How to destroy Bitcoins?(medium.com)
medium.com
How to destroy Bitcoins?
https://medium.com/@alcio/how-to-destroy-bitcoins-255bb6f2142e
52 comments
> because the C-CEX exchange would take money for "destroying" coins
Who would use such a service?
Who would use such a service?
Heh, I guess I forgot how weird things look from the outside.. but no one knew how to properly destroy coins, or that there was even a proper way. Despite there being all these altcoin "Developers", 95% of them only actually knew how to copy-paste-search-replace to create a new altcoin.. The focus in altcoins was always the marketing side: pretty graphics, good branding, and a viral community that expands until it implodes on itself.
So yea, people used it because they didn't know better.. And because of how backwards the altcoin community is, most of the time it's the inexperienced people asking other inexperienced people for help.. so bad habits spread very quickly and pervasively
So yea, people used it because they didn't know better.. And because of how backwards the altcoin community is, most of the time it's the inexperienced people asking other inexperienced people for help.. so bad habits spread very quickly and pervasively
What were common reasons to want to destroy coins? I can't think of very many scenarios, and then you'd probably need something more reliable.
The most common need was that many altcoins would start off with a large premine, and then they would offer an IPO/ICO/CFC (depending on the time, the term for this would change to be whatever was least likely to get the SEC's attention) where they basically put all the coins on an exchange or with an escrow and make it so that people can buy the coins in exchange for bitcoin. If they don't sell out of the altcoin's supply, then the developers are left with a number of coins. These coins are typically destroyed so that the only supply is owned by people who bought into it.
That problem isn't destroying coins though, it is verifying that coins have been destroyed. A person can destroy them easily, verifying that someone else is destroying them is hard.
The whole situation you described is completely ridiculous though, because instead of 'destroying' coins the developers could have distributed their own coins to all other addresses proportionately based on balance.
The whole thing is an obvious scam from top to bottom, but I'm not surprised any more that some people would take the bait.
The whole situation you described is completely ridiculous though, because instead of 'destroying' coins the developers could have distributed their own coins to all other addresses proportionately based on balance.
The whole thing is an obvious scam from top to bottom, but I'm not surprised any more that some people would take the bait.
if you give out free coins you are decreasing the value of your coin. if you destroy them, you are theoretically increasing the value.
since the popularity and value of these things are very correlated, it makes way more sense to destroy. Who is going to spend real currency on a coin that is losing value day 1 because everyone has coins to sell?
since the popularity and value of these things are very correlated, it makes way more sense to destroy. Who is going to spend real currency on a coin that is losing value day 1 because everyone has coins to sell?
If you give out coins exactly proportional to balance the value per coin has changed, but hasn't changed the distribution. It's like multiplying all balances by 100, it's just a unit change.
Early developers pre-mining coins during development, coins need to be mined to test that the altcoin actually works but it's really unfair if the developers start off with a ton of coins because they mined blocks before it went public.
Satoshi did this but I don't think any of his BTC has ever been moved from his wallet.
Satoshi did this but I don't think any of his BTC has ever been moved from his wallet.
Can't you test your mining on a different fork of the chain?
I think the idea is to make your altcoins instantly have value by transferring the value from the bitcoins to your altcoins.
Kind of like if I decided to use pine cones as a new currency, I could try to convince you by literally burning dollar bills and telling you their value had moved into those pine cones.
That's how I'm reading it at least.
Kind of like if I decided to use pine cones as a new currency, I could try to convince you by literally burning dollar bills and telling you their value had moved into those pine cones.
That's how I'm reading it at least.
The blog post seems to be missing the full PGP signature.
You can destroy Bitcoins by sending them to 1LuMWxkwCNB6gsCvN1WfShvGxbBVroXBoZ
;-)
;-)
Thanks for providing this useful service!
Did I just miss where they explained why this is a thing that people want to do?
Imagine a situation where you want to have an insurance for a rare event. Say the Toronto Maple Leafs winning the Stanley Cup. You can set up a situation where N parties can be the judge of whether or not that event has happened. If there is a disagreement you can formulate a complex transaction where it only takes N / 2 people to spoil the whole thing by sending all of the money to an unspendable address.
So the seller if the insurance tries to not pay on the extremely unlikely event, then even they don't get the money. Nobody does. But if they do agree to pay out the insurance, then they get to keep a portion of the money that was in the wallet. It's a way of ensuring honesty if even a small number of people are honest.
