I think this system needs to be modified so that the user explicitly burns the coin before exiting it and provides proof of burn
The current mechanism seems to be incredibly computationally consuming. How can I use a system where for each 1c coin I got, I need to check a linearly increasing set of Merkle proofs. If I am paid a $0.01 coin and then I have to first to dowload megabytes of Merkle proofs and then keep on monitoring it forever, how viable is this solution?
If I have $10 as 1000 coins 1c each, the amount of dowload, storage, verification and monitoring I need to do seems overwhelmingly huge and growing linearly with time.
Explicit burn proof solves all these issues, you simply do not need to store anything