[BIP Proposal] Proof-of-Activity Reclamation (PoAR)

[Donald Dienst]

Dear Bitcoin developers,

I would like to propose a new BIP titled "Proof-of-Activity Reclamation (PoAR)," which aims to address the long-term economic effects of lost and abandoned UTXOs.

This proposal introduces a fully automated and rule-based mechanism to gradually recycle coins that have been provably inactive for over 20 years. These coins are returned to the undistributed pool and slowly reintroduced via future block rewards—extending miner incentives while respecting the 21 million BTC cap.

You can view the full proposal here:
https://gist.github.com/Brandchatz/56c39d289db9e56190c13922850815b8

I welcome your thoughts, suggestions, and critiques.

Best regards,  
Donald Dienst  
dddi...@protonmail.com

[Boris Nagaev]

Hi Donald,

Thanks for sharing your proposal!

There are several additional objections worth considering:

1. It would require a hard fork. Older nodes would reject blocks with a higher-than-expected miner reward. By contrast, SegWit and Taproot were implemented as soft forks.
2. It breaks long-term inheritance schemes. Imagine a newborn inheriting 1000 BTC from a wealthy relative. The relative sets a 30-year timelock to ensure the funds are not misused during childhood. This proposal would interfere with that intention and potentially strip the heir of their rightful inheritance.
3. It penalizes long-term planning and low time preference. Users who intentionally lock up funds for decades (whether for inheritance, security, or economic reasons) would be disproportionately impacted.
4. It changes who pays for network security. Miners are expected to be compensated in the long term by transaction fees paid by active transaction senders. This proposal would instead take value from long-term holders who aren't participating in the transaction flow, effectively taxing them without consent.

Best regards,

Boris

[Lucas Barbosa]

This type of proposal, is fundamentally incompatible with Bitcoin's ethos for several reasons.

1. Sovereignty and Immutability of Property

In Bitcoin, ownership of a coin is guaranteed exclusively by possession of the corresponding private key. The idea that funds can be "reclaimed" or "recycled" after a period of inactivity amounts to automated confiscation, albeit disguised as economic efficiency. This undermines trust in the inviolability of property—something sacred to long-term users.

2. The 21 Million Rule is Inviolable, but the Supply is also Deterministic

Although the proposal claims to respect the 21 million cap, it alters the nature of supply distribution. The fact that UTXOs are lost is part of the economic reality of BTC—the actual circulating supply is lower than the theoretical one, and this is priced in. Attempting to "correct" this is a form of monetary intervention without legitimate authority in the system.

3. Perverse Precedent and Attack on Finality

Allowing a UTXO to be reused after N years sets a very dangerous precedent: ownership of BTC is no longer absolute and becomes conditional on activity. This directly attacks the finality of transactions and the ledger—one of the pillars of the system.

4. Negative Impact on Long-Term Trust

People who store BTC for the future—whether for decades, for reasons of inheritance, security, or trust in the network—would lose the guarantee that their BTC will remain untouched. This reduces Bitcoin's perceived value as a solid and reliable store of value.

5. This Has Already Been Considered and Rejected

Similar proposals (such as coin expiry or reclaimable outputs) have been discussed in the past, and the Bitcoin community has consistently rejected them based on the above principles.

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[Christian Riley]

Hi,

This has been proposed before and isn’t bitcoin but some alt coin. Taking people’s bitcoins after a certain period of time isn’t ethical.  Not to mention it breaks some protocols such as proof of burn etc. If the past discussions are any guide it is (thankfully) a nonstarter. 

Have a good one! 😀

Sent from my iPhone

On Jul 15, 2025, at 2:26 PM, 'Donald Dienst' via Bitcoin Development Mailing List <bitco...@googlegroups.com> wrote:

Dear Bitcoin developers,

--

[Donald Dienst]

Boris,

Thank you for taking the time to raise these thoughtful objections. They highlight important edge cases, particularly around long-term inheritance planning and time-locked contracts, that deserve further discussion.

The intent of this proposal is not to seize anyone’s Bitcoin but to create a rules-based mechanism for reintroducing truly abandoned coins—those locked away forever due to lost keys—back into the economy. If a private key is irrecoverably lost, the associated Bitcoin is effectively removed from circulation and, arguably, no longer owned. In such cases, the so-called "security tax" affects no active participant.

That said, your concerns are valid. One potential refinement would be to extend the inactivity window significantly—perhaps even to 100 years—to better accommodate multi-generational ownership and time-locked smart contracts. The core idea is that a sufficiently long timeframe, paired with clear expectations and wallet alerts, can strike a balance between preserving ownership rights and sustaining economic viability.

It's also possible that this proposal—or one like it—may only be realistically implemented as part of a broader hard fork in the distant future, potentially bundled with other critical changes such as post-quantum security upgrades. I hope that when that moment comes, a mechanism for reclaiming permanently lost coins is part of that discussion.

To those who object on purely ideological grounds, I would offer this reflection: if something can happen, it will happen—and it will continue to happen. People will keep losing keys. And one day, someone will lose the private key to the very last satoshi. Long before that point, Bitcoin may become functionally unusable—not because of inflation like fiat currencies, but due to irreversible deflation and economic ossification.

