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From: Jim Phillips <jim@ergophobia.org>
Date: Sat, 9 May 2015 16:11:57 -0500
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Cc: Andreas Schildbach <andreas@schildbach.de>,
	Bitcoin Dev <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] A suggestion for reducing the size of the
 UTXO database
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Makes sense.. So with that said, I'd propose the following criteria for
selecting UTXOs:

1. Select the smallest possible set of addresses that can be linked in
order to come up with enough BTC to send to the payee.
2. Given multiple possible sets, select the one that has the largest number
of UTXOs.
3. Given multiple possible sets, choose the one that contains the largest
amount of total BTC.
4. Given multiple possible sets, select the one that destroys the most
bitcoin days.
5. If there's still multiple possible sets, just choose one at random.

Once the final set of addresses has been identified, use ALL UTXOs from
that set, sending appropriate outputs to the recipient(s), a new change
address, and a mining fee.

Miners should be cognisant of and reward the fact that the user is making
an effort to consolidate UTXOs. They can easily spot these transactions by
looking at whether all possible UTXOs from each input addresses have been
used. Since most miners use Bitcoin Core, and its defaults, this test can
be built into Bitcoin Core's logic for determining which transactions to
include when mining a block.

--
*James G. Phillips IV*
<https://plus.google.com/u/0/113107039501292625391/posts>
<http://www.linkedin.com/in/ergophobe>

*"Don't bunt. Aim out of the ball park. Aim for the company of immortals."
-- David Ogilvy*

 *This message was created with 100% recycled electrons. Please think twice
before printing.*

On Sat, May 9, 2015 at 3:38 PM, Pieter Wuille <pieter.wuille@gmail.com>
wrote:

> Miners do not care about the age of a UTXO entry, apart for two
> exceptions. It is also economically irrelevant.
> * There is a free transaction policy, which sets a small portion of block
> space aside for transactions which do not pay sufficient fee. This is
> mostly an altruistic way of encouraging Bitcoin adoption. As a DoS
> prevention mechanism, there is a requirement that these free transactions
> are of sufficient priority (computed as BTC-days-destroyed per byte),
> essentially requiring these transactions to consume another scarce
> resource, even if not money.
> * Coinbase transaction outputs can, as a consensus rule, only be spent
> after 100 confirmations. This is to prevent random reorganisations from
> invalidating transactions that spend young coinbase transactions (which
> can't move to the new chain). In addition, wallets also select more
> confirmed outputs first to consume, for the same reason.
> On May 9, 2015 1:20 PM, "Raystonn" <raystonn@hotmail.com> wrote:
>
>> That policy is included in Bitcoin Core.  Miners use it because it is the
>> default.  The policy was likely intended to help real transactions get
>> through in the face of spam.  But it favors those with more bitcoin, as the
>> priority is determined by amount spent multiplied by age of UTXOs.  At the
>> very least the amount spent should be removed as a factor, or fees are
>> unlikely to ever be paid by those who can afford them.  We can reassess the
>> role age plays later.  One change at a time is better.
>>  On 9 May 2015 12:52 pm, Jim Phillips <jim@ergophobia.org> wrote:
>>
>> On Sat, May 9, 2015 at 2:43 PM, Raystonn <raystonn@hotmail.com> wrote:
>>
>> How about this as a happy medium default policy: Rather than select UTXOs
>> based solely on age and limiting the size of the transaction, we select as
>> many UTXOs as possible from as few addresses as possible, prioritizing
>> which addresses to use based on the number of UTXOs it contains (more being
>> preferable) and how old those UTXOs are (in order to reduce the fee)?
>>
>> If selecting older UTXOs gives higher priority for a lesser (or at least
>> not greater) fee, that is an incentive for a rational user to use the older
>> UTXOs.  Such policy needs to be defended or removed.  It doesn't support
>> privacy or a reduction in UTXOs.
>>
>> Before starting this thread, I had completely forgotten that age was even
>> a factor in determining which UTXOs to use. Frankly, I can't think of any
>> reason why miners care how old a particular UTXO is when determining what
>> fees to charge. I'm sure there is one, I just don't know what it is. I just
>> tossed it in there as homage to Andreas who pointed out to me that it was
>> still part of the selection criteria.
>>
>>

--047d7bb04b0e2455090515ac9a17
Content-Type: text/html; charset=UTF-8
Content-Transfer-Encoding: quoted-printable