So the seller if the insurance tries to not pay on the extremely unlikely event, then even they don't get the money. Nobody does. But if they do agree to pay out the insurance, then they get to keep a portion of the money that was in the wallet. It's a way of ensuring honesty if even a small number of people are honest.
So, escrow? This is possible without destroying the currency.
With escrow you accept counterparty risk in the form of the agent holding the escrow, with a scheme that destroys coins there is at least some incentive for everyone to play nice.
Use a zero-sum, no-operator, donation-capable lottery contract script.
Coin that is contractually unspendable is sent to the lottery script as a non-playing donation. The eventual jackpot winner gets an unexpected windfall from someone else's failed dispute.
Coin that is contractually unspendable is sent to the lottery script as a non-playing donation. The eventual jackpot winner gets an unexpected windfall from someone else's failed dispute.
Still have to trust the lottery operator not to exit scam when the pot gets big enough.
There is no lottery operator. It runs as a contract script.
A lottery is literally one of the example applications (#8) on the Bitcoin Wiki "Contract" page.
https://en.bitcoin.it/wiki/Contract
A lottery is literally one of the example applications (#8) on the Bitcoin Wiki "Contract" page.
https://en.bitcoin.it/wiki/Contract
Ethereum!
Maybe donate them to charity instead?
What are you, a communist?
Destroying the coins is equal to giving every other coin holder a proportional increase..
Only to an economist
The coins are pure digital bits of information so either method of destroying the 'coin' or dividing the 'coin' among the entire economy is the same. Nothing more than numbers on a ledger system.
If the 'coins' were made of metal, paper, food, etc, than the "only to an economist" thought experiment would apply, as "only an economist" would think of value existing in confined economic constraints.
If the 'coins' were made of metal, paper, food, etc, than the "only to an economist" thought experiment would apply, as "only an economist" would think of value existing in confined economic constraints.
I own two bitcoins. If I destroy them, your bitcoins will not instantly appreciate because my bitcoins were not actively marketed. You only affect price if you decrease supply but my bitcoins are not part of the supply since I don't have them for sale and I'm not buying anything with them.
If I destroy them, your bitcoins will not instantly
appreciate because my bitcoins were not actively marketed.
A major premise of the 'Bitcoin economy' involves the stipulation that the 'BTC economy' is hard limited to "21,000,000" coins and dividable only down to .00000001
These rules are part of what has attracted people to apply real world value to an otherwise simple piece of accounting software. If someone proved they destroyed 20 million bitcoins somehow, or if there were a hard fork consensus among all major miners to nullify the last 10 million coins from being minable, thus limiting the BTC network to 11,000,000 full coins (1,100,000,000,000,000.0 total accountable units), than the perception of value relative to Euros or Dollars would, in what I would compare to the perceived value of limited edition toys like Beanie Babies, Magic the Gathering Cards, or Happy Meal toys. Only instead of a mass produced toy, it is a digital point system where people have used computer hardware to 'mine' BTC points.
If the Genesis coins started moving, one might assume the price of BTC to fluctuate as a result of peoples perception on the 'supply' of this digital currency.
If another cryptocoin is created with a design that agreeably surpasses that of the BTC protocol, than one might assume a migration of users from BTC to the presumably better protocol.
> If the Genesis coins started moving, one might assume the price of BTC to fluctuate as a result of peoples perception on the 'supply' of this digital currency.
Though, the Genesis coins moving might also increase the price. Satoshi moving their coins would be a very monumental event---it's hard to predict how people would interpret in aggregate.
Though, the Genesis coins moving might also increase the price. Satoshi moving their coins would be a very monumental event---it's hard to predict how people would interpret in aggregate.
I'm a compassionate anarcho-capitalist :)
Why not just divvy them up proportionally among all addresses with positive balances? It's functionally identical, since (to everybody besides you) it's just a change in price level and bitcoin prices aren't sticky like dollar prices are.
Only issue I can see is divisibility: this would inevitably result in some addresses deserving <1 satoshi, leading to discrepancies when rounding.
Only issue I can see is divisibility: this would inevitably result in some addresses deserving <1 satoshi, leading to discrepancies when rounding.
This is effectively what happens, because the remaining bitcoins become more scarce and (in theory at least) more valuable as a result.
