Topic: A proposed solution to adjust for lost Bitcoins: wallet 'heartbeats' (Read 12205 times)

I wouldn't say the amount of lost coins is going to be negligible or small over time.
Just imagine 1 million Satoshi's coins (which AFAIK haven't moved yet) would be considered lost at some point. That's 5% of the whole Bitcoin economy no matter how much further you divide the units. Another half a million belongs to a dozen of other guys who jumped in early.

So this problem will have to be solved in the future, but we should also take into account how and when the original Bitcoin idea was introduced into our society. Having a limited amount of coins is very easy to explain to people tired of endless and unsustainable inflation carried out by their governments. People wanted a return to the Gold Standard and having a limited amount of coins is an easy sell. So I guess it was more important to get people attracted to a whole concept of P2P currency where they essentially control the rules of money generation and then later people themselves will decide what inflation rate and policy is best for them.

PS: Regarding Satoshi coins and another half-a-mil, I really believe that people who invented Bitcoin to save us from the current system will spend their millions of bitcoins for the betterment of humanity and peace on Earth

PPS: I do not support original idea of wallet heartbeats. I'd love to live in a remote village for 10 years and be sure that my coins are safe when I return back to civilization.

Sorry for reviving a 2 month old thread but upon insight then lost bitcoins really wouldn't affect the bitcoin economy.

The lost bitcoins would be so negligible, even now it is definitely negligible.

Since bitcoins go up to 21000000 in integers, that's quite good. It also goes in the decimal places as well.

If .00000001 BTC became worth $1 in the future if it were globally adopted by many people, then you could easily revise the client to handle that in integers instead, and "move" the decimal place out.

Realistically, we can represent 2,100,000,000,000,000 units.

The amount of lost coins is probably very small, and you could just possibly add more decimal places in the future to bitcoin to accomodate rising deflation, which would make bitcoin theoretically infinite despite the "finite" 21,000,000 coins.

This is also a reason why introducing endless inflation would be such a bad idea.  

(Well i guess I'm not used to people giving up so quickly in long discussions, but that's OK too)

Now that I read your cogent argument, I'm convinced that China will step in to save the network. The network is not in danger at all and never will be. Hats off.

1. You completely ignore sociological & geopolitical aspects of such an event. Such a large operation would be a direct proof that Bitcoin is a danger for current establishment, which could cause MASSIVE surge in publicity for Bitcoin, which would bring a lot of new people into mining business.

Every action has a reaction, you simply CANNOT ignore that.

Let's consider a scenario. Let's assume that FBI/CIA/Other US govt agencies start a new supercomputer, and gain 60% in one day.
But there is no action without reaction. China & other countries who don't like USA immediately assume, that Bitcoin is probably a danger to US dollar and because China really wants to get rid of dollar, they put one of their newly built supercomputers into mining Bitcoins, so dollar will fall even more quickly.
Also, other "wild" miners join the game - some (ideological) to protect Bitcoin, but most because USA admitting that Bitcoin is dangerous confirms that is it valuable. So not only the attacker's network share drops below 40 or even 30%, but Bitcoin value skyrockets.

2. Increasing inflation by sunsetting old coins is in no way solution to this.
So your entire reply is decidely not on topic (as is mine, unfortunately).

Why would the attacker stop the 51% attack? Say you are Paypal or VISA or a government agency. Destroying the network is like squashing a bug. You built up 51% to destroy the network. It is a pretty fucking trivial investment from your perspective. Maintenance cost of the attack is trivial. There is just the upfront capital cost. In addition, by selling on the way up or postponing the attack date, the investment partially pays for itself.  Why would the attacker allow someone else to recapture 51%?  Why would anyone invest the resources necessary to recapture the network from a determined attacker? It is not likely to work since the attacker can invest resources too. Even if the martyr is successful, then he will still have wasted a large amount of money. I am skeptical that anyone will fuck themselves royally to save the currency.

The network's days are numbered.

It won't take anyone by surprise, and the blockchain won't need saving. There's nothing to save it from. There's just not a whole lot of damage you can actually do with 51% of the hashpower. Block other people's transactions? The transactions will get through the instant you lose your 51%. Double-spend your coins? You'd need to double-spend a lot of coins at once to make it worth the amount of money a 51% attack would cost, because it only works once: as soon as your coins are first double-spent, everyone will realise that the network is compromised and will refuse to trust any future large transactions until it's clear the attack is over, at which point it's business as usual again. No precautionary measures are needed because the network is already designed to handle this threat.

