Proposal to Address Dormant Bitcoin:Recycling Lost Coins into the Mining Process

[stompix]

In fact, depending on the fiat value (or whatever the representation of the electricity bill then) we could get away with 1 BTC block reward or even less, and still keep a high enough hashrate that makes the network more secure than it is today or even better, so that suggested fee could drop to below 0.25% a year or so, and it could be adjustable based on some variables.

One issue with this:
3 BTC at $60k will guarantee you the safety we have now.
0.3 BTC at $600k will guarantee the same safety.

The problem is that you're guarding in both cases with the same hashrate or miner cost to be more precise an ecosystem worth 500 billion and one worth 10 trillion. So if 3 billion might sound like a lot to attack a coin with a market cap of 500 billion it doesn't sound that excessive when taking down one that rivals the GDP of the USA.

The economics of mining by and large follows the value of the coin, which is regulated partly by the difficulty. Our optimal outcome would be to have a network that has a high difficulty and thereby a high opportunity costs that comes with any attack. If we were to consider the deflationary nature of Bitcoin, it is more likely for the price to increase in tandem with the deflation rate. Whilst for one with an inflationary nature, we would have the price decreasing with the inflation rate.

Case in point, if we do not see high adoption rates by the time mining rewards dwindle even further, it would just be an indication that Bitcoin hasn't been a successful experiment. More likely than not, a replacement of Bitcoin would be readily available by then and it would provide more utility than what we have.

We had a glimpse of that a few weeks ago when the fee paid nearly exceeded the reward for a few blocks!
Was that sustainable the long run, obviously not!

Now there comes the problem with the rising BTC price and the fees that have to prop them up, for sure people like to talk about prices in BTC, that the fee is not in cents but in sat/b but in reality, nobody gives a damn how many satoshi that is but how much $ you have to pay.
With fixed blocksize the math is pretty simple:

Transactions last 24h
(Number of transactions in blockchain per day)   456,073
Reward (last 24h)   968.75+21.92 BTC ($28,921,512.6)

So 450k tx that need to cough up 28 million, that's 62$ per tx on average!

But what if the BTC price doubles every 4 years to compensate?
As I said above, you're just having the same number of security guards while doubling the area they need to patrol and twice the merchadise!

[tdk2]

we propose the implementation of a mechanism that gradually and systematically sends dormant funds back into the mining process after a predefined period of inactivity.

Several Swiss banks tried just such a scam with "unclaimed" Jewish assets from the time of the Holocaust. Didn't end well for them.

[mikeywith]

The problem is that you're guarding in both cases with the same hashrate or miner cost to be more precise an ecosystem worth 500 billion and one worth 10 trillion. So if 3 billion might sound like a lot to attack a coin with a market cap of 500 billion it doesn't sound that excessive when taking down one that rivals the GDP of the USA.

What kind of attack can one perform to own 10 trillion worth of BTC? The only feasible attack would be double-spend, to perform a 3 billion $ attack you would really want to reverse a transaction/ series of transactions that is worth much more, a double spend attack is not feasible now or with a market cap of 10 trillion as long as:

1- The attack is very expensive.
2- The profit of playing fair is high.


A government carrying out different attacks just to damage bitcoin is something different, you could argue that if needs be, it won't matter much how much hashrate is securing the network, if they label mining bitcoin as a crime worldwide, 90% of miners will shutdown and then it will cost them little to nothing to attack it.

[BlackHatCoiner]

Which one is more important remains the question, which feature is more valuable is also a matter of question, is it the 21M cap, or the free storage of coins, hard to tell which one to sacrifice when the time comes.

They're equally important. Arbitrarily altering the inflation schedule, and collecting a "storage tax" from every Bitcoin address will have the same effect. De-valuating the currency. Collecting "storage tax" only from "lost coins" doesn't hold water, because besides being incapable of distinguishing lost coins, they are pretty much finite, and once collected, you'll quickly run out of incentives.

A government carrying out different attacks just to damage bitcoin is something different, you could argue that if needs be, it won't matter much how much hashrate is securing the network, if they label mining bitcoin as a crime worldwide, 90% of miners will shutdown and then it will cost them little to nothing to attack it.

What one government does, isn't necessarily in favor of the rest of the governments. Quite the opposite. Whenever some government tries to ban bitcoin mining, there appear mining paradises somewhere else.