3 ms·

Funny thing is, we don't know how many keys are lost. They say it's deflationary, and I say it's deflating to zero through key attrition. And people pay for bur

by lolc 1y ago

Funny thing is, we don't know how many keys are lost. They say it's deflationary, and I say it's deflating to zero through key attrition. And people pay for burning electricity meanwhile. Weird game.

kragen 1y ago
We know it's not a large fraction, or anyway wasn't a large fraction a year ago, because the fraction of all mined Bitcoin that hasn't moved in the last year is only about 25%.
- lolc 1y ago
  Where did you get this number? All I can find is much higher, showing more than half of the coins have not been moved over a year. https://en.macromicro.me/charts/32355/bitcoin-supply-last-active-1plus-years-ago https://en.macromicro.me/charts/32355/bitcoin-supply-last-ac... https://charts.bitbo.io/dormant-coins/ https://charts.bitbo.io/dormant-coins/ Edit: If I understand correctly around 15% of coins has not moved in even ten years. So more than 20% of all the mined coins up to mid 2015 have not moved since.
  - kragen 1y ago
    Maybe I remembered it wrong, or maybe I was just out of date. Thanks for the correction! Still, that's basically pointing at key attrition being a fairly minor phenomenon.
    - FabHK 1y ago
      People complain about 5% inflation, and you call 20% or so of money supply gone "fairly minor"?
      - kragen 1y ago
        Yes; we're talking about 20% or so over 16 years, which is 1.25% per year, four times lower than the 5% per year inflation you're saying people complain about. And the anecdotal data suggests that that key attrition was concentrated in the early years, not just before there were Bitcoin ETFs, not just before there were exchanges, but before even the Bitcoin pizza. But the big issue from my point of view is not the actual key attrition rate but the uncertainty of the money supply, because from my point of view, these are the important questions about key attrition: - If Bitcoin goes to zero, what order of magnitude of money will the investor class lose? 200 trillion dollars, 20 trillion, 2 trillion, 200 billion, 20 billion, or 2 billion? - How much money and power has Bitcoin transferred to its early adopters: 2 trillion, 200 billion, 20 billion, 2 billion, or 200 million? - How much impact could awakening dormant coins have on the market? If Satoshi, or for that matter Hal Finney's heir or another early participant, started liquidating his early coins, would that be a tenth of the usual daily trading volume? Ten times? A hundred times? Questions like these are why lolc brought up key attrition in response to ducksinhats saying, "It offers stability and a mathematical escape from very fallible humans controlling monetary systems." A key attrition rate of 99% or 90% to date would result in very different answers to these questions. But 20% or 50% to date is fairly minor in this context.
        FabHK 1y ago
        Yes, good point. In terms of those macro questions, the key attrition is a minor issue.
- throw101010 1y ago
  Even if it was known and it did tend to zero I don't see the issue, Bitcoin is divisible, almost infinitely if you count L2s system (e.g. Lightning Network operates on a millistaoshi base unit instead of satoshi). Inaccessible bitcoins mean that the accessible ones are more rare so in a way it benefits other holders this way. They also serve the network as a form of security bounty, let's say tomorrow we discover a way to break encryption "soon" pepople will be provided with a path to safer addresses but these old addresses, the ones for which a public key is known, act as an incentive to look for such security flaws.
  - wqaatwt 1y ago
    Point is that it encourages hoarding money instead of engaging in anything that’s productive. Technical issues are secondary.
    - throw101010 1y ago
      Nobody prevents you from spending and replacing bitcoins, besides maybe the governments that insist on taxing smaller transactions as if it wasn't a currency. You should ask them why they've generated about 58 million millionaires and 2,700 billionaires worldwide. That's some actual "hoarding" you should be concerned about, instead of concern trolling about Bitcoin.
      - wqaatwt 1y ago
        > Nobody prevents you from spending..bitcoins Well besides common sense. If you own a deflationary asset/currency which is guaranteed to appreciate as long as the economy is growing (well it wouldn’t if btc became a global currency but that’s another matter) there is no reason for you to invest into anything unless it offers a disproportionately high return (or buy goods/services now if you can delay buying them) It would just reduce risk tolerance for investors and increase the real cost of borrowing significantly. That’s how deflationary currencies work (we know that based on several hundreds years worth of empirical evidence).
        1y ago

by lolc 1y ago

Funny thing is, we don't know how many keys are lost. They say it's deflationary, and I say it's deflating to zero through key attrition. And people pay for burning electricity meanwhile. Weird game.

