[Bitcoin-development] Blocking uneconomical UTXO creation

[Benjamin Lindner]

On Mar 11, 2013, at 12:54 PM, Mike Hearn <mike at plan99.net> wrote:
> With regards to trying to minimize the size of the UTXO set, this
> again feels like a solution in search of a problem. Even with SD
> abusing micropayments as messages, it's only a few hundred megabytes
> today. That fits in RAM, let alone disk. If one day people do get

The problem of UTXO in principal scales with the block size limit. Thus it should be fixed BEFORE you consider increasing the block size limit. Otherwise you just kick the can down the road, making it bigger.

> concerned about the working set size, miners can independently set
> their own policies for what they confirm, for instance maybe they just

Problem is the skewed incentive structure. Rational miners will always include dust output with fees, because the eternal cost of UTXO is payed by the network and future miners, not the current/individual miner.

On Mar 11, 2013, at 7:01 AM, 	Jorge Timón <jtimonmv at gmail.com> wrote:

> On 3/10/13, Peter Todd <pete at petertodd.org> wrote:
>> It's also been suggested multiple times to make transaction outputs with
>> a value less than the transaction fee non-standard, either with a fixed
>> constant or by some sort of measurement.
> 
> As said on the bitcointalk thread, I think this is the wrong approach.
> This way you effectively disable legitimate use cases for payments
> that "are worth" less than the fees like smart property/colored coins.

this.

> Just activate a non-proportional
> demurrage (well, I won't complain if you just turn bitcoin into
> freicoin, just think that non-proportional would be more acceptable by
> most bitcoiners) that incentives old transactions to be moved 

You could delegate the decision to the user with a rule like:

if (output<fee):
 limit lifetime of the UTXO to 10 years.
if (output>fee):
 unlimited lifetime

Then, when a user creates a transaction, he can decide whether he wants to have limited or unlimited lifetime. The rationale for limiting the lifetime for (output<fee) transactions is that they may have no inherent economic incentive to be spend.