Dormant threshold is way too low. There's many news articles about people forgetting that they used to mine bitcoins and then suddenly remembered. This will continue to happen for much longer than 8 years as people rediscover bitcoin when it goes further mainstream. You can't expect them to have run a node/kept their utxo before they were aware of this change and then realise miners have discarded their utxo. Oops?
Since we can't predict when mainstream will happen, you instead need a threshold where the key holder is likely dead. That should be like 80 years or 120 years, so 4.2m to 6.3m confirmations.
Next paragraph is off topic:
IMO it would be even better for these dormant & dead key holder's utxos to also re-enter the economy as miner fees; let 1 dormant utxo to be mined per block. It would need a hard fork. But then maybe people would stop being so stupid with burning bitcoins/sending it to 1BitcoinEater, or mining a million bitcoins from day 1 and leaving it, if they know it'll eventually go into another miner's pockets. This could be used to fund cheap transactions forever, and miners would be incentivised to hold copies of these dormant utxos since it could become theirs one day. But this would be even more controversial than just expiring them as we are in no short supply of people who believe in Bitcoin's deflationary, fossil fuel (burnable) economy, rather than a cyclical economy that better resembles how we treat lost gold today...
The general concept has merit and the basic outline here seems sound
enough. I have harboured a notion for having "archived UTXO" for some
time, this is essentially it. The retrieval from archive cost is on the
UTXO holder not the entire storage network, which is then only bearing
full 'instant' retrieval costs for N blocks.
On Sat, 2015-12-12 at 15:09 -0500, jl2012--- via bitcoin-dev wrote:
> It is a common practice in commercial banks that a dormant account might
> be confiscated. Confiscating or deleting dormant UTXOs might be too
> controversial, but allowing the UTXOs set growing without any limit
> might not be a sustainable option. People lose their private keys.
> People do stupid things like sending bitcoin to 1BitcoinEater. We
> shouldn’t be obliged to store everything permanently. This is my
> proposal:
>
> Dormant UTXOs are those UTXOs with 420000 confirmations. In every block
> X after 420000, it will commit to a hash for all UTXOs generated in
> block X-420000. The UTXOs are first serialized into the form:
> txid|index|value|scriptPubKey, then a sorted Merkle hash is calculated.
> After some confirmations, nodes may safely delete the UTXO records of
> block X permanently.
>
> If a user is trying to redeem a dormant UTXO, in addition the signature,
> they have to provide the scriptPubKey, height (X), and UTXO value as
> part of the witness. They also need to provide the Merkle path to the
> dormant UTXO commitment.
>
> To confirm this tx, the miner will calculate a new Merkle hash for the
> block X, with the hash of the spent UTXO replaced by 1, and commit the
> hash to the current block. All full nodes will keep an index of latest
> dormant UTXO commitments so double spending is not possible. (a
> "meta-UTXO set")
>
> If all dormant UTXOs under a Merkle branch are spent, hash of the branch
> will become 1. If all dormant UTXOs in a block are spent, the record for
> this block could be forgotten. Full nodes do not need to remember which
> particular UTXO is spent or not, since any person trying to redeem a
> dormant UTXO has to provide such information.
>
> It becomes the responsibility of dormant coin holders to scan the
> blockchain for the current status of the UTXO commitment for their coin.
> They may also need to pay extra fee for the increased tx size.
>
> This is a softfork if there is no hash collision but this is a
> fundamental assumption in Bitcoin anyway. The proposal also works
> without segregated witness, just by replacing "witness" with "scriptSig"
>
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