But there is _NO_ problem. And there is _NO_ hard evidence that it will become a problem.

51% attack won't destroy the blockchain...
Also 51% is actually not enough to perform massive scale attack. You should have few percent more, which is highly unlikely (for example, if deepbit became the adversary, large percent of users would stop using it instantenously).

And we already have a contermeasure against 51% attacks - decentralized mining pools. If only people used them more often.

So increasing inflation by any means is not necessary. What kind of solution is that ? This is common thievery, nothing else.

My guess is that a single entity will acquire 51% sometime during the next block reward cycle. (that is during the period when the block reward is equal to 25, starting in December of 2012). If the individual is malicious (admittedly unlikely), the developers will likely be taken by surprise and won't have time to save the blockchain. This idea of waiting for bitcoin to die before taking precautionary measures is foolhardy.

What I want is a solution to the problem discussed in this thread. I'm not sure how what you're suggesting would accomplish that.
My defense of a sunset limit has been based on two things: It not being nearly as horrible and evil as some people seem to think and it being a potential solution to the problem. If the problem did not exist (which I still believe it does), or if someone could offer up a better solution, I would not support the implementation of said limit.

You say "market readjustment", I say "significant and harmful economic disruption". Both would be accurate.

"Don't try to solve the problem until it actually starts causing trouble".
Meh, I guess it'll be easier to convince people when they're actually staring death in the face, so to speak.

It makes absolutely no difference whether they were lost or not. The problem remains the same.

Among non-lost coins I agree however "lost" coins will never be automatically sunset or moved by the owner to strong addresses because they are lost.  

Even then I am not saying action IS REQUIRED just that it MAY be required and certainly should be analyzed at that point.


The market will always adjust to the equilibrium price however such adjustments can be disruptive if there are large increases in supply or demand.  Those disruptions themselves can be damaging to the currency.

The other risk is that eventually "treasure hunting" becomes a more profitable venture that protecting the network.  Obviously that is in no-ones best interest.  Once again not saying it WILL happen but imagine a situation where ECC is significantly compromised.  As Bitcoin increases in value, the cost to brute force one private key falls (both due to deeper crypto flaws and Moore's law) the BTC per "GH/s equivelent" will rise.  If it is ever higher than block reward then it becomes more profitable to treasure hunt then protect the network.  Miners likely will do that leading to a tragedy of the commons scenario.  They may even form large hunting pools to reduce variance.

Still discussing it now is premature.  We don't know if ECC will be compromised.  We don't know how long such a compromise will take, we don't know how many coins will remain in compromised addresses.  If may never become "economical" to hunt for lost coins.  Even if it becomes economical the rate that lost coins are found may not be disruptive.  I am just saying that if ECC is compromised there MAY be a need for sunsetting compromised addresses.

If we did need to sunset "legacy" addresses I would advocate for permanent coin destruction rather than confiscating.  It removes the moral hazard.

The issue with the thread is it seems to things which are unnecessary are being advocated:
a) sunset addresses even if no compromise occurs
b) confiscate the wealth

Even if you agree that massive market disruptions are damaging neither are needed.  If the coins are spent after long inactivity and addresses algorithm isn't compromised then the coins were never lost.  It would be no different than Satoshi today dumping 1M+ coins on MtGox.  While not the smartest decision nobody has a right to say he "can't" and we need to confiscate the coins to make sure he doesn't.    If ECC algorithm isn't weakened there is no risk of large amounts of truly lost coins being "found".

On confiscation of wealth that is just asinine.  If the risk is not knowing if coins are truly lost then simply make them permanently lost with no profit to anyone.  The network doesn't need to have exactly 12.00000000000000000000000000000000000000000000 M BTC in circulation.   Giving the wealth to someone else creates a moral hazard.  Just destroy the coins instead.

We will return to this topic in 30 years, when it will be possible to verify these claims.

For now, stick to the matter at hand. And the matter is, we don't need any fix for a problem that neither does exist yet or it is certain it will ever exist.

I would put this in much stronger terms. The theory unambiguously indicates that changing from block reward to txn fees will fail under the current design unless mining becomes monopolized. A solution to this problem will need to be adopted eventually. There is a reasonable debate about what the right fix is and whether it is worth worrying about right now or not. The side that says txn fees will work as they stand is not supported by a theoretical argument.

