Re: HODL Tax Proposal

The discussion initiated by Jimmy Song addresses a theoretical policy proposal concerning Bitcoin mining and transaction selection processes. The proposal suggests that miners could adopt a policy where the age of the unspent transaction outputs (UTXOs) being spent is considered alongside the fee rate when deciding whether to include a transaction in their block template. This approach posits an opt-in mechanism for miners, allowing them the choice to ignore this criterion in their decision-making process. Should a significant portion of the network's hash power embrace this policy, it might result in the imposition of an implicit demurrage tax on transactions without necessitating a consensus fork, given sufficient interest from the community.

However, Song anticipates substantial opposition to this idea among miners. He argues that miners are unlikely to forsake competitive fees for the sake of strategic considerations akin to those in a prisoner's dilemma scenario, which would result in lost revenue to competitors. This skepticism highlights the tension between innovative policy suggestions aimed at modifying mining behavior and the practical economic incentives that drive miner actions within the Bitcoin network.