Key Burn is a new technique introduced to address concerns with the spendable outputs that encode the art of a Bitcoin Stamp.
While spending outputs is currently a non-trivial process, tooling is likely to emerge in the near future making the process easy enough. Combined with the large amount of sats embedded in older Stamps' outputs (7800), we recognize the incentive to spend the outputs once tooling makes it easy to do so. That being said, spent outputs would only mean that the art would no longer exist within the UTXO set, but continue to live in the transaction data of the blockchain held by all full nodes.
Key Burn is the first step in addressing this potential issue. We are also working on a redemption method paired with Key Burn that would allow artists to redeem up to 90% of the trapped sats from the outputs before 'burning' the multisig key. We believe this approach should be incentive-compatible for artists and collectors alike.
Based on 'NFiniTy' by B0B Smith, Key Burn assigns the spending key of the 'fake multisig' to a burn address when a Bitcoin Stamp is minted, making the spendable outputs, effectively, unspendable.
Presently, the STAMPCHAIN.IO minting service does this by default by cycling through a series of known burn addresses which can easily be scrutinized to validate that no private key can practically exist. In the future, this library of burn addresses may grow to address adversarial action.
The very first example of the Key Burn method in use (coined 'NFiniTy') is here: https://xchain.io/asset/SPENDME. By analyzing its scriptPubKey, you will notice that the spendable multisig key address is: '022222222222222222222222222222222222222222222222222222222222222222' which does not have a known Private Key based on the highly improbable pattern.
The second example of the Key Burn method in use (a valid #Bitcoin Stamp) is here: https://xchain.io/asset/A808022222222222222. Once again, you can examine the scriptPubKey here: https://blockstream.info/tx/f2ac4cf5230e3033968c25d0a4e3f05ea7ba36429dec7e560ae770a732fd7ae8?expand to verify that the spendable multisig key address is: '022222222222222222222222222222222222222222222222222222222222222222'
If you're unfamiliar with how a burn address works, essentially, a completely improbable pattern is chosen which proves that no private key is held. This is because the public key is derived from the private key, so the odds of coming up with a pre-determined pattern of great length is infinitesimally small to the point where a computer would need to grind away at keys for billions of years in order to do produce a valid private key.
Here are the key addresses chosen for the initial launch of Key Burn.
022222222222222222222222222222222222222222222222222222222222222222
033333333333333333333333333333333333333333333333333333333333333333
020202020202020202020202020202020202020202020202020202020202020202
030303030303030303030303030303030303030303030303030303030303030303
We strongly advise other minting services looking to implement Key Burn to use one of the addresses above or work closely with the STAMP protocol developers to ensure that a consolidated list of burn addresses is maintained as we will be badging Bitcoin Stamps in a future update of STAMPCHAIN.IO as well as the webservice API.
In a future release, Bitcoin Stamps will have 1 of 3 designations based on the state of the spendable outputs and key availability:
- Spent Outputs (Art will likely be blacked-out or faded but numbering will remain intact)
- Unspent Outputs; Key Available
- Unspent Outputs; Key Burned
Special Thanks to B0B Smith, Regan and RΞINAMORA for devising and coding this solution.