Bitcoin Deflation

[HandcraftedBreads]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

I suppose the first thing one would say no for, would be by virtue of bitcoin's well-known deflationary property. This said, I believe it is much more important, especially in the longest term, that bitcoin keeps its property of conservation of energy, that is, having a fixed quantity of money ever available. By losing coins, instead, and by having them unrecoverable, we have not a fixed quantity of money available, rather a decreasing one, which is why we call bitcoin deflationary.

What would happen if we would make so that coins with 131 years of inactivity would be reintroduced into the network?

I see this having some positive effects:
- decreased impact of hereditary monopoly
- incentive to let the currency flow
- canceled the future necessity to increase the number of decimals for 1 BTC (very-long term perspective: too many coins have been lost, thus the necessity to further subdivide a coin)


FAQ (Further information in replies)

How do we identify lost coins?

Wallets would declare activity status by performing an active (sender) transaction, of any size, within a 131-year span.

How do we prevent reintroduced coins to cause financial distress and depreciation of coins?

This issue can be solved by new cycles of mining reintroducing money gradually over time, starting at the end of a mining age (131 years).

Who is going to reintroduce lost coins?

The protocol.

Does this mean stealing coins from users?

If the protocol reintroduces lost coins from inaccessible wallets, it is not considered stealing because the previous owner has lost control and ownership rights over those coins. The reintroduction is aimed at ensuring the functionality and integrity of the system rather than depriving the previous owner of their rightful property.

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[Z-tight]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

Reintroduced by whom? Individuals control the private keys to their BTC, so if any lost BTC is going to be reintroduced, it has to be if the owner finds the private keys to their funds. It is not even possible to be sure of how much BTC's are lost, because it does not mean funds are lost if it has not moved from an address for many years.

I suppose the first thing one would say no for, would be by virtue of bitcoin's acclaimed deflationary property. This said, I believe it is much more important, especially in the longest term, that bitcoin keeps its property of conservation of energy, that is, having a fixed quantity of money ever available. By losing coins, instead, and by having them unrecoverable, we have not a fixed quantity of money, rather a decreasing one, which is why we call bitcoin deflationary.

Lost BTC's do not increase the number of BTC's in circulation, it reduces it, only 21 million BTC's are going to be mined, if you add the ones that are lost, then a few million less would be in circulation, but not more than the capped 21 million, and this doesn't affect the BTC network any bit, it should even make BTC more scarce and more valuable.

What would happen if we would make so that coins with 109 years of inactivity would be reintroduced into the network?

BTC was created only 14 years ago, and only the owner of a private key can move their BTC no matter how long it has remained inactive in an address.

[franky1]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

so you want to introduce stealing someone elses retirement/inheritance plans simply because they have not decided to spend their retirement funds in X years

um no thanks

once you introduce a way to take value away from someones utxo without their signature. your breaking many rules of bitcoin that cant then be unbroken

[paid2]

Wasn't it Satoshi himself who said that every BTC lost is a gift to other BTC holders?

I wonder what would be the consequence on Bitcoin's price if such an operation comes into effect.
One might also wonder about the technical feasibility of such an idea, it would be necessary to be able to withdraw BTC from certain wallets without the actual consent of the owners of said wallets. I think this would open the door to negative possibilities for bitcoin, it would imply that we don't really own our BTC, even when we have our private keys.

Personally I find it very positive to have a large amount of bitcoin lost/burned, it allows to guarantee a certain minimum price in theory, if we are interested in the FIAT value of BTC at least.
The deflationary interest of Bitcoin would be a bit lost with such a process.

[dimonstration]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

This is madness. The first problem is how can you identify lost coin if there’s a recent event that an old address move their token recently? Doing this will make Bitcoin centralized since you will remove the freedom for people to hold in long term period because their coin might be categorized as lost if they didn’t touch it for long period of time.

