginning. Most people want a 4% or 5% rate, you're proposing 10%. The curve of generation, the maximum base (some people think that it shouldn't exist and the supply of money should be elastic), charge the demurrage automatically or at the moment of the transaction (so that the demurrage acts as a tx fee for the miner instead of being part of a constant reward), etc.
If you're interested, please visit: http://www.freicoin.org/

the concept is very similar, although my idea has some major differences.

there is always 1T coins once they have been made.
there is no fixed %, you only get reduced by whats required
once you get below a x amount for y blocks, it just gets taken. this is to get rid of stray coins quickly instead of just deducting small useless amounts forever.

so the basic way reductions are calculated is by

1. take all coins that meet the criteria
2. 500,000-from #1
3. divide out what you need to make your 500,000 coins from each account.

this process does not start until the 1,000,000,000,000 coins have been made

i think it would also be beneficial to have every block consolidate every previous block. so instead of having a huge number of small blocks, just have about 10,000 big blocks(more if faster block times)

[kjj]

In your idea, you have 10,000 copies of a database, each with several millions or billions of rows.  And you need two do three passes through it every minute or two, and the third pass will require a hash of each of those millions or billions of rows.  And when a miner finds a new block to send out, everyone in the system needs to do several millions or billions of hashes just to verify it.

By the time that is feasible on regular computers, we'll have wristwatches running full bitcoin nodes and storing the entire bitcoin blockchain internally.

Not to mention that your system produces the starting conditions of every hyperinflation ever, namely the thought that "I must get rid of this fucking currency as quickly as I possibly can because it will be worth less in a couple of minutes".

And yes, I'm sure you can find ways to tweak the system to mitigate the technical problems, but I doubt that you'll ever be able to do anything about people's preference for money that gains value over time, instead of losing it.

[ctoon6]

In your idea, you have 10,000 copies of a database, each with several millions or billions of rows.  And you need two do three passes through it every minute or two, and the third pass will require a hash of each of those millions or billions of rows.  And when a miner finds a new block to send out, everyone in the system needs to do several millions or billions of hashes just to verify it.

By the time that is feasible on regular computers, we'll have wristwatches running full bitcoin nodes and storing the entire bitcoin blockchain internally.

Not to mention that your system produces the starting conditions of every hyperinflation ever, namely the thought that "I must get rid of this fucking currency as quickly as I possibly can because it will be worth less in a couple of minutes".

And yes, I'm sure you can find ways to tweak the system to mitigate the technical problems, but I doubt that you'll ever be able to do anything about people's preference for money that gains value over time, instead of losing it.

my idea hardly resembles hyperinflation where you take wheel barrels down to the store to buy a loaf of bread. once all 1T coins have been made there is no more inflation. although it may look like it from your end.

i think that the average person would find that it would still be cheaper to use this currency than USD and visa, inflation and the fees would be far lower and thus cost less money. after all, most people spend most of their money the same month they get it. so they would not be paying much.

a new system could be added on top of the one i already suggested. you could put coins in a address that makes them not able to be removed. i guess there could be 2 types of addresses or something. you send coins to the savings type and they cant be removed for 1 year or so. also, coins can not be added to an address once it has coins. coins not taken out will suffer from the same demurrage as normal coins. coins can be put back into savings immediately. the reason you can not be able to set the amount, is to prevent abuse by setting either really short times or really long times with not intent on ever getting them back, effectively destroying them. this system would allow you to save coins without having to loose all your money in 6-10 years or whatever amount of time.

[jtimon]

@ ctoon6
Apart from the additional work required from the miners that kjj points out, your system has another flaw.
Your system will not have a perpetual reward as you claim. People will just move their coins in the quantities and times you incentive. That's good for storage and lost coins, but doesn't solve the security potential problem.

@maaku
Your system doesn't warranty the reward to solve the potential security problem and neither solves the lost coins problem. Until the account get completely destroyed by demurrage, the system can't take the lost coins, because it's waiting for a transaction from that account to charge the demurrage.

If we have, for example, a lost account with 1000 coins, and your proposed 4% demurrage...

In 10 years
0.96^10 = 0.664832636, the account will still have 664.832636 coins
In 20 years
0.96^20 = 0.442002434, the account will still have 442.002434 coins
In 50 years
0.96^50 = 0.129885794, the account will still have 129.885794 coins
In 100 years
0.96^100 = 0.0168703194, the account will still have 16.8703194 coins
In 200 years
0.96^200 = 0.000284607675, the account will still have 0.284607675 coins
etc

On the other hand, my system will be reintroducing the lost coins through demurrage because it is charged automatically on every account no matter if there's transactions from it or not.

[maaku]

Yeah, but my proposal also includes a new transaction type where fees can be claimed as a bounty each time an output halves in value, solving that problem.

[jtimon]

Yeah, but my proposal also includes a new transaction type where fees can be claimed as a bounty each time an output halves in value, solving that problem.

Are you aware that at 4% the bounty takes almost 17 years to be claimed?

0.96^16.97 = 0.500199006
0.96^16.98 = 0.499994857

[maaku]

Yes, I'm aware of that and consider it a feature. I don't think that lost coins is an issue, except in the very long-term.

[jtimon]

Yes, I'm aware of that and consider it a feature. I don't think that lost coins is an issue, except in the very long-term.

I can understand that you're not much concerned with lost coins.
But do you really consider how your system (compared to mine) treats the lost coins a feature?

[maaku]

I do, because for those ~17 years the owner of those coins would have received a benefit from the levied fee had he chosen to spend them.