In that light, maintaining the myth that permanently lost coins should remain sacrosanct is not ideological purity—it’s advocating for a slow march toward irrelevance. To preserve Bitcoin’s utility as both a store of value and a medium of exchange, we must confront this eventuality with reasoned, transparent, and opt-in solutions.

Sincerely,
Donald D. Dienst

[Murch]

Hi Donald and all,

The idea of recycling dormant coins is one that has made the rounds
several times before, including in the form of the "Bitcoin Dormant
Recovery Proposal" just a couple months ago:
https://github.com/bitcoin/bips/pull/1852

I don’t have the impression that the idea has been particularly popular,
and as BIPs go, this one is missing crucial parts, e.g.:

• A more comprehensive motivation based on thorough analysis how
redistributing dormant coins improves the system as this constitutes a
departure of the status quo for the supply schedule
• Specification of the redistribution rate and mechanism
• Specification of the out-of-band activity proof mechanism and how this
out-of-band information would be introduced into the Bitcoin system as
consensus critical information, and discussion of alternative approaches
and why this is the correct approach
• Rationale for reclaiming dormant coins at halvings rather than UTXOs
expiring after a fixed number of blocks
• An analysis of the backward compatibility, including especially the
discussion of how to conduct this hard fork

In its current state, I would consider this document premature for a
pull request and would encourage further development. Generally, the
arguments and reasoning used in the motivation and rationale will need a
lot more work to make a hard fork and a change in the economic paradigm
palatable.

Cheers,
Murch

On 2025-07-10 15:55, 'Donald Dienst' via Bitcoin Development Mailing

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[Peter Todd]

On Tue, Jul 15, 2025 at 03:02:04PM -0700, Murch wrote:
> Hi Donald and all,
>
> The idea of recycling dormant coins is one that has made the rounds several
> times before, including in the form of the "Bitcoin Dormant Recovery
> Proposal" just a couple months ago:
> https://github.com/bitcoin/bips/pull/1852
>
> I don’t have the impression that the idea has been particularly popular, and
> as BIPs go, this one is missing crucial parts, e.g.:
>
> • A more comprehensive motivation based on thorough analysis how
> redistributing dormant coins improves the system as this constitutes a
> departure of the status quo for the supply schedule

Worth noting that from an economic point of view redistributing genuinely lost
coins, and creating coins out of thin air, is essentially the same thing:
either way you are introducing coins into the active economy that were
previously not in economic circulation. In both cases you are diluting the
value of non-lost coins by increasing the total active supply, decreasing their
purchasing power proportionally.

If you want to argue for actually redistributing coins rather than just
creating new ones out of thin air - for whatever reason - you need to justify
why you want to risk confiscating coins that were not in fact lost.

--
https://petertodd.org 'peter'[:-1]@petertodd.org

[Javier Mateos]

Hi Donald and everyone!
First of all, I want to thank you for the effort and work put into this proposal, wich addressses a complex and important topic. Howewer, to my understanding, the proposal clearly lacks solid foundations, and although it tries to anticipate some objections, the responses offered are either insufficient or even counterproductive.

1) The issue of miner incentives is overstated
The last bitcoin won’t be mined until the year 2140, which means we’re still more than 100 years away. Justifying such a structural change today based on a concern that lies completely outside our current technical, social, and economic horizon is an exaggeration. As rewards decrease, Bitcoin has already shown a natural tendency to substitute them with transaction fees, without this causing any systemic collapse.

2) Artificial scarcity is not a problem (it’s part of the design)
Bitcoin is divisible into 100 million satoshis per unit, which provides more than enough granularity to operate even if BTC reaches astronomical values. If 1 BTC were worth more than 1 million u$s, each satoshi would be worth over a cent. If necessary, an extension of decimals could be considered in the future (as is already done in Lightning with millisatoshis), without altering the fundamental rules.

The idea that “lost value must be recovered” to maintain liquidity completely ignores the fact that in a deflationary economy, the loss of units doesn’t necessarily reduce system functionality—it increases the value of the remaining units. In the words of Satoshi Nakamoto himself:
“Lost coins only make everyone else’s coins worth slightly more. Think of it as a donation to everyone.” (I clarify that i do not necessarily intended to be canonical)

3) The confiscation risk doesn't disappear just because it's framed as "reauthentication."
The argument that “if you can’t move your coins for 20 years, it’s indistinguishable from abandonment” is not only weak, but profoundly dangerous. What happens if coins are immobilized as part of an inheritance, a trust, or simply due to personal choice?

Peter Todd summed it up perfectly:
“If you want to argue for actually redistributing coins rather than just creating new ones out of thin air - for whatever reason - you need to justify why you want to risk confiscating coins that were not in fact lost.”

The fact that the current system can’t distinguish between lost and non-lost coins doesn’t justify defaulting to confiscation. In fact, that limitation is deliberate: Bitcoin is based on the presumption of individual sovereignty, not on a registry of “legitimate activity.” Why should I be required to spend or move my BTC if I don’t want to? The very idea of Bitcoin is that I have full freedom to decide what to do with my funds. 

4) Bitcoin does not need to "reactivate" value to sustain its economy.
The assumption that a prolonged decrease in supply would destabilize the system has not been empirically demonstrated. Growing demand, combined with coin loss, creates deflationary pressure, yes—but that doesn’t prevent circulation or absolutely disincentivize spending. Bitcoin’s economy has already adapted to this over time without artificial intervention.

Sincerely,
Javier Mateos