Quote from: SapphireSpire on March 17, 2016, 12:10:30 AM

Quote from: monsterer on March 16, 2016, 05:32:30 PM

UTXO A (mine) = 25 BTC
send A (mine) to B (mine)
send B (mine) to you (C, yours)
send B (mine) to A (mine)

B and C are destroyed, leaving A, the original 25 BTC belonging to me

If A is a UTXO then it gets spent in the first step, assuming you send all 25 BTC.
In the last step you would send B to D, not A.
The result is that C and D would void each other, and B would be destroyed.

Spend UTXO_A (mine) and create new unspent output UTXO_B (yours)
Sometime later you spend UTXO_B (yours) and create new unspent outputs UTXO_C (yours) and UTXO_D (overstock.com)
Sometime after that overstock.com spends UTXO_D with other UTXO that they control to consolidate into new unspent output UTXO_E
overstock.com spends UTXO_E and creates new UTXO_F, UTXO_G, UTXO_H, and UTXO_I to pay salaries to some of their employees
the employee that received UTXO_F spends it at Dish Satellite TV service on his monthly service fees creating UTXO_J
Dish exchanges the bitcoins for U.S. currency by spending UTXO_J and creating UTXO_K
Coinbase sells the bitcoins to a customer, spending UTXO_K and creating UTXO_L
That customer spends UTXO_L, creating a new unspent output to their paper wallet UTXO_M. They plan on storing this output for 10 years
A few days have passed. I now spend UTXO_A, and create new unspent output UTXO_N to an address that I control

The person that thought they had bitcoins in UTXO_M no longer has those bitcoins? And they don't even realize it? The overstock.com employees that got paid with UTXO_G, UTXO_H, and UTXO_I suddenly find that their salary has vanished?

Would anyone ever use this system? This is a disaster. You'll NEVER be sure if any payment that you ever receive from anyone will suddenly vanish.