Make Bitcoins "dissolve" after some time if not used?

[bittersweet]

The transaction chain is growing and growing.

Would it make sense if in the future bitcoin miners would only assume transactios as valid if the bitcoins used in the transaction were used at least once in the last year for example? So you would have to move your Bitcoins at least once per year to another account, or you would "lose" them. So the chain would have to be only one year long.

I think this would be pretty good way to deal with lost bitcoins - we would know how many are really lost. Perhaps there could be even a method to reintroduce them back into the system? I don't know, some "public" account where people with too old bitcoins to use them could send them, and the Bitcoins from the account would be reused as a prize for generating blocks.

Does it make ANY sense?  



edit: I posted this in the wrong board, sorry. This thread should be in Development & Technical Discussion

[Garrett Burgwardt]

No.

There is functionally no difference between lost coins and coins in savings.

And it would be terrible for someone to lose coins simply because they rotted away. Bitcoin is good as it is.

[bittersweet]

Yes but if not making them rot would be simply moving all of them from one your account to another, in a client it could be as simple as one click of a button once per year. And there could be a warning implemented. Clients could even implement "refreshing" your account automatically.

The only real problem I see here would be transaction fee. But is it really? If you hold money safe, don't pay anything, and the others keep the network working for you all the time (which does cost them money)...

[bhagwad]

I think dealing with lost bitcoins is really important. Unlike regular money, there will only ever be a limited supply of bitcoins and over time, the available number of bitcoins will keep going down as more and more bitcoins are lost.

With 21 million bitcoins divisible upto 8 digits, it means we will have a maximum of 2,100,000,000,000,000 currency units which is 2 quadrillion. It sounds like a lot but if a person loses 10,000 bitcoins (say his hard drive crashes), that's a net loss of 1,000,000,000,000 or 1 trillion units out of the market forever! In a period of 10 years or so, this is going to add up leaving us with very few bitcoins  - ever.

We need <em>some</em> way of replenishing lost bitcoins. Perhaps we can release newer bitcoins using the same technique we have now every 5 years or so for a few months...or some other solution?

[bittersweet]

Like Garrett said, there is functionally no difference between lost coins and coins in savings. So I proposed to force people to use them at least once per year (for example, could be longer period of time) to prove they are not lost and to not have to keep insanely long chain of transactions. It could be automated process, so you would have to start bitcoin client once / year.

Just adding more is not a solution, because you can't really tell if they are lost.

[theymos]

Miners only have to store unspent transactions, so it's not any more work to store a transaction from two years ago than one from now -- you don't need all the intervening spent transactions.

It would reduce the number of transactions that need to be saved somewhat, but it's not worth making balances unstable.

Lost coins represent absolutely no problem. Precision will keep being increased so we can run on fewer and fewer coins.

[bhagwad]

You're right. We can't really tell if the coins are lost or not.

Even if we do require users to transact their bitcoins once a year, there will be people who don't or people who have genuinely lost them. What do we do then? In fact, requiring users to transact once a year can prove disastrous if they forget to do it - not only will we erroneously assume that the coins have been lost, if a person holds a substantial number of bitcoins, those coins are lost to us forever.

The biggest difference between lost bitcoins and losing coins in a piggybank is that new physical coins are getting minted all the time. We need a mechanism to reflect this reality.

theymos says that precision will keep increasing. I've shown in my original post that losing even 10,000 bitcoins represents a 0.05% drop in the entire world economy. Over a period of say 10 years, we will have lost a very significant amount of transacting units and the precision of just 8 digits will no longer be able to keep up.

[bhagwad]

How about if we use statistical analysis to estimate the number of bitcoins lost on average each year? That might help alleviate the problem somewhat...

We can then regenerate the lost bitcoins periodically to the community at large.

Another option would be to continue generating a small number of bitcoins forever thereby building in a small amount of inflation - which might even be compensated for the lost coins. I don't know the rates at which bitcoins are genuinely lost and so this amount will have to be determined as we go along.

[Alex Beckenham]

In a period of 10 years or so, this is going to add up leaving us with very few bitcoins  - ever.

Forum member 'asdf' said it best I think... if we lose a massive 50% of the coins EVERY year, will we ever have 0?

