Topic: the oxidation fee.. (Read 310 times)

In essence the proposed idea of oxidation, would be a direct anti-holding initiative which would in turn require holders and Bitcoin users to transact even when they don’t want to as a counter oxidation strategy?

It would really mean one solution creating two problems.

I don't think we should limit ourselves to strictly following the whitepaper. Satoshi is a smart guy but he couldn't foresee every outcome. I still think a flat block subsidy of 1.5625 will be a better form of "tax". Everyone will basically pay for the miners with the devaluation of their BTC. The devaluation would only be 21.5% over a 50 year period which is basically unnoticeable.

I don't total disagree with this idea but I think there should be a longer grace period before slashing someones wallet. I have thought before that if a wallet hasn't moved in 30-50 years then it should be assumed it is lost funds and should be redistributed to the miners some how.

A concern I have is that bitcoin is effectively deflationary. due to lost funds, dust wallets, and population growth. So some how redistributing the lost funds and dust wallets would be a good idea. If we know for certain they are unusable funds.

I think there is something already in bitcoin code called provably unspendable pubkey script. Which auto gives the BTC to the miners if the pubkey script is provable unspendable. If somehow the private key to a UTXO is provable lost from not being used for over 50 years then it could be redistributed to miners.



Bitcoin cash did this and their miners are only getting $1500 per a block.

If block size increases the fees will drop. Not sure if these effect would be linear or not but in theory if double the transactions are placed in blocks then fee rate should half. resulting in the same amount of fees for the miners. resulting in no increase blockchain security

Pretty simple solution, make is so that more people can use the chain and by doing so the fees will compensate the block reward.
Instead of 400 000 tx paying the equivalent of 40 000 000 so 100$ per tx, have 40 000 000 tx paying 1$.
And you will not tax someone who doesn't use it.


No, I don't agree with this!

Fees are just like the bank transactions fees, you pay for extra usage of the block space, you make 1000 transactions in a bank you pay for each of those (well, in some banks, I have free national transactions), but someone who only has a deposit will pay only the account maintenance fees, and it doesn't matter how long that deposit has sat there.
I have 1 million euros and I just deposited I pay 3 euros a month, I had 100 euros for 10 years I pay 3 euros a month.
Everyone no matter the age or the amount pays the same for the same security.

You're trying to set an arbitrary fee on the ones that benefit the least from the blockchain security.
Why should my cold wallet get taxed when I have only 1 btc there and I use no blockspace while Binance is moving around 10 000 btc a week and using each day half a block just for the consolidations and deposits/payments.


If there is no reward and there are no fees large enough to keep the security up, well, this means that BTC has failed as a p2p currency, right?
So, it's not a global payment system, more like an investment-only mechanism so we can safely switch to PoS, have BlackRock and BoA in charge of half of the validators and call it a day.

Because miners earn a very fatty reward for it.

Miners earn for this, don't you see that? They earn money for mining new blocks and in fact, they force me to pay to move my coins, literally telling me to not move my coins if I want to keep it safe without saying a single cent, oops, satoshi.

Just look at it, when you harvest wheat, you have to pay money to buy a land and then pay tax property, then you have to pay money for wheat seed from a guy that is taxed to sell wheat seed (2 taxes already), then you have to buy combine that is sold by company that pays taxes to create a combine, then you have to buy a fuel that is taxed by the government, then you harvest wheat and you have to pay additional taxes because you sold them and you have to tax your profit. Then you go in a shop with your money and buy something from a supermarket where food is already taxed and your income is already taxed, your car's fuel is taxed too. I mean, taxes taxes taxes, look at how much taxes we pay, we pay ten times or hundred times more than what we are supposed to pay. If I buy taxed food, why should I pay taxes for money that I make?
We don't need more taxes on Bitcoin, that's all! The network is secure, miners are motived to mine and keep it secure because they earn a fatty reward for it, that's how it works, doesn't need additional headache.

We don't live in ideal world though. Not everyone bother put resource or handle complexity running wallet backed by their own full node.


Prune node actually save all UTXO[1], not all TX. Otherwise, size of chainstate folder (created by Bitcoin Core) would be much bigger.