kragen 1y ago

We know it's not a large fraction, or anyway wasn't a large fraction a year ago, because the fraction of all mined Bitcoin that hasn't moved in the last year is only about 25%.

lolc 1y ago
Where did you get this number? All I can find is much higher, showing more than half of the coins have not been moved over a year. https://en.macromicro.me/charts/32355/bitcoin-supply-last-active-1plus-years-ago https://en.macromicro.me/charts/32355/bitcoin-supply-last-ac... https://charts.bitbo.io/dormant-coins/ https://charts.bitbo.io/dormant-coins/ Edit: If I understand correctly around 15% of coins has not moved in even ten years. So more than 20% of all the mined coins up to mid 2015 have not moved since.
- kragen 1y ago
  Maybe I remembered it wrong, or maybe I was just out of date. Thanks for the correction! Still, that's basically pointing at key attrition being a fairly minor phenomenon.
  - FabHK 1y ago
    People complain about 5% inflation, and you call 20% or so of money supply gone "fairly minor"?
    - kragen 1y ago
      Yes; we're talking about 20% or so over 16 years, which is 1.25% per year, four times lower than the 5% per year inflation you're saying people complain about. And the anecdotal data suggests that that key attrition was concentrated in the early years, not just before there were Bitcoin ETFs, not just before there were exchanges, but before even the Bitcoin pizza. But the big issue from my point of view is not the actual key attrition rate but the uncertainty of the money supply, because from my point of view, these are the important questions about key attrition: - If Bitcoin goes to zero, what order of magnitude of money will the investor class lose? 200 trillion dollars, 20 trillion, 2 trillion, 200 billion, 20 billion, or 2 billion? - How much money and power has Bitcoin transferred to its early adopters: 2 trillion, 200 billion, 20 billion, 2 billion, or 200 million? - How much impact could awakening dormant coins have on the market? If Satoshi, or for that matter Hal Finney's heir or another early participant, started liquidating his early coins, would that be a tenth of the usual daily trading volume? Ten times? A hundred times? Questions like these are why lolc brought up key attrition in response to ducksinhats saying, "It offers stability and a mathematical escape from very fallible humans controlling monetary systems." A key attrition rate of 99% or 90% to date would result in very different answers to these questions. But 20% or 50% to date is fairly minor in this context.
      - FabHK 1y ago
        Yes, good point. In terms of those macro questions, the key attrition is a minor issue.
throw101010 1y ago
Even if it was known and it did tend to zero I don't see the issue, Bitcoin is divisible, almost infinitely if you count L2s system (e.g. Lightning Network operates on a millistaoshi base unit instead of satoshi). Inaccessible bitcoins mean that the accessible ones are more rare so in a way it benefits other holders this way. They also serve the network as a form of security bounty, let's say tomorrow we discover a way to break encryption "soon" pepople will be provided with a path to safer addresses but these old addresses, the ones for which a public key is known, act as an incentive to look for such security flaws.
- wqaatwt 1y ago
  Point is that it encourages hoarding money instead of engaging in anything that’s productive. Technical issues are secondary.
  - throw101010 1y ago
    Nobody prevents you from spending and replacing bitcoins, besides maybe the governments that insist on taxing smaller transactions as if it wasn't a currency. You should ask them why they've generated about 58 million millionaires and 2,700 billionaires worldwide. That's some actual "hoarding" you should be concerned about, instead of concern trolling about Bitcoin.
    - wqaatwt 1y ago
      > Nobody prevents you from spending..bitcoins Well besides common sense. If you own a deflationary asset/currency which is guaranteed to appreciate as long as the economy is growing (well it wouldn’t if btc became a global currency but that’s another matter) there is no reason for you to invest into anything unless it offers a disproportionately high return (or buy goods/services now if you can delay buying them) It would just reduce risk tolerance for investors and increase the real cost of borrowing significantly. That’s how deflationary currencies work (we know that based on several hundreds years worth of empirical evidence).
      - 1y ago