[HandcraftedBreads]

This is madness. The first problem is how can you identify lost coin if there’s a recent event that an old address move their token recently? Doing this will make Bitcoin centralized since you will remove the freedom for people to hold in long term period because their coin might be categorized as lost if they didn’t touch it for long period of time.

Let's say we don't identify lost coins, but inactive wallets. So the coins in a wallet that has not performed a transaction in 131 years (full bitcoin mining life), will be reintroduced to the network by another cycle of mining. In this way, we wouldn't steal money from people, because they would be able to prevent the reintroduction, by performing a simple transaction, thereby "verifying their activity".

[thecodebear]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

I suppose the first thing one would say no for, would be by virtue of bitcoin's acclaimed deflationary property. This said, I believe it is much more important, especially in the longest term, that bitcoin keeps its property of conservation of energy, that is, having a fixed quantity of money ever available. By losing coins, instead, and by having them unrecoverable, we have not a fixed quantity of money, rather a decreasing one, which is why we call bitcoin deflationary.

What would happen if we would make so that coins with 109 years of inactivity would be reintroduced into the network?

I see this having some positive effects:
- decreased impact of hereditary monopoly
- incentive to let the currency flow
- canceled the future necessity to increase the number of decimals for 1 BTC (very-long term perspective: too many coins have been lost, thus the necessity to further subdivide a coin)

ummm what?? Just randomly deciding to take other people's Bitcoin from their own addresses and redisburse it?!? Even if a wallet is inactive for generations maybe its the long term savings of a family and they haven't touched it and just keep passing it down. It would be insane to unilaterally decide its okay to just take Bitcoin from addresses.

I can't believe the first objection you thought people would have with this would be something to do with deflation, and not to do with the fact that you're saying you think people's bitcoin should be forfeit if you simply hold on to it for too long!

And in a completely insane world where we wanted Bitcoin to be awful and made this happen, how would it even be redistributed? Who would decide the distribution, how would it be decided?

God, occasionally people come up with just horrendous ideas to change Bitcoin for no good reason, this definitely is on that list. No offense lol

[thecodebear]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

This is madness. The first problem is how can you identify lost coin if there’s a recent event that an old address move their token recently? Doing this will make Bitcoin centralized since you will remove the freedom for people to hold in long term period because their coin might be categorized as lost if they didn’t touch it for long period of time.

Exactly. I mean even today you see articles about there being like 4 million or 5 million lost bitcoin because people just assume any bitcoin that hasn't moved since like 2013 has been lost, but every couple of months I see an article about how a few hundred bitcoin of some address that's been inactive since 2010 or 2011 was just moved. Plenty of the "lost" bitcoin is not actually lost but is still owned by people.

There is no amount of time (like 109 years as the OP suggests) that can pass that would make it okay to for the protocol itself to steal people's Bitcoin.

This would make Bitcoin no longer sovereign money because in its very design it would steal your money if you held it for too long. This idea would fundamentally break Bitcoin for no good reason at all. There is no difference in Bitcoin's utility whether there are 21 million bitcoin available or 19 million or 17 million.

[HandcraftedBreads]

No offense lol

The main focus was to reintroduce lost coins, thereby keeping a constant quantity of money (energy) in circulation.

The protocol, which would be the neutral entity performing the process, wouldn't steal people's money. An address owner could "reset" the clock whenever they make a transaction through it. Much like when you breathe: 131 years would be the time for a wallet to die without breathing, that is, transacting, and the energy (money) into it to be reintroduced into the network.

The wallet owner could then provide proof that the coins in the wallet address are still active, potentially able to circulate again (actively managed by an owner). If this doesn't happen, the protocol will resolve the situation.

[tiCeR]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

I suppose the first thing one would say no for, would be by virtue of bitcoin's acclaimed deflationary property. This said, I believe it is much more important, especially in the longest term, that bitcoin keeps its property of conservation of energy, that is, having a fixed quantity of money ever available. By losing coins, instead, and by having them unrecoverable, we have not a fixed quantity of money, rather a decreasing one, which is why we call bitcoin deflationary.

