[cryptography] Bitcoin observation

lodewijk andré de la porte lodewijkadlp at gmail.com
Wed Jul 6 06:55:57 EDT 2011


I find the phrasing very strange. You cannot "destroy" a bitcoin, only
render it practically beyond recovery. You could still recover it by
figuring out which account's full of money and brute forcing their private
key from their public key and transaction log, it's not likely to be
feasable anytime soon though.

When someone incidentally loses his coins the same thing happens. Nothing
happens but the rarity of coins increases, due to there being less in
circulation. Speculating by destroying part of the goods is an ancient
practice, coffee traders did it too I believe. I also have a memory of a
movie in which a comic book collector is shredding most of a large pile of
comic books so they'll become rare and the remaining books are worth more.

Anyone with enough money should be able to do it, it'll be risky and
complicated but it could work. His "buying up the market" would have already
pushed the price very high and when his demand goes away everyone that still
has coins will be forced to sell them at a lower price. What's difficult and
different is that you don't actually need atomic units, you don't need 20mg
to make a cup of coffee. The current value determines what something's
worth.

In afterthought I do not think anyone could successfully do this in
any meaningful way.

Best regards,
Lewis

2011/7/6 Alfonso De Gregorio <adg at crypto.lo.gy>

>
>
> On Tue, Jul 5, 2011 at 9:22 AM, Jon Callas <jon at callas.org> wrote:
>
> Good points. But nonetheless, it's a really, really cool property of the
>> system that you can gain by destroying bitcoins. I mean heck -- let's create
>> another sub-constant, H_s which is the constant that shows when it better to
>> destroy one than steal one. Obviously, if you have zero bitcoins, then
>> stealing them has some value. But heck -- what if you're sitting on a cache
>> of 371,000 coins. My intuition is that it's going to be better to destroy
>> than steal. If you're found with a stolen bitcoin, you have some 'splaining
>> to do. But if you silently destroy one -- then you see a market float.
>>
>
>
> Let's assume there is a way to convince market participants that some
> Bitcoins has been destroyed, what would happen then? The value of the
> current Bitcoin supply would slightly increase, that's correct.
>
> Would market participants be willing to invest more in order to secure
> their liquid assets against Bitcoin assassination attacks? How the attack
> rate would increase/decrease?
>
> The tragedy of the commons suggests us that when both risks and benefits
> are socialized between the elements of the population, individuals lack the
> incentive to unilaterally invest in security.
>
> On the other hand, as long as the reduction of money supply increases the
> value of the survived assets (ie, there's demand), some elements of the
> population will have an incentive to attack.
>
> It would be interesting to investigate further.
>
> Alfonso
>
> --
>  tweets @secYOUre      blog. http://Plaintext.crypto.lo.gy/
>
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