Is it really? In practice there's not much difference between money that's never used and money that's destroyed. As long as it's out of circulation, it doesn't affect the economy. Apart from big, public actions of destroying BTC that many parties know about, I'm not sure there's any real value growth from the BTC burning.
The number of transactions and transaction fees would be prohibitive, and the blockchain bloat is undesirable.
Can you destroy bitcoins "after the fact" in this way though? Not claiming the block reward seems more like never mining them in the first case than "destroying" extant bitcoins.
(The distinction is relevant because I can imagine wanting to visibly destroy bitcoins that were e.g. proceeds of crime)
(The distinction is relevant because I can imagine wanting to visibly destroy bitcoins that were e.g. proceeds of crime)
Given cooperation by a miner, you can probably do it in principle (though I have not checked), because of transaction fees.
The recipe is this: Create a transaction with a transaction fee corresponding to the amount of BTC you want to destroy, and reveal this transaction only to the cooperating miner. The miner agrees to include the transaction without claiming the included fee.
Admittedly it's a bit pointless given that a better approach exists (OP_RETURN, as mentioned in the article).
The recipe is this: Create a transaction with a transaction fee corresponding to the amount of BTC you want to destroy, and reveal this transaction only to the cooperating miner. The miner agrees to include the transaction without claiming the included fee.
Admittedly it's a bit pointless given that a better approach exists (OP_RETURN, as mentioned in the article).
>In 2013, an easy way to add data to any Bitcoin transaction was introduced. By making standard a previously invalid script instruction, OP_RETURN, a Bitcoin user could add up to 40 bytes of data to his transactions.
It was already plenty easy to convert data to a multisig transaction. OP_RETURN doesn't add to the UTXO, while multisig transactions do, so OP_RETURN is less harmful.
This wasn't introduced to make it saving data to the blockchain easier, it was introduced to decrease the harm caused by spammers. It is more like a needle exchange.
It was already plenty easy to convert data to a multisig transaction. OP_RETURN doesn't add to the UTXO, while multisig transactions do, so OP_RETURN is less harmful.
This wasn't introduced to make it saving data to the blockchain easier, it was introduced to decrease the harm caused by spammers. It is more like a needle exchange.
Could a computer one day be powerful enough to reverse generate the private key for those "irretrievable" bitcoins?
Granted we are living in a very different technological age by then.
Granted we are living in a very different technological age by then.
If that was feasible, the entire bitcoin network would be destroyed(because you could now spend other peoples money by figuring out their private key based on their public wallet address)
If it approached feasible gradually and visibly enough, and secure alternatives for verifiable digital signatures existed, the network wouldn't necessarily be destroyed. We could see a gradual migration to addresses of the new form, while lost coins would eventually become retrievable.
Is there a reason you can't just delete the wallet that holds the coins and make sure you don't have any backups?
It seems that just removing them from circulation by any means would have the same result as "destroying" them.
It seems that just removing them from circulation by any means would have the same result as "destroying" them.
The distinction between "destroyed" and "lost" is significant, to the extent that if coins have been destroyed people know that the coins will never resurface; it's impossible to distinguish between coins which are lost and coins which have simply been unspent (e.g., the Satoshi hoard).
> Is there a reason you can't just delete the wallet that holds the coins and make sure you don't have any backups?
But you can't prove that you did that to anyone else.
But you can't prove that you did that to anyone else.
Right. This is where the phrase proof of burn comes in. It is nice to show, in a provable way, that you have have destroyed the coins.
Or you could do like I did and let 33 of them fester in a landfill in Cleveland because I couldn't be bothered to copy them to my new hard drive because they were only worth $0.10 at the time. Doh!
I sold my first ~500 to DPR when he was building liquidity in preparation to open Silk Road. As I recall, he was offering about $1. That was after I totally got the lack of anonymity, but before the first reliable mixing services.
I did well on investments and earnings from late 2012 through late 2013. And I managed to invest much of it in co-located servers. But it was nothing like $500K. So it goes.
I did well on investments and earnings from late 2012 through late 2013. And I managed to invest much of it in co-located servers. But it was nothing like $500K. So it goes.
Anyway, it's not the "good" OP_RETURN method, but to send your coins from any altcoin to a provably impossible address I made a utility and print out of addresses for sending to "an address owned by the public key hash of 0" http://earlz.net/view/2014/10/22/0340/provably-spendable-alt...