7 ms·

How to destroy Bitcoins?

95 points by alcio 11y ago

btreecat 11y ago
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.
- pavel_lishin 11y ago
  > 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.
  - clarkmoody 11y ago
    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.
- cperciva 11y ago
  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).
  - aaron_m04 11y ago
    This is why Bitcoin needs to start expiring unspent outputs that are more than 5 years old.
    - Kapow 11y ago
      Like how you can't use paper money that was printed before 2010? That makes sense.
- saosebastiao 11y ago
  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!
  - mirimir 11y ago
    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.
lmm 11y ago
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)
- nhaehnle 11y ago
  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).
jackgavigan 11y ago
You can destroy Bitcoins by sending them to 1LuMWxkwCNB6gsCvN1WfShvGxbBVroXBoZ ;-)
- redcalx 11y ago
  Thanks for providing this useful service!
earlz 11y ago
I actually had to address this in the altcoin world (back when that was a thing) because the C-CEX exchange would take money for "destroying" coins, but the method they used for destroying coins was just taking a video of them sending a wallet to the private key owned by a different wallet and then deleting the wallet. (which they could've easily kept a backup of). There were even some altcoin devs that paid me to hardfork their coin to ensure that coins sent to the address the exchange used could no longer be spent on the network. 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-altcoin-burn-addresses http://earlz.net/view/2014/10/22/0340/provably-spendable-alt...
- detaro 11y ago
  > because the C-CEX exchange would take money for "destroying" coins Who would use such a service?
  - earlz 11y ago
    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
    - detaro 11y ago
      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.
delecti 11y ago
Did I just miss where they explained why this is a thing that people want to do?
- 3pt14159 11y ago
  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.
  - ohitsdom 11y ago
    So, escrow? This is possible without destroying the currency.
    - Phlarp 11y ago
      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.
      - mirimir 11y ago
        Maybe donate them to charity instead?
        rdancer 11y ago
        What are you, a communist?
rory096 11y ago
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.
- joosters 11y ago
  This is effectively what happens, because the remaining bitcoins become more scarce and (in theory at least) more valuable as a result.
  - viraptor 11y ago
    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.
- tlrobinson 11y ago
  The number of transactions and transaction fees would be prohibitive, and the blockchain bloat is undesirable.
ck2 11y ago
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.
- oh_sigh 11y ago
  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)
  - dllthomas 11y ago
    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.
lappa 11y ago
>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.

95 points by alcio 11y ago

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.

pavel_lishin 11y ago
> 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.
- clarkmoody 11y ago
  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.
cperciva 11y ago
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).
- aaron_m04 11y ago
  This is why Bitcoin needs to start expiring unspent outputs that are more than 5 years old.
  - Kapow 11y ago
    Like how you can't use paper money that was printed before 2010? That makes sense.
saosebastiao 11y ago
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!
- mirimir 11y ago
  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.

lmm 11y ago

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)

nhaehnle 11y ago
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).

jackgavigan 11y ago

You can destroy Bitcoins by sending them to 1LuMWxkwCNB6gsCvN1WfShvGxbBVroXBoZ ;-)

redcalx 11y ago
Thanks for providing this useful service!

earlz 11y ago

I actually had to address this in the altcoin world (back when that was a thing) because the C-CEX exchange would take money for "destroying" coins, but the method they used for destroying coins was just taking a video of them sending a wallet to the private key owned by a different wallet and then deleting the wallet. (which they could've easily kept a backup of). There were even some altcoin devs that paid me to hardfork their coin to ensure that coins sent to the address the exchange used could no longer be spent on the network. 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-altcoin-burn-addresses http://earlz.net/view/2014/10/22/0340/provably-spendable-alt...

detaro 11y ago
> because the C-CEX exchange would take money for "destroying" coins Who would use such a service?
- earlz 11y ago
  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
  - detaro 11y ago
    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.

delecti 11y ago

Did I just miss where they explained why this is a thing that people want to do?

3pt14159 11y ago
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.
- ohitsdom 11y ago
  So, escrow? This is possible without destroying the currency.
  - Phlarp 11y ago
    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.
    - mirimir 11y ago
      Maybe donate them to charity instead?
      - rdancer 11y ago
        What are you, a communist?

rory096 11y ago

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.

joosters 11y ago
This is effectively what happens, because the remaining bitcoins become more scarce and (in theory at least) more valuable as a result.
- viraptor 11y ago
  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.
tlrobinson 11y ago
The number of transactions and transaction fees would be prohibitive, and the blockchain bloat is undesirable.

ck2 11y ago

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.

oh_sigh 11y ago
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)
- dllthomas 11y ago
  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.

lappa 11y ago

>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.