We’ve heard a tremendous amount of noise about them, from miners seeking to brand themselves as compliant to bitcoin critics assailing their fungibility.
CoinDesk columnist Nic Carter is partner at Castle Island Ventures, a public blockchain-focused venture fund based in Cambridge, Mass.
But do virgin coins, and more broadly, distinct miner-generated tiers of coins, actually exist? I’ve never seen any evidence of them, personally.
On the blockchain, pooled mining looks like a coinbase transaction going to a single entity, and a distribution transaction to individual miners.
That dramatically increases the variance of mining, and for smaller miners, would virtually guarantee that they would never win a block.
There are other lingering problems. Miners aren’t compensated based solely on the issuance of new coins .
Over time, fees will eventually fully displace the block subsidy in the composition of miner revenue, so pools or miners that are selective about whom they serve will likely be structurally less profitable.
You are still faced with a problem: How do you transfer your virginal or distinct coins to a buyer? You could mine directly into a single-use device encoding a private key, like an Opendime, but that exposes your keys to hardware risk.
If you wanted to actually transfer private keys without making an on-chain transfer, you could use a complex system like statechains.
Think of it like pouring water from four glasses into six – the amount of water is the same, but you have no way of knowing which atoms from which originating glass ended up where.
Like with regular cash transactions, to hit a specific threshold for an expenditure, you would have to select the bills of the right sizes .
You cannot track a specific quantity of bitcoin through a coinjoin transaction with 50 inputs and 50 outputs; it’s like bars of gold being melted down and re-formed with each transfer.
Thus, even if certain coins are dubbed conflict-free, renewable-mined or virginal, these specific units lose their identity once they actually begin to circulate on chain.
A more foolproof way to acquire clean coins would be to appeal to a higher authority with the power to rid them of their taint.
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