From: Michael Gronager <gronager@ceptacle.com>
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Date: Mon, 3 Dec 2012 12:19:37 +0100
To: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>
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Subject: [Bitcoin-development] Chain dust mitigation: Demurrage based Chain
	Vacuuming
Precedence: list

(Also posted on the forum: =
https://bitcointalk.org/index.php?topic=3D128900.0)

The amount of "dust" in the block chain is getting large and it is =
growing all the time. Currently 11% of unspent tx outputs (UTXO) are of =
1Satoshi (0.00000001BTC), 32% is less than 0.0001BTC and 60% is less =
than 0.001BTC. (Thanks to Jan for digging out these numbers!)

This means that a huge part of the block chain is used for essentially =
nothing - e.g. the sum of the 11% is worth roughly 2 US cents !

The main source for these 1 Satoshi payouts is Sahtoshi Dice. And =
nothing wrong with that, however, we should work on ensuring that too =
many too small payments will not kill the size of the blockchain in the =
end - further, they are essentially too small to be included in other =
transaction as the added fee will often make it more expensive to remove =
them. Hence, there is no incentive to get rid of them.

I have an idea for a possible mitigation of this problem - introduction =
of demurrage - not as in it normal meaning as a percentage over time =
(see:http://en.wikipedia.org/wiki/Demurrage_(currency) btw, this has =
also been tried in freicoin), but as a mean to recycle pennies over =
time. The proposal is simple - UTXOs age out if not re-transacted - the =
smaller the coin the faster the aging:
1-99 Satoshi: lives for 210 blocks
100-9999 Satoshi: lives for 2100 blocks
10000-999999 Satoshi: lives for 21000 blocks
1000000-99999999 Satoshi: lives for 210000 blocks

Only amounts above 1BTC lives forever - (or we could even impose aging =
on those too..)

The aged coins are simply included in the block mining reward, creating =
another incentive for miners. Further, if we include all coins in this =
recycle scheme coins will never be lost forever.=20

This scheme will impose some lifetimes also on e.g. colored coins (hence =
you need to use a certain amount to borrow space on the blockchain for =
the time needed, or simply transact them).

If you like this I would be happy to write it into a BIP.

Thoughts ?=