This thread has been interesting and has been much food for thought.
I hope all the opposition doesn't drive away the owner of the OP from Bitcoin.
Ideas being discussed even though they may have a low probability taking root is healthy and shouldn't be feared.
The idea that changing Bitcoin will kill Bitcoin is a fallacy. Here's why, it takes a pretty significant majority (specifically miners) to
accept a change like this. I would have to say that miners care more about bitcoin than anyone else. If they believe in an idea enough to
help implement it then there's no way it would kill bitcoin because it already has the backing and support of those who make it work.

Here's my thoughts on the proposal:
    Bitcoin is too knew to seriously consider implementing a fix for a supposed problem that manifests itself over a very long period of time.
The fact that it is working now is a miracle. Until events transpire that causes all bitcoin user to reflect over something specific, gaining a majority will be extremely difficult unless you have a lot of clout.
I say be patient and who knows how the culture here will change in a decade.

Personally, I believe an idea similar to yours will be seriously considered as the block reward is pushed extremely low.
The success of changing from bitcoin rewards to transaction fees is still theoretical. I'm not saying it will not work, but it is theoretical and has been the topic of much discussion.
If it does not work as some envision it then solutions will be seriously sought after. These potentially lost bitcoins may be the source to drive the economic engine of bitcoin for another 100 years after the reward is gone without exceeding the hard coded limit of approximately 21 million bitcoins.

So, be patient. the time for your idea may come.

A weakness, unlike a clean break, would automatically provide the sunset.  No action needed.

Value is relative and adapt itself to its market. If the market is 21 millions unit, the value will adjust accordingly. If the market is 8.7 millions unit like today, the value will adapt itself.

Even if in 10 years from now, there's 10 millions Bitcoin available(because the rest is lost), the market will only adjust itself to the current supply. Bitcoin will worth more to compensate for the lack of Bitcoins. It's a hard cap market, where the supply is limited. Whether the cap is 21 millions, 5 millions or 150 millions, it is still a hard cap that will never be breached.

This wallet heartbeat plays around two important values of Bitcoin:
-The supply limit
-Individual control

Supply limit for $CAN is a soft cap. You have a limit that can be modified.
Supply limit for Bitcoin is a hard cap. You have a limit, you're stuck with it.

Individual control for $CAN is shared. You can use it as you wish, but it's still the property of the Bank of Canada.
Individual control for Bitcoin is completely individual. You control it so much that you can print your own money, and you can delete your own money.

A wallet heartbeat will maximize the supply under the limit, but will never change the fact that you have a maximum, whatever the value is.
However, the wallet hearbeat will forever change the individual control of Bitcoin from "individual" to "shared".

I'm sure the intentions are good, but you're playing with the fundamentals values of Bitcoin. Changing one of these values means that it's not Bitcoin anymore. Making a new currency with that solution could be interesting, because it could offer a new set of values on the market. But you can't implement this into Bitcoin without denaturing Bitcoin itself.

This.  When (or more likely) if ECC is compromised the most likely scenario (based on prior crypto attacks) it likely will be a partial compromise.  That is private keys must be brute forced but can be done so millions or maybe even billions of times faster.  That means that the day 0 threat to Bitcoin will be minimal.  The network will operate for a while with "legacy" addresses and new "strong" addresses.

In time though those legacy addresses will represent a risk.  A method to sunset that risk may need to be devised.  Even then it will be controversial and require some thought.  To change the protocol today in such a fundamental manner is just asinine. 

I see yuur point, but you are not entirely on topic.

The topic author is not suggesting to "sunset" coins for security reasons, but for some bullshit semi-inflational reasons, which is plainly wrong and destroys the sancrosanct rules of Bitcoin as Gavin said.

Once the cryptography behind Bitcoin gets broken, I am sure that majority will agree that something needs to be done about old, insecure coins. In that case, i suppose it would be possible to re-hash the old coins somehow with new algorithm by sending them to a upgraded address using upgraded client.

But that is a matter for completely different discussion.

I agree too—

Though I would point out here that at some point in the future we may find that we need to upgrade cryptosystems for security reasons... and that if we don't _eventually_ deny the spending of coins sent to the old insecure system then we could well find that enormous deposits of zombie coins suddenly appear due to cracking and that their rapid unexpected introduction into the economy is very much not what anyone signed up for and could be disruptive.   So it would make sense to sunset insecure transactions.

Someone arguing for regular long-horizon sun-setting, instead of just a one time event, might have a lot more success arguing it at that time.  In particular, it would be much less bad if you know _in advance_ that you will have to heart beat your coins once a decade, then it would be to find out later that cryptosystem breaks mean you'll have to do it.