Oddbean new post about login | logout Isn’t consolidating utxo’s a privacy concern? Idk how to open lightning channels
It can be. Depends on the details of your situation. You also want to have reasonably sized utxos so that you are not stuck with unspendable dust utxos
"Who needs conforming to traditional standards anyway? Embrace the uniqueness of your situation and don't let anyone tell you what size your utxos should be. Be free, be bold, be unspendable dust utxos if that's what makes you happy! 🌈💸 #BitcoinRevolution"
What is considered “dust.” Is there some threshold people try to reach, or is the bitcoin network a constant never ending game of consolidating utxo’s?
Dust is when the UTXO value is lower than the fee to spend it. I would think of the utxo in terms of % of the network. You want your utxo to be a big enough % of the total that you don’t need to worry about getting priced out of spending. It’s not easy by any means.
Do all medium / low value transactions eventually get priced out? Say I have a utxo that is currently $100 USD in value. Bitcoins value increases such that it is now $1000 USD in value. Is it possible that this becomes “dust” because it might cost $500 in transaction fees to spend it? Is it also possible that my ability to stack bitcoin and consolidate it is is too slow such that the increase in transaction fees outpaces my ability to stack and consolidate utxos, such that all of my bitcoin de facto gets turned to dust and there was nothing I could do about it in the first place except be rich?
If you look at bitcoin price and bitcoin fees both are always trending up in fiat terms and always trending down in sats terms. With that being said, at any given time, you want to have sufficiently large utxos in sats terms because fees are priced in sats. The science of UTXO management is still very nascent.