Assume UTXO also already exist on Bitcoin Core[2], but works differently than many of us expect. I also don't understand how oxidation fee improve prune node, since based on my understanding it doesn't reduce total UTXO.

[1] https://learnmeabitcoin.com/technical/transaction/utxo/
[2] https://github.com/bitcoin/bitcoin/blob/master/doc/design/assumeutxo.md

thank you graphite,


higher transaction fee will benefit classic banking systems and approves the benefits of their cross-border CBDCs. so this is not a good idea.


putting such inflation on btc is against its whitepaper, but adding new fee structure could pass by a BIP, I think.

I do appreciate your explanation, Stompix.. but can't agree with.

you know, I am from banking sector and could say your money is not safe at banks which invest with your money (commercial banks) and this is why you always see "Bank Run" happen anywhere. if you do not let your bank to do business with your deposit money, then you should pay them to keep your money safe, because they also pay their armed guards for protecting the whole vault system 24/7 and this is a cost for bank.

in blockchain system with PoW consensus, miners have similar duty as armed-guards do in banking system. the one who pays the fees for regular transaction (6 month ago) are in business with blockchain but those who just left their coins to a blockchian system also need to pay the miners to watch their value with oxidation fee. your point of view is coming from rewarding system that does not wexist any more, and if you do not fix it, miners (armed guards) will turn off their miners and leave everything (including the safety of that guy with a transaction at 6 month ago) unprotected to 51% attackers.


true. once we agree on the concept, then there could be lots of solution out there for these sort of valid problems that your have mentioned above. for example there might be an extra space in new generation of blocks dedicated for older transactions and give the priority for formal transaction. an upgrade in protocol layer could solve it. but also think about all those lost BTCs in blockchain that could revive and get into circulation as rewards to miners. think about all aspects of this oxidation fee.

thank you BlackHat,


in fact the size of such prune-nodes for addresses with only one unspent tx will remain unchanged, but addresses with more than 1 unspent tx will summarize into one out tx, that I look for these sort of compression effect in blockchain-size.


true. and I really do not mean a tax system could help btc blockchain. just do research on situations that emerges hidden costs and try to pay them by new fees.

You know ABC, basically just think we need this brainstorming to meet more and more "Core Wallets" out there among BTC hodlers, instead of hardware and SPV wallets. [1] so prune nodes are very close to the concept if they save ALL unspent transactions (non-oxidized transactions) - which amazingly this could also provide potential compatibility with GDPR principles in future [2].

I also do follow ideas like assumeUTXO which shows us there are still some sort of improvements needed to get considered[3]:

"Rather than the status quo — setting a number of blocks and compressing historical blocks prior to that milestone — O’Beirne’s assumeUTXO is an experimental way for new Bitcoin full nodes to delay their need to verify historical transactions until the user receives recent transactions."

now look at this oxidation fee how forces the entire network and hodlers to achieve better performance of prune-nodes in bitcoin blockchian and facilitate ideas like assumeUTXO.


[1] https://coinguides.org/bitcoin-blockchain-pruning/
[2] https://bitcointalksearch.org/topic/when-gdpr-fork-happens-in-blockchains-5453832
[3] https://protos.com/bitcoin-core-developer-proposes-new-type-of-pruned-node/

The blockchain is only as safe as how much power miners use on the network. If miners end up only getting 50k per a block some day then it would only require 50k worth of power to create a false block. Thats 2.6 Billion USD worth of power to basically shut down the network for a year.

This is a lot of money but if bitcoin is to become a global reserve currency 2.6 Billion is a small price to pay to disrupt it.

I agree that miner rewards is a potential problem in the future. If transaction fees don't go up the blockchain will be vulnerable. I like the Idea for compressing the blockchain by getting old UTXO's to be used but I still don't think this would be the right way to go.

I think a better idea would be instead of halving the block subsidy every 4 years it should flatline at 1.5625BTC. This would insure miners will keep getting rewards and keep securing the network regardless if transaction fees increase. This level of inflation should be negligible. only 82,125BTC will be mined each year which is only a 0.39% yearly inflation rate.

Nope , really bad analogy!

