This proposal aims to address the issue of dormant Bitcoin, commonly referred to as "lost" or "unclaimed" coins, by suggesting a mechanism to recycle them back into the mining process. By doing so, we strive to prevent Bitcoin from being permanently lost and ensure the long-term integrity and scarcity of the network.
Bitcoin is a decentralized digital currency that relies on private keys for ownership and access to funds. However, numerous Bitcoin wallets remain inactive for extended periods, often due to users losing access to their private keys or abandoning their wallets. This results in a significant amount of Bitcoin becoming inaccessible and presumed lost forever.
I must say, I have a lot of problems with your proposal. First you usually can't decide in a trustless and decentralized way which coins are lost or where the owner simply doesn't want or have the need to move them. There shouldn't be an authority or force to have to move coins. Period.
I even don't see the need for provably lost coins to recycle them back into circulation. Lost coins make those from everybody else a little more valuable. I don't appreciate any scheme that destroys coins deliberately, but as Bitcoin is decentralized and trustless I can't do anything about it.
This process will involve adding the dormant coins to the mining reward pool, where they will be available for miners to compete for during their usual mining operations.
To ensure fairness and prevent concentration, the redistribution of dormant coins will be algorithmically divided among miners based on their proportional mining power, similar to the current mining reward distribution.
The entire process, from identifying dormant wallets to the redistribution mechanism, will be transparent and publicly auditable. Detailed reports and statistics will be made available to ensure transparency and build trust within the Bitcoin community.
Miners compete against each other and as said already there's a winner who takes all the block reward. Now you want to redistribute recycled coins based on estimated proportional mining power? Proportianal to all miners at once? I'm not sure if I understand you properly.
Transparency and auditability sound nice, but explain how you want to do that trustless and decentralized. If an audit shows issues, how do you want to fix those? Transactions are final and non-reversible.
Preservation of Scarcity: By recycling dormant coins back into the mining process, we ensure that the total supply of Bitcoin remains finite, maintaining the intended scarcity and economic principles of the network.
You have that already without your proposal. Active coins in circulation actually benefit in value by provably lost coins. You might not like it but that's your problem.
Encouraging Active Ownership: This proposal incentivizes Bitcoin holders to actively manage and secure their wallets to avoid the risk of losing their funds. It promotes responsible ownership and strengthens overall network security.
By the value of Bitcoins every owner is already incentivised to not loose his private keys or wallet(s). Your proposal forces owners to otherwise unnecessary actions if they don't want or need to move their stash.
Enhanced Network Stability: The recycling of dormant coins helps distribute previously lost value among active miners, potentially reducing the concentration of mining power and contributing to a more stable and decentralized network.
I see a contradiction here as concentration of mining power would benefit due to your proposed redistribution by proportional mining power.
This proposal aims to address the issue of dormant Bitcoin by implementing a mechanism to recycle lost coins back into the mining process after a specified period of wallets not being accessed. By doing so, we can prevent permanent losses, enhance network stability, and ensure the long-term integrity of the Bitcoin network.
We have about 21*10
14 coin units at max with current design and even if we loose half of it it's still more than 10
14 coin units. I don't see the need for recycling nor it to be fair and justified in any way.