
How to destroy Bitcoins? - alcio
https://medium.com/@alcio/how-to-destroy-bitcoins-255bb6f2142e
======
earlz
I actually had to address this in the altcoin world (back when that was a
thing) because the C-CEX exchange would take money for "destroying" coins, but
the method they used for destroying coins was just taking a video of them
sending a wallet to the private key owned by a different wallet and then
deleting the wallet. (which they could've easily kept a backup of). There were
even some altcoin devs that paid me to hardfork their coin to ensure that
coins sent to the address the exchange used could no longer be spent on the
network.

Anyway, it's not the "good" OP_RETURN method, but to send your coins from any
altcoin to a provably impossible address I made a utility and print out of
addresses for sending to "an address owned by the public key hash of 0"
[http://earlz.net/view/2014/10/22/0340/provably-spendable-
alt...](http://earlz.net/view/2014/10/22/0340/provably-spendable-altcoin-burn-
addresses)

~~~
detaro
> _because the C-CEX exchange would take money for "destroying" coins_

Who would use such a service?

~~~
earlz
Heh, I guess I forgot how weird things look from the outside.. but no one knew
how to properly destroy coins, or that there was even a proper way. Despite
there being all these altcoin "Developers", 95% of them only actually knew how
to copy-paste-search-replace to create a new altcoin.. The focus in altcoins
was always the marketing side: pretty graphics, good branding, and a viral
community that expands until it implodes on itself.

So yea, people used it because they didn't know better.. And because of how
backwards the altcoin community is, most of the time it's the inexperienced
people asking other inexperienced people for help.. so bad habits spread very
quickly and pervasively

~~~
detaro
What were common reasons to want to destroy coins? I can't think of very many
scenarios, and then you'd probably need something more reliable.

~~~
earlz
The most common need was that many altcoins would start off with a large
premine, and then they would offer an IPO/ICO/CFC (depending on the time, the
term for this would change to be whatever was least likely to get the SEC's
attention) where they basically put all the coins on an exchange or with an
escrow and make it so that people can buy the coins in exchange for bitcoin.
If they don't sell out of the altcoin's supply, then the developers are left
with a number of coins. These coins are typically destroyed so that the only
supply is owned by people who bought into it.

~~~
CyberDildonics
That problem isn't destroying coins though, it is verifying that coins have
been destroyed. A person can destroy them easily, verifying that someone else
is destroying them is hard.

The whole situation you described is completely ridiculous though, because
instead of 'destroying' coins the developers could have distributed their own
coins to all other addresses proportionately based on balance.

The whole thing is an obvious scam from top to bottom, but I'm not surprised
any more that some people would take the bait.

~~~
elif
if you give out free coins you are decreasing the value of your coin. if you
destroy them, you are theoretically increasing the value.

since the popularity and value of these things are very correlated, it makes
way more sense to destroy. Who is going to spend real currency on a coin that
is losing value day 1 because everyone has coins to sell?

~~~
x1798DE
If you give out coins exactly proportional to balance the value per coin has
changed, but hasn't changed the distribution. It's like multiplying all
balances by 100, it's just a unit change.

------
jackgavigan
You can destroy Bitcoins by sending them to 1LuMWxkwCNB6gsCvN1WfShvGxbBVroXBoZ

;-)

~~~
redcalx
Thanks for providing this useful service!

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delecti
Did I just miss where they explained why this is a thing that people want to
do?

~~~
3pt14159
Imagine a situation where you want to have an insurance for a rare event. Say
the Toronto Maple Leafs winning the Stanley Cup. You can set up a situation
where N parties can be the judge of whether or not that event has happened. If
there is a disagreement you can formulate a complex transaction where it only
takes N / 2 people to spoil the whole thing by sending all of the money to an
unspendable address.

So the seller if the insurance tries to not pay on the extremely unlikely
event, then even _they_ don't get the money. Nobody does. But if they do agree
to pay out the insurance, then they get to keep a portion of the money that
was in the wallet. It's a way of ensuring honesty if even a small number of
people are honest.

~~~
ohitsdom
So, escrow? This is possible without destroying the currency.

~~~
Phlarp
With escrow you accept counterparty risk in the form of the agent holding the
escrow, with a scheme that destroys coins there is at least some incentive for
everyone to play nice.

~~~
mirimir
Maybe donate them to charity instead?

~~~
rdancer
What are you, a communist?

~~~
eru
Destroying the coins is equal to giving every other coin holder a proportional
increase..

~~~
eximius
Only to an economist

~~~
nosuchthing
The coins are pure digital bits of information so either method of destroying
the 'coin' or dividing the 'coin' among the entire economy is the same.
Nothing more than numbers on a ledger system.

If the 'coins' were made of metal, paper, food, etc, than the "only to an
economist" thought experiment would apply, as "only an economist" would think
of value existing in confined economic constraints.

~~~
eximius
I own two bitcoins. If I destroy them, your bitcoins will not instantly
appreciate because my bitcoins were not actively marketed. You only affect
price if you decrease supply but my bitcoins are not part of the supply since
I don't have them for sale and I'm not buying anything with them.