My money is already safe in the bank (blockchain), and satoshi's coins are as safe as everyone else, why would I who knows my coins are safe pay 10% and the guy who has just moved coins 6 months ago not pay since we both are offered the same security?
50 satoshi or 100000 Bitcoins we;re both offered the same, the blockchain doesn't care about the amounts!

The real analogy for what you're doing is the Cyprus bank crisis, when everything above 100 000 was no longer your money!


You're creating artificial demand for block space with this, it will make things worse when we look from the fees standpoint, so it will hurt everyone , imagine you need to transact and suddenly 10 blocks are full because some huge custodian is moving away his funds not to be taxed, jus as an example some hold their coins in under 10BTC blocks, like Bitgo in thousands of adreses.

You're not helping in decreasing the blockchain size. As already said, holders can just re-create the same outputs. The only thing you enforce is people making more transactions to avoid your fee. So, you're actually disincentivizing transaction compression.

You're probably surrounded by people who share a different perspective, myself included. Taxes are often times obstacles from innovative thinking and creation of value in the free market.

I think you refer to pruned node, which download whole blockchain but only store some latest blocks and UTXO set (which necessary for verification purpose). People already can run pruned node since some years ago using Bitcoin Core software.

Thank you Stompix for reply,


Taxation is not a bad thing if spend in its true ways. spending taxes out of the taxed system is harmful but investing taxes on infrastructure of the taxed system always improves and creates value.

but lets look at the oxidation concept as a hidden cost, not taxation. imagine you have 6 x 50 USD banknote in your pocket. you are happy that have this money in cash and can spend it anywhere freely (lightening channels), but nothing more. the only cost of it for you is about finding the nearest ATM and pay the cost as time. just take in mind that central banks also pay for printing those banknotes at the beginning (genesis block), because each banknote could spend in more than 1000 transactions, so the cost of providing those cash will break into plenty of transactions - so imposes small rates of fees on society and economy.

but when you have 3000 USD as banknote with you, you will begin to worry about its safety, so instead of walking in the street to home, you may hail a cab for more safety. therefore as you could see, your 3000 USD in cash in fact has lower value - after pay the cab driver, something like 3000 minus 55 USD (the cab fee, not cab tax).

now imagine you have 30'000 USD in cash and you are in real trouble, because the problem is how to keep it safe in home! so you need to pay for a vault. and now your 30'000 USD worth can calculate after reducing the cost of buying and installing a vault in your home! so as you could see none of them are taxes to your money. they are all about preserving your money.

p.s.: while miners are responsible for providing equivalent level of security for coin hodlers in a blockchain, why hodlers should not pay their cost? that is why I call it FEE.


the oxidation fee makes everybody to move their coins into new blocks, so after a while older blocks will be full of data that may not get accessed for a verification process for new transactions. so in new generation of nodes that only save non-oxidized transactions, you always find free spaces for bigger amount of transactions per new block.

It's oxidation TAX!
You're taxing people, that's what it is, you want to tax some to keep the miner's revenue up, but what will happen if there are no people willing to move their coins and pay those coins and what will happen if everyone will weasel their ways around?

I mean common, we have had taxes for millennia and just as old there is tax evasion, one area where people exceed is finding ways to avoid it, they will do the same here.


Why would this happen and how?

Hello ABC, thanks for reply.

please correct me if I have misinformation, but we have full and partial nodes in btc. partial nodes only collect hash of roots so are fully depended on other full nodes to function properly. but just try to offer a new version of nodes (non-oxidized node) that download and sync like a full node, but after that begins to drop all its old blocks - sequentially from the genesis block - that contain no verifiable (unspent) transaction data. so I hope this decreases the size of storage needed for a node to run with most important blockchain data to be trust-able enough.

so this is not about compression algorithms, just a compressing behavior.

