HODL Tax Proposal

[Richard Greaser]

Hi everyone, 

It has become apparent to me that there is an issue where users of the network holding their coins, are not adding value to the network.

As miners continue to get squeezed post halving, they would benefit tremendously from fees being taken from individuals refusing to move their coins, providing increased security to the network. 

I have written out a proposal more in depth and is attached below. 

[Keagan McClelland]

This is never going to happen.

While demurrage has been proposed before and may ultimately be a consideration that the Bitcoin users want to ensure that costs are borne fairly by the different use cases, this mechanism is somewhat laughable.

The proposal you present also seems to reflect a deep misunderstanding of how the Bitcoin protocol works:

1. Self assigning a bip number defies the bip assignment process and claims a level of legitimacy that this proposal does not have.

2. Bitcoin for the most part does not really understand "days". There is a timestamping mechanism that is used to reconcile difficulty adjustment periods with the targeted time, but this is not something that can be more widely used.

3. The way that "balances" are tracked and audited by Bitcoin nodes does not lend itself easily to being just "deducted from"

4. You cannot "automatically deduct" a fee from an "address". Addresses don't technically exist at the protocol level.

5. Miners do not "contribute proportionally" to computational work of finding a block. There's the winner, and then everyone else.

6. Bitcoin cannot and will not make any legal or jurisdictional considerations whatsoever when considering design choices.

7. Dennis Porter is irrelevant and does not have any authority to grant or withhold "permission"

8. This proposal, like all demurrage proposals, clearly has negative tradeoffs to be considered.

9. Centrally planning the price and inactivity period of demurrage is antithetical to Bitcoin's decentralized market design mechanisms in use thus far.

Stick to journalism. Maybe learn about Bitcoin a bit before trying to extract the wealth of savers.

Keags

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[George Burke]

A tax on property already owned is something I'm fundamentally against. Being charged for lack of usage erodes our concept of property ownership, especially when usage itself sufficiently subsidizes the network. The "network tax" was already paid on the acquisition of the asset by the sender, and another network tax will be paid by the current owner upon every subsequent sale or self-transfer. 

My perspective: HODLers are indeed providing a valuable service to the longevity and growth of network value. They're providing scarcity.

--

George Burke 
Co-founder, Portal 
Silicon Valley Bitcoin, Organizer 
Co-founder, FounderPool 

San Juan, PR / San Francisco, CA 
Keybase || OneName 

For security, encrypt with my PGP key

 

On Thu, Aug 1, 2024 at 2:13 PM Richard Greaser <thebitc...@gmail.com> wrote:

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[José Edil Guimarães de Medeiros]

Not sure if I should consider this a joke after the president of bitcoin thing, but I just got curious about a basic technical detail and wanted to stress the concept. 

Since the value "tokens" in Bitcoin are the utxos, outputs from transactions that have not been spent in another transaction, and since the sole purpose of the utxos are to atomically serve as input to a subsequent transaction, how do you proposed to "tax" them?

I mean, let's say someone sent me 1 BTC to address X by building a simple p2pkh transaction with the address I provided. To move that 1 BTC mean to authorize it as an input to a new transaction. In principle, that can only be done by me producing a valid signature using a private key.

Let's say I'm one of those infamous holders. How do you propose the tax to be implemented?

All the best. 

--

E...

On 1 Aug 2024, at 18:13, Richard Greaser <thebitc...@gmail.com> wrote:

Hi everyone, 

It has become apparent to me that there is an issue where users of the network holding their coins, are not adding value to the network.

As miners continue to get squeezed post halving, they would benefit tremendously from fees being taken from individuals refusing to move their coins, providing increased security to the network. 

I have written out a proposal more in depth and is attached below. 

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<hodltax.md>

[Christian Riley]

Hi,

Assuming this was a serious proposal, I believe you will get few takers for this taxcoin, but if you implement it, perhaps I am wrong.  

As I recall, there have been other similar proposals for seizing inactive coins and this is just a slower proposal where instead of seizing them all at once you want to seize them slowly.  This would probably destroy such things as proof of burn, puzzles, etc.  It could also change assumptions and incentives - once an address is close to the “tax period” miners might refuse to mine a transaction with it to collect the tax. Also, from a technical perspective, how is the “fee automatically deducted from an address”?  And I’d also add this could result in a huge number of transactions, enough to potentially fill all available space and result in the inability to have other transactions or even get every “address” active every X days.  There are other issues too. 

