Good morning e,
> Good evening ZmnSCPxj, > > Sorry for the long delay... Thank you very much for responding. > > > Good morning e, > > > > > Good evening ZmnSCPxj, > > > > > > For the sake of simplicity, I'll use the terms lender (Landlord), borrower > > > (Lessor), interest (X), principal (Y), period (N) and maturity (height > > > after N). > > > > > > The lender in your scenario "provides use" of the principal, and is paid > > > interest in exchange. This is of course the nature of lending, as a period > > > without one's capital incurs an opportunity cost that must be offset (by > > > interest). > > > > > > The borrower's "use" of the principal is what is being overlooked. To > > > generate income from capital one must produce something and sell it. > > > Production requires both capital and time. Borrowing the principle for the > > > period allows the borrower to produce goods, sell them, and return the > > > "profit" as interest to the lender. Use implies that the borrower is > > > spending > > > the principle - trading it with others. Eventually any number of others > > > end up > > > holding the principle. At maturity, the coin is returned to the lender (by > > > covenant). At that point, all people the borrower traded with are bag > > > holders. > > > Knowledge of this scam results in an imputed net present zero value for > > > the > > > borrowed principal. > > > > But in this scheme, the principal is not being used as money, but as a > > billboard > > for an advertisement. > > > > Thus, the bitcoins are not being used as money due to the use of the > > fidelity > > bond to back a "you can totally trust me I am not a bot!!" assertion. > > This is not the same as your scenario --- the funds are never transferred, > > instead, a different use of the locked funds is invented. > > > > As a better analogy: I am borrowing a piece of gold, smelting it down to > > make > > a nice shiny advertisement "I am totally not a bot!!", then at the end of > > the > > lease period, re-smelting it back and returning to you the same gold piece > > (with the exact same atoms constituting it), plus an interest from my > > business, > > which gained customers because of the shiny gold advertisement claiming "I > > am totally not a bot!!". > > > > That you use the same piece of gold for money does not preclude me using > > the gold for something else of economic value, like making a nice shiny > > advertisement, so I think your analysis fails there. > > Otherwise, your analysis is on point, but analyses something else entirely. > > > Ok, so you are suggesting the renting of someone else's proof of "burn" > (opportunity cost) to prove your necessary expense - the financial equivalent > of your own burn. Reading through the thread, it looks like you are > suggesting this as a way the cost of the burn might be diluted across > multiple uses, based on the obscuration of the identity. And therefore > identity (or at least global uniqueness) enters the equation. Sounds like a > reasonable concern to me. > > It appears that the term "fidelity bond" is generally accepted, though I find > this an unnecessarily misleading analogy. A bond is a loan (capital at risk), > and a fidelity bond is also capital at risk (to provide assurance of some > behavior). Proof of burn/work, such as Hash Cash (and Bitcoin), is merely > demonstration of a prior expense. But in those cases, the expense is provably > associated. As you have pointed out, if the burn is not associated with the > specific use, it can be reused, diluting the demonstrated expense to an > unprovable degree. Indeed, that is why defiads used the term "advertisement" and not "fidelity bond". One could say that defiads was a much-too-ambitious precursor of this proposed scheme. > I can see how you come to refer to selling the PoB as "lending" it, because > the covenant on the underlying coin is time constrained. But nothing is > actually lent here. The "advertisement" created by the covenant (and its > presumed exclusivity) is sold. This is also entirely consistent with the idea > that a loan implies capital at risk. While this is nothing more than a > terminology nit, the use of "fidelity bond" and the subsequent description of > "renting" (the fidelity bond) both led me down another path (Tamas' proposal > for risk free lending under covenant, which we discussed here years ago). Yes, that is why Tamas switched to defiads, as I had convinced him that it would be similar enough without actually being a covenant scam like you described. > In any case, I tend to agree with your other posts on the subject. For the > burn to be provably non-dilutable it must be a cost provably associated to > the scenario which relies upon the cost. This provides the global uniqueness > constraint (under cryptographic assumptions of difficulty). Indeed. I suspect the only reason it is not *yet* a problem with existing JoinMarket and Teleport is simply that no convenient software currently exists which allows the same bond to be used by both, thus making it safe in practice but not in theory. But the theory implies that if somebody does make such software, effectively both systems will become joined as effectively only a single identity exists in both systems. This may not be a problem either since the intent is that Teleport will obsolete JoinMarket someday, but if other applications start using the same scheme without requiring a commitment to a specific application, this may also effectively render Teleport less useful as well. Regards, ZmnSCPxj _______________________________________________ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
