Author: Mark Friedenbach 2012-12-03 17:02:13
Published on: 2012-12-03T17:02:13+00:00
In 2012, Michael Gronager proposed a way to address the issue of "dust" in the blockchain, which accounted for a significant portion of unspent transaction outputs (UTXOs). Specifically, 11% of UTXOs were worth only 1 Satoshi (0.00000001BTC), with 32% being less than 0.0001BTC and 60% being less than 0.001BTC. This meant that a large part of the blockchain was being used for essentially nothing, as the sum of the 11% of 1 Satoshi payouts was worth roughly 2 US cents. The main source of these payouts was Satoshi Dice, and while there was nothing inherently wrong with this, it could potentially lead to too many small payments clogging up the blockchain. To mitigate this problem, Gronager suggested introducing demurrage, not in its traditional sense as a percentage over time, but as a means of recycling small amounts of bitcoin over time. Under his proposal, UTXOs would age out if not re-transacted, with smaller coins aging faster than larger ones. For example, coins worth 1-99 Satoshi would live for 210 blocks, while those worth 100-9999 Satoshi would live for 2100 blocks. Coins worth 10000-999999 Satoshi would live for 21000 blocks, and those worth 1000000-99999999 Satoshi would live for 210000 blocks. Only amounts above 1BTC would live forever, although aging could potentially be imposed on those as well. The aged coins would simply be included in the block mining reward, creating another incentive for miners. Additionally, if all coins were included in this recycle scheme, they would never be lost forever. However, this scheme would impose some lifetimes on colored coins, meaning that users would need to use a certain amount to borrow space on the blockchain for the necessary time, or simply transact them. If this proposal was well-received, Gronager offered to write it into a Bitcoin Improvement Proposal (BIP).
Updated on: 2023-06-06T09:23:33.150260+00:00