32 sats \ 6 replies \ @Murch 13 Apr \ on: There is no such thing as a dust UTXO bitcoin
I don't think this is well reasoned.
A miner that includes your transaction has the opportunity cost of not using the blockspace for another transaction. In order for an economically rational miner to prioritize including your transaction over something else, you must provide now value to them than they'd otherwise earn.
As long as we have a block weight limit, transaction fees will always scale with the weight of transactions. If bitcoin continued to increase in value it will be because people find more utility in it. More utility implies that users will send larger amounts of value on the network. Larger payments can pay more for blockspace than smaller payments.
So, I don't think that bitcoin getting more valuable is compatible with smaller UTXOs becoming easier to spend—unless you expect the block weight limit to be significantly raised or altogether removed.
Since having a block weight limit is important for network security, this is unlikely.
Occasionally there might be a spell of low feerate, and you should use that to consolidate and move funds to more blockspace-efficient output scripts, but generally I expect small amounts to get harder to spend over time.
I agree. I don't believe that smaller utxos will be generally easier to spend.
I do think it makes sense to spend (significantly?) more in fees than the face value of a nominally dust utxo in order to consolidate it if points 1-3 of the original post are true.
This is important because if you think bitcoin's value in terms of fiat will be an order of magnitude higher at some future point, it is economically rational to spend in fees much more than the current fiat value of the utxo in order to merge it with a larger utxo.
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Because I'm not paying in btc.
Now, the obvious problem here is that I could just buy btc at market rates, instead of trying to "redeem" my dust this way.
It only makes sense when a person can not buy btc at market rates.
But there might be use cases here: bitcoin atms charge significantly higher than market rates. As do some sellers on bisq.
Maybe there is a world where people interested in buying non kyc bitcoin pay out of band fees to miners to redeem other people's dust outputs.
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Yes, I need to add this as a point 4 to my original post. Something like:
- If you cannot buy btc at market rates, or if you don't want to buy it from other sellers available to you.
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The hypothesis is that txs fees size scale with fiat-value of bitcoin. And it makes sense.
Money that competes for blockspace is mostly denominated in fiat.
Miner costs are denominated with fiat. Opportunity cost of using bitcoin is also denominated in fiat. Meaning
Think about it. Bitcoin network competes with meatspace entities:
- If it costs me 1$ to send 10000$ of remittance with bitcoin I will use bitcoin.
- If it costs me 1000$ to send 10000$ of remittance with bitcoin I will use western union.
If most economic decisions of "should I used bitcoin or $SOME_MEATSPACE_PRODUCT" are denominated in fiat, the competition for blockspace will be a function of fiat-denominated value (and not bitcoin-denominated value).
There are cases in which bitcoin have no meatspace competition (like censorship-resistant money) and those cases might cause a decoupling. But arguably most competition for blockspace at the moment are driven by competition-with-meatspace-entities.
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