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Transaction Coins

An idea was brought recently about creating a coin that benefits from the digital scarcity of Bitcoin transactions. The coin works by being created from transactions whose hash is close to the non zero portion of their block hash. A single coin is created for up to N closest transactions to the block hash.

One of the drawbacks of this idea is that it could incentivize transactions for other reasons than actually transacting, thus creating an “altcoin” market on the Bitcoin blockchain in which people transact and pay fees solely for the chance of getting this coin. This can cause the Blockchain to become seriously congested and wouldn’t allow legitimate transactions to pass.