Aside from all problem which already mentioned, i fail to see how it incentive people to run full node. After all, only miner get the oxidation fee. Real full node still need to download whole and verify blockchain. Compressing (i assume you're talking about lossless compression) blockchain data could be done by upgrading how each node communicate.

thank you odolvlobo, we ha the same chat before about "demurrage" here in bitcointalk and I still could remember your key notes about the topic.

the oxidation fee may get stem from the idea that - by inventing btc - wants to introduce the digital form of gold as we find / lose in nature. everyday people find / buy / lose / reward gold all around but once you lose your address keys in btc, they never revive and get back to the circulation.

but with this oxidation fee in the protocol, the whole halving process could remain unchanged but the reserve amount of remaining BTCs may increase in future, so rewards also increases. eventually I expect this oxidation fee with formal transaction fee could provide a continuous balanced profit for miners to keep high level of hashpower for the network and secure at all.

p.s.: just think what monero is doing in its reward system (unlimited amount of fix rewards) will devaluate it at all. but reviving lost / oxidized coins and make them back to the circulation will end to situation that taxes directly convert into more investment for infrastructure.

Thanks, bitbollo

as said, this is not going to be a simple decision. a complete simulation may help to understand the side-effects of such upgrade. but when we increase the block-size and decrease the block-chain length, the whole btc protocol may get more closer to its goals in whitepaper, when in the first sentence we could see it was going to be a payment system, not a system for Saving of Value.

this is not that terrible, Findingnemo )

thanks for reply, but please be advised that that 10% was just an example to explain the concept, but I would offer a logarithmic approach to the oxidation fee that just gets curvy shapes in last years.. and please consider that, a blockchain system is not a bank. the closest entities in decentralized echo-systems to the banks are crypto exchanges, which already have several EARN programs for customers too and charge their own level of fees.

but miners should work and benefit to make everything safe for end users.

p.s.: blockchains could get consider as digital version of Safe Deposit Boxes that everybody could RENT and put banknotes in it. I really do not know a bank in the world that pay interest to values in safe boxes.

Thanks for reply, mocacinno..

there might be a trade-off among enforcing holders to participate in decreasing the block-chain length and block-size. in other words, when we compress the block-chain by oxidation-fee, then we could increase the block-size on the other hand. so once the idea show its merit, then we could set all these variables to fit in.

What you are proposing is called "demurrage". It is an alternative form of inflation. Rather than devaluing money by printing more, you devalue it by canceling it or taxing it.

Anyway, it's not clear what the problem is that you want to solve.

I think that this approach would create new rules that were never included in the protocol and would penalize users who have already used it (like the classic hodler).
A lot of people find themselves with inputs blocked, among other things this would just penalize small inputs! because they would have to pay many more fees to be able to release these funds ... in such way people getting payment for trivial amount would decide immediately to spend it since in the long terms it can become impossible to spend
Probably this approach could work for a fork or an altcoin, I don't think it can fit in btc current protocol.

That's terrible idea, why someone has to pay 10% fee for holding their money? The banking system is better than what you are proposing because banks give interest when you hold money in bank accounts not the other way around.

Miners are making more money that makes them to be profitable even after all the expenses, if miners can't able to make profits and stop their operations the one who remains will enjoy the rewards.

i'm just brainstorming here, but i imagine such a proposal would result in everybody spending all their unspent outputs at least once a year to avoid the tax... This would result in more broadcasted transactions, fuller mempools, blocks that are consistently completely filled and a fee war???

In other words, would forcing everybody to spend all their unspent outputs at least once a year result in higher fees for everybody? I'm sure miners would be happy, but the rest of the network not so much.

hi there..

while rewards are decreasing by series of halving events and higher prices for a crypto or transaction fees are somehow not rational / possible, may we get back on paper and try to design a new fee structure to both satisfy miners and incentivize people to install more nodes all around?

my two cents here is about getting back to an old idea which was about the frozen old transactions in old blocks, that once they decide to move then should pay extra fee (oxidation fee) to the miners. for example if oxidation fee increases 10% by each year, after 10 years of being frozen, the total asset in that specific transaction may vanish by 100% oxidation fee for the owners and convert into reward to miners.. at the end of the day, once the oxidation fee structure get online, then we could see significant compression for old block data and new series of nodes (we may call them non-oxidized nodes) appear with only non-oxidized transactions.

in fact this is about the price that each participant should pay for preserving the supportive blockchain system of a coin (the bit-gold-layer).

any feedback welcome.