Well a few pages back we already began discussing some unhealthy scenarios which can develop from an infinitely deflationary currency. Some of this discussion has been quoted below. If you can follow up where the argument stopped and provide some solid counter-points I will consider them seriously. But you also bring up another good point about cracking keys; eventually most coins will come back into circulation when keys become easy enough to crack, and it's possible a situation like this could flood the market with lost coins which have been out of circulation for a long time. This idea to re-mine lost coins could help to offset any situation like that because it will help stabilise the money supply and not allow it to dwindle down to a dangerous or risky point were a sudden inflow of coins could cause great harm to the economy.
Cracking Keys is an exception case that needs to have a minimal planning performed now, but will have unique needs depending on when and how it is broken. Your proposal to re-mine lost coins will not prevent anyone from cracking this encryption, nor will it protect any coins. The only effect your policy would have is forcing some users who didn't have their coins stolen in the first 100 years of bitcoin to move them to a new cipher or lose them. If the break in encryption comes before your re-mining mechanism kicks in then there is no effect at all.
Re-mining does not improve the cracked encryption scenario practically, agreed?Here's one reason I can think of why infinite deflation is not healthy, and I'm sure there are many more potential problems. Consider an example where at some point far in the future enough coins have been lost that we only have 100 left in active use. Now imagine a day where someone digs up an old private key out of a dusty old box in the attic of their new house, and that key gives them access to an address which holds 100 bitcoins, or even more. Imagine what that would do to the economy if that person now owned more wealth than the entire economy combined. This is just one simple reason why it's inherently unhealthy.
You keep referencing "infinite" which means "going on forever" the very use of that word implies that there is no end or curve, but it just goes and goes "TO INFINITY!" Given a realistic situation as bitcoins get lost more and more rational people will place a higher and higher value on the remaining coins. Since they are worth more, extra care will be take to ensure that they are NOT lost, and you will end up with a long tail of deflation that reaches the FAR FAR future long before the number of BitCoins can realistically reach a point that it is unusable. Even if 1 million years from now there is only 1 Satoshi left that is an acceptable end for me, since that 1 satoshi will be worth a fortune in bitcoin 7.0 or something. Even if we lose 1% of all BTC every year, we will have a functional economy for generations before we need to add precision. Your infinity problem is so much farther than 100 (or likely even 1000) years away.
We will not see bitcoin erode into something unusable within your lifetime by your own admission, right?
There are several faulty lines of logic used here. First of all the bitcoins were lost for a long time, but they were found again when the person found the private key in a dusty box. This is not really how bitcoins are lost, they are lost when private keys are destroyed and not recoverable. However, in this case, the private key was written down physically so it was possible to find it again. At this fictional point in the future, it will have been a very long time since the market saw any single account holding such a large amount of bitcoins. As far as the market is concerned, there is essentially only 100 bitcoins in active circulation. Also keep in mind that I am describing bitcoin as it is now, where coins cannot be re-mined, to illustrate why infinite deflation is unhealthy. Reintroducing an amount of coins which appears to be equal to the entire amount left in circulation after hundreds or thousands of years of deflation in the money supply, is going to cause some large upsets. Now in the case where it's possible to re-mine coins, if that person found the key sitting in an old dusty box, and it had remained untouched for over 100 years, the coins would already be gone. In fact if he found those coins 99 years after they were first active, he could use them; but in such a scenario the re-mining process has ensured a stable money supply, meaning his newly acquired 100 bitcoins will have no dramatic effect on the market because there are still nearly all bitcoins in circulation.
This is simply economic uncertainty, and should be part of the investor equation. Anyone investing in BitCoins when there are only 100 left should know that there USED to be 21 million, and that there is a chance that some will come back online. This is a risk to investing in bitcoin that is infinitesimal right now, but will grow over time as coins are lost, why would future investors not be aware of it? The problem is that the chance of "crashing" the bitcoin economy with found coins will require either a LOT of coins, or a LOT of lost coins, but again, this is a risk, not a certainty. Risk of devaluation due to an event like this is real, but unlikely.
Are you proposing that we have to build a perfect system that does not require diversification of investments?I don't see anything here that says that deflation over a long time is bad, or that we need to weaken bitcoin to prevent risk in the future.