<div dir=3D"ltr">Makes sense.. So with that said, I&#39;d propose the follo=
wing criteria for selecting UTXOs:<div><br></div><div>1. Select the smalles=
t possible set of addresses that can be linked in order to come up with eno=
ugh BTC to send to the payee.</div><div>2. Given multiple possible sets, se=
lect the one that has the largest number of UTXOs.</div><div>3. Given multi=
ple possible sets, choose the one that contains the largest amount of total=
 BTC.</div><div>4. Given multiple possible sets, select the one that destro=
ys the most bitcoin days.</div><div>5. If there&#39;s still multiple possib=
le sets, just choose one at random.</div><div><br></div><div>Once the final=
 set of addresses has been identified, use ALL UTXOs from that set, sending=
 appropriate outputs to the recipient(s), a new change address, and a minin=
g fee.</div><div><br></div><div>Miners should be cognisant of and reward th=
e fact that the user is making an effort to consolidate UTXOs. They can eas=
ily spot these transactions by looking at whether all possible UTXOs from e=
ach input addresses have been used. Since most miners use Bitcoin Core, and=
 its defaults, this test can be built into Bitcoin Core&#39;s logic for det=
ermining which transactions to include when mining a block.</div></div><div=
 class=3D"gmail_extra"><br clear=3D"all"><div><div class=3D"gmail_signature=
"><div>--<div><b>James G. Phillips IV</b>=C2=A0<a href=3D"https://plus.goog=
le.com/u/0/113107039501292625391/posts" style=3D"font-size:x-small" target=
=3D"_blank"><img src=3D"https://ssl.gstatic.com/images/icons/gplus-16.png">=
</a>=C2=A0<a href=3D"http://www.linkedin.com/in/ergophobe" target=3D"_blank=
"><img src=3D"http://developer.linkedin.com/sites/default/files/LinkedIn_Lo=
go16px.png"></a></div></div><div><font size=3D"1"><i>&quot;Don&#39;t bunt. =
Aim out of the ball park. Aim for the company of immortals.&quot; -- David =
Ogilvy<br></i></font><div><font size=3D"1"><br></font></div></div><div><fon=
t size=3D"1"><img src=3D"http://findicons.com/files/icons/1156/fugue/16/lea=
f.png">=C2=A0<em style=3D"background-color:rgb(255,255,255);font-family:ver=
dana,geneva,sans-serif;line-height:16px;color:green">This message was creat=
ed with 100% recycled electrons. Please think twice before printing.</em></=
font></div></div></div>
<br><div class=3D"gmail_quote">On Sat, May 9, 2015 at 3:38 PM, Pieter Wuill=
e <span dir=3D"ltr">&lt;<a href=3D"mailto:pieter.wuille@gmail.com" target=
=3D"_blank">pieter.wuille@gmail.com</a>&gt;</span> wrote:<br><blockquote cl=
ass=3D"gmail_quote" style=3D"margin:0 0 0 .8ex;border-left:1px #ccc solid;p=
adding-left:1ex"><p dir=3D"ltr">Miners do not care about the age of a UTXO =
entry, apart for two exceptions. It is also economically irrelevant.<br>
* There is a free transaction policy, which sets a small portion of block s=
pace aside for transactions which do not pay sufficient fee. This is mostly=
 an altruistic way of encouraging Bitcoin adoption. As a DoS prevention mec=
hanism, there is a requirement that these free transactions are of sufficie=
nt priority (computed as BTC-days-destroyed per byte), essentially requirin=
g these transactions to consume another scarce resource, even if not money.=
<br>
* Coinbase transaction outputs can, as a consensus rule, only be spent afte=
r 100 confirmations. This is to prevent random reorganisations from invalid=
ating transactions that spend young coinbase transactions (which can&#39;t =
move to the new chain). In addition, wallets also select more confirmed out=
puts first to consume, for the same reason.</p><div class=3D"HOEnZb"><div c=
lass=3D"h5">
<div class=3D"gmail_quote">On May 9, 2015 1:20 PM, &quot;Raystonn&quot; &lt=
;<a href=3D"mailto:raystonn@hotmail.com" target=3D"_blank">raystonn@hotmail=
.com</a>&gt; wrote:<br type=3D"attribution"><blockquote class=3D"gmail_quot=
e" style=3D"margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">=
<p dir=3D"ltr">That policy is included in Bitcoin Core.=C2=A0 Miners use it=
 because it is the default.=C2=A0 The policy was likely intended to help re=
al transactions get through in the face of spam.=C2=A0 But it favors those =
with more bitcoin, as the priority is determined by amount spent multiplied=
 by age of UTXOs.=C2=A0 At the very least the amount spent should be remove=
d as a factor, or fees are unlikely to ever be paid by those who can afford=
 them.=C2=A0 We can reassess the role age plays later.=C2=A0 One change at =
a time is better.<br>
</p>
<div class=3D"gmail_quote">On 9 May 2015 12:52 pm, Jim Phillips &lt;<a href=
=3D"mailto:jim@ergophobia.org" target=3D"_blank">jim@ergophobia.org</a>&gt;=
 wrote:<br type=3D"attribution"><blockquote style=3D"margin:0 0 0 .8ex;bord=
er-left:1px #ccc solid;padding-left:1ex"><div dir=3D"ltr"><div><div><div><d=
iv>On Sat, May 9, 2015 at 2:43 PM, Raystonn <span dir=3D"ltr">&lt;<a href=
=3D"mailto:raystonn@hotmail.com" target=3D"_blank">raystonn@hotmail.com</a>=
&gt;</span> wrote:<br></div></div></div><div><blockquote style=3D"margin:0p=
x 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);bo=
rder-left-style:solid;padding-left:1ex"><blockquote style=3D"margin:0px 0px=
 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-=
left-style:solid;padding-left:1ex"><span style=3D"color:rgb(80,0,80);font-s=
ize:12.8000001907349px">How about this as a happy medium default policy: Ra=
ther than select UTXOs based solely on age and limiting the size of the tra=
nsaction, we select as many UTXOs as possible from as few addresses as poss=
ible, prioritizing which addresses to use based on the number of UTXOs it c=
ontains (more being preferable) and how old those UTXOs are (in order to re=
duce the fee)?=C2=A0</span></blockquote><p dir=3D"ltr">If selecting older U=
TXOs gives higher priority for a lesser (or at least not greater) fee, that=
 is an incentive for a rational user to use the older UTXOs.=C2=A0 Such pol=
icy needs to be defended or removed.=C2=A0 It doesn&#39;t support privacy o=
r a reduction in UTXOs.</p></blockquote><div>Before starting this thread, I=
 had completely forgotten that age was even a factor in determining which U=
TXOs to use. Frankly, I can&#39;t think of any reason why miners care how o=
ld a particular UTXO is when determining what fees to charge. I&#39;m sure =
there is one, I just don&#39;t know what it is. I just tossed it in there a=
s homage to Andreas who pointed out to me that it was still part of the sel=
ection criteria.</div></div></div></div>
</blockquote></div></blockquote></div>
</div></div></blockquote></div><br></div>

--047d7bb04b0e2455090515ac9a17--