Will Your Bitcoin Wallet Turn to Dust?

Posted on 2025-01-02 00:58


I haven't seen much discussion of this topic, and I don't know if my concern is valid, but I'm concerned that the monetary value of Bitcoin dust will increase over time and may cause small holders' wallets to become worthless, because their small BTC holdings may eventually turn to dust.

What is Bitcoin dust? Without going into the details of how transactions are not really transactions, "transactions" are actually the creation of new BTC (denominated in Satoshis) ledger entries and the destruction of old entries through UXTO mechanism (Unspent Transaction Outputs). The charging of fees inevitably leads to small amounts that are smaller than the transaction fee charged. These small UXTO entries are termed "Bitcoin dust."

My worry comes from the fact that the size (in Satoshis) of a dust UXTO entry is dependent on what the minimum transaction fee happens to be. As fees go up, it would seem that the threshold for what is consider dust goes up as well.

Finally, with the halving reward for miners dropping toward zero, it would seem that transaction fees will have to increase for mining to remain profitable. There seems to be universal agreement on that. But if the fees increase, won't some small UTXOs that were not dust suddenly become dust? And that might not bad for large BTC holders, but for small holders it could be catastrophic.

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