Even if 140 years later there's only one Satoshi in circulation (0.00000001 BTC), then we'll just divide that up among everyone no problem and continue to transact with each other in some smaller units.

0.0000000000000000000000000000000000000001 for two pizzas anyone?

[bhagwad]

@doood

You can't divide a bitcoin into more than 100 milliion units. Just imagine the whole world sharing just 100 million cents. There won't be enough for everyone to possess even 1 unit!

Contrary to what is being said, you can't run the world economy on just one bitcoin since bitcoins are not infinitely divisible. If they were, then there would be no problem.

But they're not.

[Alex Beckenham]

@doood

You can't divide a bitcoin into more than 100 milliion units. Just imagine the whole world sharing just 100 million cents. There won't be enough for everyone to possess even 1 unit!

Contrary to what is being said, you can't run the world economy on just one bitcoin since bitcoins are not infinitely divisible. If they were, then there would be no problem.

But they're not.

Why not?

Is your computer incapable of storing a 48 digit number?

Even my old rusty PC from 5 years ago can do that.

The 'global economy' isn't infinite, so bitcoin's divisibility doesn't need to be either.

[bhagwad]

Why not?

Is your computer incapable of storing a 48 digit number?

Even my old rusty PC from 5 years ago can do that.

The 'global economy' isn't infinite, so bitcoin's divisibility doesn't need to be either.

The system isn't devised that way. Your computer may be able to do the division but the bitcoin software doesn't allow you to transact in less than 0.00000001 units. You can find this in the specifications of the bitcoin standard: https://en.bitcoin.it/wiki/FAQ#How_divisible_are_Bitcoins?

And while you're right that the global economy isn't infinite, it's replenishable and so lost currency can be created again. Bitcoins weren't designed with that functionality in mind.

[Alex Beckenham]

the bitcoin software doesn't allow you to transact in less than 0.00000001 units.

...yet.

Why do you doubt theymos when he says precision can keep being increased?

[bhagwad]

Why do you doubt theymos when he says precision can keep being increased?

As long as 8 digits isn't a hard limit, there's no problem at all. It's just that I haven't seen the code and I don't know how deeply embedded the 8 digit limit is in the system. I hope it can be changed. After all, why didn't the designers pick some truly huge limit like 16 instead? That would have tided us over for some hundreds of thousands of years I'm guessing.

I'm reminded of a time when everyone though that IPv4 was more than enough...

[ryepdx]

As long as 8 digits isn't a hard limit, there's no problem at all. It's just that I haven't seen the code and I don't know how deeply embedded the 8 digit limit is in the system.

Yeah. The 8 digit limit is only in the official client, not in the protocol. You could write your own client to transfer a tenth or a hundredth or a zillionth of a satoshi if you wanted to. The designers probably chose 8 digits because they assumed that the client would be getting updated between now and bitcoin getting big enough to need more precision. Probably a safe assumption. At present, allowing more than 8 decimal places would really just be a waste of effort and memory.

[error]

It would be much better to figure out a way to identify and recover lost coins for their owners.

[Garrett Burgwardt]

It would be much better to figure out a way to identify and recover lost coins for their owners.

Impossible without breaking the security for everyone else. Make frequent backups to many different places and you're fine.

[Alex Beckenham]

why didn't the designers pick some truly huge limit like 16 instead? That would have tided us over for some hundreds of thousands of years I'm guessing.

I'm reminded of a time when everyone though that IPv4 was more than enough...

I just got reminded of that too! Specifically when you wrote that 16 digits should 'tide us over' for thousands of years

[Nesetalis]

the biggest loss is going to come through death... people's wallets will vanish most often when the person dies and some idiot doesnt manage their computer....
or some one leaves bitcoins in a 'bank', and if they just float there, waiting for a dead owner to never retrieve them? :p though thats less serious, as most banks would have an activity clause.

[Alex Beckenham]

the biggest loss is going to come through death... people's wallets will vanish most often when the person dies and some idiot doesnt manage their computer....
or some one leaves bitcoins in a 'bank', and if they just float there, waiting for a dead owner to never retrieve them? :p though thats less serious, as most banks would have an activity clause.

No amount of computer management or 'activity clause' will do much good if the dead person is the only one that knew the password to an encrypted file container.