Of course, the way to test is to fork your software and see how many people will run it.  :-)

Sent from my iPhone

[Keagan McClelland]

Hypothetically miners could attempt to adopt a mining/relay policy wherein they consider the age of the utxo being spent and factor that into the feerate they consider when accepting the transaction into their block template. However this would be an opt-in mechanism and miners can choose to not take this into consideration when making the choice to mine the transaction or not. If enough hashpower adopted this policy, you could end up with a de-facto demurrage tax. This also means that you can do this without a consensus fork if there was appetite for it.

However, I suspect there will be extreme resistance to this proposal and it is unlikely that miners would intentionally leave otherwise-good fees on the table simply because they want to play prisoners dilemma games where they lose fees to the competition.

Keags

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[Jimmy Song]

For those that haven't figured this out yet, the name on the original proposal (Dick Greaser) is the editor or the Bitcoin Bugle, a satirical "news" site. He's trolling the list.

To view this discussion on the web visit https://groups.google.com/d/msgid/bitcoindev/CALeFGL2ngsRd3N%2B8L7u9ZLNQB084xqcMZ04Dp3J53CEBHBxQcg%40mail.gmail.com.

[George Burke]

Jimmy, he might be trolling but he replied privately to me with a very thoughtful (though disagreeable) rebuttal. Hard to consider this satirical. 

Sent from Mobile
--
George Burke
CMO, FounderPool.co
Cofounder, PortalDeFi.com
Silicon Valley Bitcoin, Organizer 

San Francisco, CA | San Juan, PR

 

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[hashnoncemessage]

obvious troll is obvious 

thanks dick greaser 

> Like Paul Sztorc's previous proposals, this one has zero negative trade offs. 

okay i lolled 

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[Garlo Nicon]

Good luck implementing it in test networks first, for example testnet3. Some people were complaining, that they cannot get enough coins, and there is no other test chain, which is close to the mainnet, and has a lot of history, and a lot of halvings. So, if you think seriously about it, then you should start from testnet3. Other networks, including mainnet, have not enough blocks, and have too big rewards for that.

> addresses that do not engage in any outgoing transactions for over 60 days

Miners can easily attack your network by mining empty blocks. It is profitable to block regular payments today, to get high demurrage fees tomorrow. Also, it is possible to easily censor any transaction, just by refusing to include it. Then, required demurrage fees will be higher, than what was originally sent as fees, and all nodes will just throw it away, while respecting your consensus. Which also means, that this proposal enables "transaction expiration" in some implicit way: if a transaction is not confirmed in N blocks, then everything is eaten by demurrage fees, so the old transaction simply expires.

> action needs to be taken before Peter Todd's suggestion of tail emissions get any serious momentum

Assuming that "tail supply" will ever be implemented, then guess what: people will count each and every overprinted satoshi. Creating coins is hard, burning them is easy. If people will inflate Bitcoin, then other people will bring it back to the equilibrium, just by burning all overprinted coins, and refusing to accept any overprinted satoshi. You will see charts, and statistics, how many "tail supply coins" were mined in a given block, and people will burn the same amount, if not more.

> A proposed rate is 0.1% of the address balance per inactivity period.

Ouch. This is way more than the current fees. Some people stopped using LN, because of fees like that. If you have 1 BTC, and you have to pay 100k satoshis, then you can compare it with on-chain fees, where you can get it confirmed for 1k sats. Which means, that this "0.1% fees" will remove all whales from your network, where "a whale" is "anyone with >= 0.01 BTC". Good luck maintaining the chain without any whales, it will be just an altcoin, similar to CPU-mined altcoins, where "miners=users" is the only use-case.

Also note, that miners can simply send those demurrage fees back to the users, just to get something. Then, they will have the choice: reject user's transaction entirely (because of missing demurrage fees), or confirm two transactions: one paying demurrage fees, and one sending them back to the user. Congratulations, your rule just doubled the number of transactions for no reason. Because only miners getting proper fees will survive, everyone else will reject too many transactions, and end up with nothing.

> The inactivity threshold and fee rate can be adjusted based on community feedback and network conditions.

So, is it a local node policy, instead of being a consensus rule? Good, then I can just edit my config file, put "demurragefee=0.00000000" and "inactivity=999999999". Good to know, that a proposal like that, can be turned off that simply.