What would happen if we would make so that coins with 109 years of inactivity would be reintroduced into the network?

I see this having some positive effects:
- decreased impact of hereditary monopoly
- incentive to let the currency flow
- canceled the future necessity to increase the number of decimals for 1 BTC (very-long term perspective: too many coins have been lost, thus the necessity to further subdivide a coin)

What if you clean up the basement of your dead great grandpa and you find a big fat chest full to the brim with gold and you sell it for say 100 million and you are obliged to register that sale with financial authorities and then, yes then, they tell you that the gold was acquired by your great grandpa 110 years ago and there is a law stating that when something is lying around dormant for >109 years, it automatically belongs to the public and must be returned to public treasury, what then? Honest question, what would you think?

[HandcraftedBreads]

What if you clean up the basement of your dead great grandpa and you find a big fat chest full to the brim with gold and you sell it for say 100 million and you are obliged to register that sale with financial authorities and then, yes then, they tell you that the gold was acquired by your great grandpa 110 years ago and there is a law stating that when something is lying around dormant for >109 years, it automatically belongs to the public and must be returned to public treasury, what then? Honest question, what would you think?

I think there is already something like this. It is called the Copyright Act, and its relative Copyright Term Extension Act. It gives us the possibility to channel work into the public domain.

An implementation like this would prevent previous work to be directly wasted through loss of coins. Rather, the reward of that work would be reintroduced into the network through additional work, new mining for missing coins. This additional work would "pay the price" for having lost them in the first place, while maintaining a fixed amount of circulating coins.

[teosanru]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

I suppose the first thing one would say no for, would be by virtue of bitcoin's acclaimed deflationary property. This said, I believe it is much more important, especially in the longest term, that bitcoin keeps its property of conservation of energy, that is, having a fixed quantity of money ever available. By losing coins, instead, and by having them unrecoverable, we have not a fixed quantity of money, rather a decreasing one, which is why we call bitcoin deflationary.

What would happen if we would make so that coins with 109 years of inactivity would be reintroduced into the network?

I see this having some positive effects:
- decreased impact of hereditary monopoly
- incentive to let the currency flow
- canceled the future necessity to increase the number of decimals for 1 BTC (very-long term perspective: too many coins have been lost, thus the necessity to further subdivide a coin)

109 years? Even if I consider the time period from 2009 until the first 109 years you would have seen so much of deflation in the price that it'll be sky rocketing until a point where using bitcoin would have already become difficult due high transaction fees. On the other hand if you reduce the span of 109 years you stand at a risk of snatching someone's valuables merely based on the fact that they did not do any activity. I don't think both these solutions are optimal.

[HandcraftedBreads]

109 years? Even if I consider the time period from 2009 until the first 109 years you would have seen so much of deflation in the price that it'll be sky rocketing until a point where using bitcoin would have already become difficult due high transaction fees. On the other hand if you reduce the span of 109 years you stand at a risk of snatching someone's valuables merely based on the fact that they did not do any activity. I don't think both these solutions are optimal.

I've proposed additional solutions in the replies. Should I edit the original post to make it easier to discuss? By the way, I confused the number. It is 131.

[franky1]

I've proposed additional solutions in the replies. Should I edit the original post to make it easier to discuss? By the way, I confused the number. It is 131.

and just as fast as you introduce a rule to move value without signature.. you suddenly want to move the years.. whats next only 30, then only 10?

um no thanks

[HandcraftedBreads]

and just as fast as you introduce a rule to move value without signature.. you suddenly want to move the years.. whats next only 30, then only 10?

um no thanks

It was 131 from the beginning, I just confused the number with 2009. 131 years stands for the full approximate length of bitcoin's mining life.

[Artemis3]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

so you want to introduce stealing someone elses retirement/inheritance plans simply because they have not decided to spend their retirement funds in X years

um no thanks

once you introduce a way to take value away from someones utxo without their signature. your breaking many rules of bitcoin that cant then be unbroken

I can also imagine countries, foundations, etc keeping bitcoin reserves (in cold wallets), not moved in decades just like they did with gold.