~~~
nosuchthing

      If I destroy them, your bitcoins will not instantly 
      appreciate because my bitcoins were not actively marketed.
    

\- Not instantly no, but if you were to prove beyond a reasonable doubt that
you possessed 10 million BTC, and somehow also were able to prove that you
destroyed those 10 million coins, the reaction from the economy would assume
the current coins in circulation have just become more valuable purely due to
the perception of "scarcity". I would personally contest that perception as
BTC is sparsely more than a record keeping system, and the value of a BTC
should not matter if there were 40 million coins in the network, or 10 coins
that could be divided infinitely.

A major premise of the 'Bitcoin economy' involves the stipulation that the
'BTC economy' is hard limited to "21,000,000" coins and dividable only down to
.00000001

These rules are part of what has attracted people to apply real world value to
an otherwise simple piece of accounting software. If someone proved they
destroyed 20 million bitcoins somehow, or if there were a hard fork consensus
among all major miners to nullify the last 10 million coins from being
minable, thus limiting the BTC network to 11,000,000 full coins
(1,100,000,000,000,000.0 total accountable units), than the perception of
value relative to Euros or Dollars would, in what I would compare to the
perceived value of limited edition toys like Beanie Babies, Magic the
Gathering Cards, or Happy Meal toys. Only instead of a mass produced toy, it
is a digital point system where people have used computer hardware to 'mine'
BTC points.

If the Genesis coins started moving, one might assume the price of BTC to
fluctuate as a result of peoples perception on the 'supply' of this digital
currency.

If another cryptocoin is created with a design that agreeably surpasses that
of the BTC protocol, than one might assume a migration of users from BTC to
the presumably better protocol.

~~~
eru
> If the Genesis coins started moving, one might assume the price of BTC to
> fluctuate as a result of peoples perception on the 'supply' of this digital
> currency.

Though, the Genesis coins moving might also increase the price. Satoshi moving
their coins would be a very monumental event---it's hard to predict how people
would interpret in aggregate.

------
rory096
Why not just divvy them up proportionally among all addresses with positive
balances? It's functionally identical, since (to everybody besides you) it's
just a change in price level and bitcoin prices aren't sticky like dollar
prices are.

Only issue I can see is divisibility: this would inevitably result in some
addresses deserving <1 satoshi, leading to discrepancies when rounding.

~~~
joosters
This is effectively what happens, because the remaining bitcoins become more
scarce and (in theory at least) more valuable as a result.

~~~
viraptor
Is it really? In practice there's not much difference between money that's
never used and money that's destroyed. As long as it's out of circulation, it
doesn't affect the economy. Apart from big, public actions of destroying BTC
that many parties know about, I'm not sure there's any real value growth from
the BTC burning.

------
lmm
Can you destroy bitcoins "after the fact" in this way though? Not claiming the
block reward seems more like never mining them in the first case than
"destroying" extant bitcoins.

(The distinction is relevant because I can imagine wanting to visibly destroy
bitcoins that were e.g. proceeds of crime)

~~~
nhaehnle
Given cooperation by a miner, you can probably do it in principle (though I
have not checked), because of transaction fees.

The recipe is this: Create a transaction with a transaction fee corresponding
to the amount of BTC you want to destroy, and reveal this transaction only to
the cooperating miner. The miner agrees to include the transaction without
claiming the included fee.

Admittedly it's a bit pointless given that a better approach exists
(OP_RETURN, as mentioned in the article).

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lappa
>In 2013, an easy way to add data to any Bitcoin transaction was introduced.
By making standard a previously invalid script instruction, OP_RETURN, a
Bitcoin user could add up to 40 bytes of data to his transactions.

It was already plenty easy to convert data to a multisig transaction.
OP_RETURN doesn't add to the UTXO, while multisig transactions do, so
OP_RETURN is less harmful.

This wasn't introduced to make it saving data to the blockchain easier, it was
introduced to decrease the harm caused by spammers. It is more like a needle
exchange.

------
ck2
Could a computer one day be powerful enough to reverse generate the private
key for those "irretrievable" bitcoins?

Granted we are living in a very different technological age by then.

~~~
oh_sigh
If that was feasible, the entire bitcoin network would be destroyed(because
you could now spend other peoples money by figuring out their private key
based on their public wallet address)

~~~
dllthomas
If it approached feasible gradually and visibly enough, and secure
alternatives for verifiable digital signatures existed, the network wouldn't
necessarily be destroyed. We could see a gradual migration to addresses of the
new form, while lost coins would eventually become retrievable.

------
btreecat
Is there a reason you can't just delete the wallet that holds the coins and
make sure you don't have any backups?

It seems that just removing them from circulation by any means would have the
same result as "destroying" them.

~~~
cperciva
The distinction between "destroyed" and "lost" is significant, to the extent
that if coins have been destroyed people know that the coins will never
resurface; it's impossible to distinguish between coins which are lost and
coins which have simply been unspent (e.g., the Satoshi hoard).

~~~
aaron_m04
This is why Bitcoin needs to start expiring unspent outputs that are more than
5 years old.

~~~
Kapow
Like how you can't use paper money that was printed before 2010? That makes
sense.

