[BIP Proposal] Proof-of-Activity Reclamation (PoAR)

The debate centers around the proposal to reintroduce lost bitcoins into circulation through a mechanism termed "Proof-of-Activity Reclamation (PoAR)," which aims to address issues such as miner incentives, artificial scarcity, confiscation risks, and the need for Bitcoin to sustain its economy without resorting to altering its foundational principles.

Critics of the proposal argue that the concern over miner incentives due to the eventual mining cap being reached is exaggerated. They assert that transaction fees can naturally compensate for the decrease in block rewards, negating the need for drastic changes based on distant future speculation. Furthermore, the divisibility of Bitcoin into satoshis is highlighted as a design feature that counters concerns over artificial scarcity. Any potential adjustments to extend decimal places in the future would not fundamentally alter Bitcoin's core rules, according to proponents who see the system's deflationary aspect as beneficial rather than problematic.

The issue of confiscation, disguised as reauthentication of dormant coins, has raised significant ethical and practical concerns. Critics argue that the inability to distinguish between truly lost coins and those intentionally held as part of long-term savings or inheritance plans poses a risk of unjustly penalizing certain users under the guise of reactivating dormant value within the network. This argument extends to the broader philosophical foundation of Bitcoin, emphasizing individual sovereignty over one's funds without the obligation to engage in active transactions.

Donald Dienst's proposal suggests a nuanced approach to reintroducing lost bitcoins back into circulation, advocating for a rules-based mechanism that respects multi-generational ownership while addressing the economic implications of permanently lost coins. He suggests extending the inactivity window to mitigate concerns over long-term planning, such as inheritance, and proposes enhancements for post-quantum security as part of a broader hard fork. This approach aims to balance preserving Bitcoin's utility as both a store of value and a medium of exchange against the backdrop of inevitable wallet access losses.

The Proof-of-Activity Reclamation (PoAR) proposal specifically targets the recycling of coins inactive for more than 20 years, reintroducing them into circulation to extend miner incentives within the fixed supply framework. However, this proposition has sparked debate over its necessity and potential impact on Bitcoin's economic model, raising questions about backward compatibility, the ethics of reallocating inactive coins, and the overall feasibility of implementing such a change through a hard fork. Critics highlight the risks associated with disrupting long-term financial planning and the shift in funding sources for network security from active transactions to a form of value reallocation from inactive holders.

In essence, the discourse surrounding the PoAR proposal underscores the complexity of managing digital currency economies, the ethical considerations in distinguishing between lost and purposefully dormant assets, and the importance of maintaining Bitcoin's foundational principles amidst evolving economic dynamics. The community's response to these proposals reflects a cautious approach to altering Bitcoin's economic model, emphasizing thorough analysis, consensus-building, and respect for individual autonomy in digital asset management.