[Fivestar4everMVP]

Wouldn't it be better if lost coins were reintroduced into the network after a fixed span of inactivity?

I suppose the first thing one would say no for, would be by virtue of bitcoin's well-known deflationary property. This said, I believe it is much more important, especially in the longest term, that bitcoin keeps its property of conservation of energy, that is, having a fixed quantity of money ever available. By losing coins, instead, and by having them unrecoverable, we have not a fixed quantity of money available, rather a decreasing one, which is why we call bitcoin deflationary.

What would happen if we would make so that coins with 131 years of inactivity would be reintroduced into the network?

Bitcoin code was not written in a way that it could mint new coins, so even if your idea is good, it is absolutely not implementable, the current bitcoin code cant be uttered or changed from what and how Satoshi have designed it to operate, any one that tried to utter the code will trigger a hardfork which would lead to the creation of a new coin, which would be utterly different from bitcoin.

Do your research, you would discover that there are lots of bitcoin Hardforked coins in the market, this hardforked coins were created to correct some supposed flaws bitcoin had, but still, non of this coins has been able to outshine bitcoin even as perfect as they claim to be.

[HandcraftedBreads]

Bitcoin code was not written in a way that it could mint new coins, so even if your idea is good, it is absolutely not implementable, the current bitcoin code cant be uttered or changed from what and how Satoshi have designed it to operate, any one that tried to utter the code will trigger a hardfork which would lead to the creation of a new coin, which would be utterly different from bitcoin.

There would be no need to mine new coins, as the total limit would remain constant as originally intended. Instead, mining would focus on the lost coins, which after 131 years of inactivity by the hosting wallet, would be either burned or placed in an intermediate area similar to a mempool, but for coins. These lost coins would be waiting to be reintroduced to the network through remining. This process would be called "recycling". Mining is indeed a cycle. Whenever there would be lost coins recycling, it would result in a circulating supply of 21 million minus the burnt or mempool supply.

[franky1]

Bitcoin code was not written in a way that it could mint new coins, so even if your idea is good, it is absolutely not implementable, the current bitcoin code cant be uttered or changed from what and how Satoshi have designed it to operate, any one that tried to utter the code will trigger a hardfork which would lead to the creation of a new coin, which would be utterly different from bitcoin.

There would be no need to mine new coins, as the total limit would remain constant as originally intended. Instead, mining would focus on the lost coins, which after 131 years of inactivity by the hosting wallet, would be either burned or placed in an intermediate area similar to a mempool, but for coins. These lost coins would be waiting to be reintroduced to the network through remining. This process would be called "recycling". Mining is indeed a cycle. Whenever there would be lost coins recycling, it would result in a circulating supply of 21 million minus the burnt or mempool supply.

bitcoin is not a system that should take coins away from a utxo without a signature.
either now or in a century

there is no need to steal coins to keep mining active.
instead there would be more transactions per block by then where lots of users paying lots of small fee's = a nice total for pools

if you think the network should for 131 years stay at just 2000 tx a block average paying large fee's and also steal coins to compensate pools.. then that is a very very very bad proposal/future plan

[HandcraftedBreads]

if you think the network should for 131 years stay at just 2000 tx a block average paying large fee's and also steal coins to compensate pools.. then that is a very very very bad proposal/future plan

The use of the word "steal" remains improper. The coins subjected to this process of recycling would be the ones of "dead" wallets, i.e those wallets that have been inactive (no transaction) for a period equal to the full mining cycle (131 years). This same thing happens in nature. The universe doesn't steal energy from dead bodies, it recycles that energy channeling it back into the system. Bitcoin has a curious habit of mimicking nature when it comes to energy, except for recycling. Energy is never permanently lost in nature, it just transforms from one form to another. It seems that bitcoin neglects the recycle of lost money/energy back into the system.