Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
> On Jul 5, 2019, at 17:17, ZmnSCPxj wrote: > > Good morning Eric, > >> But it’s worth noting that early recovery of the UTXO entirely eliminates >> the value of the time lock cost to the ad market. The most obvious example >> is one encumbering the coin to himself, then releasing it with his own two >> signatures whenever he wants. In other words, there is no encumbrance at >> all, just a bunch of pointless obscurantion. > > You still do not understand. > I strongly suggest actually reading the post instead of skimming it. I am responding to the cryptoeconomic principles, not the implementation details. Based on your comments here I am not misrepresenting those principles. For example, I have shown that the multisig unlock implementation reduces the presumably-encumbered UTXO to simply a UTXO. You have not disputed that. In fact below you have accepted it (more below). > The advertisement is broadcast to new nodes on the ad network if and only if > its backing UTXO remains unspent. > Once the UTXO is spent, then the advertisement is considered no longer valid > and will be outright deleted by existing nodes, and new nodes will not learn > of them (and would consider it spam if it is forced to them when the UTXO is > already spent, possibly banning the node that pushes the advertisement at > them). > > Thus the locked-ness of the UTXO is the lifetime of the advertisement. The term “locked” here is misused. A unspent output that can be spent at any time is just an unspent output. The fact that you can “unencumber” your own coins should make this exceedingly obvious: > Once you disencumber the coins (whether your own, or rented) then your > advertisement is gone; forever. As I have shown, there is no *actual* encumbrance. > Your advertisement exists only as long as the UTXO is unspent. Exactly, which implies *any* UTXO is sufficient. All that the ad network requires is proof of ownership of any UTXO. Unspentness is not actually a necessary cost (expense). All coin is always represented as UTXOs. If one has a hoard of coin there is no necessary incremental cost of identifying those coins to “back” ads.This isn’t altered by the proposed design. The only cost would be to have a hoard that one does not otherwise desire, representing an opportunity cost. Yet, as I have also pointed out, the amount of that opportunity cost can simply be spent (or burned) by the advertiser, representing the same cost. So covering the case where one cannot raise the capital to “back” one’s ad does not require rental, as the cost of the otherwise rental can just be spent outright. Presumably it would be ideal to transfer the value of those spends to people who provably present the ads for effective viewing (i.e., the AdWords business model). It is of course this market-driven cost of presenting an ad that provides the spam protection/definition for AdWords. Best, Eric > Regards. > ZmnSCPxj ___ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
Good morning Eric, > But it’s worth noting that early recovery of the UTXO entirely eliminates the > value of the time lock cost to the ad market. The most obvious example is one > encumbering the coin to himself, then releasing it with his own two > signatures whenever he wants. In other words, there is no encumbrance at all, > just a bunch of pointless obscurantion. You still do not understand. I strongly suggest actually reading the post instead of skimming it. The advertisement is broadcast to new nodes on the ad network if and only if its backing UTXO remains unspent. Once the UTXO is spent, then the advertisement is considered no longer valid and will be outright deleted by existing nodes, and new nodes will not learn of them (and would consider it spam if it is forced to them when the UTXO is already spent, possibly banning the node that pushes the advertisement at them). Thus the locked-ness of the UTXO is the lifetime of the advertisement. Once you disencumber the coins (whether your own, or rented) then your advertisement is gone; forever. Your advertisement exists only as long as the UTXO is unspent. Regards. ZmnSCPxj ___ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
> On Jul 5, 2019, at 16:16, ZmnSCPxj wrote: > > Good morning Eric, > > > Sent with ProtonMail Secure Email. > > ‐‐‐ Original Message ‐‐‐ > On Saturday, July 6, 2019 3:27 AM, Eric Voskuil wrote: > >>> On Jul 4, 2019, at 21:05, ZmnSCPxj zmnsc...@protonmail.com wrote: >>> Good morning Eric, >>> As with Bitcoin mining, it is the consumed cost that matters in this scenario, (i.e., not the hash rate, or in this case the encumbered coin face value). Why would the advertiser not simply be required to burn .1 coin for the same privilege, just as miners burn energy? Why would it not make more sense to spend that coin in support of the secondary network (e.g. paying for confirmation security), just as with the burning of energy in Bitcoin mining? >> >> Good morning ZmnSCPxj, >> >>> Using the unspentness-time of a UTXO allows for someone advertising a >>> service or producer to "close up shop" by simply spending the advertising >>> UTXO. >>> For instance, if the advertisement is for sale of a limited stock of goods, >>> once the stock has been sold, the merchant (assuming the merchant used own >>> funds) can simply recover the locked funds, with the potential to reinvest >>> them elsewhere. >>> This allows some time-based hedging for the merchant (they may be willing >>> to wait indefinitely for the stock to be sold, but once the stock is sold, >>> they can immediately reap the rewards of not having their funds locked >>> anymore). >> >> This is a materially different concept than proposed by Tamas. >> >> “...he gives up his control of the coins until maturity, he can not use them >> elsewhere until then.” > > Possibly. > In a way, this is giving up control of the coin, until he no longer needs the > advertisement, i.e. dynamically select the maturity age needed. > >>> Similarly, an entity renting out a UTXO for an advertisement might allow >>> for early reclamation of the UTXO in exchange for partial refund of fee; as >>> the value in the UTXO is now freed to be spent elsewhere, the lessor can >>> lease it to another advertiser. >> >> You appear to be proposing a design whereby either the owner or the renter >> (not entirely clear to me which) can spend the “locked up” coin at any time >> (no maturity constraint), by dropping the covenant. >> >> If the renter can do this he can simply steal the coin from the owner. >> >> If the owner can do this there is no value to the renter (or as a proof of >> cost), as the owner retains full control of the coin. >> > > Obviously this will require a 2-of-2 multisig, with an timelocked transaction > that lets the owner recover at a futuredate, so that it is the agreement of > *both* that is needed to perform any actions before the timelock. > I already described this in the link I provided. > > >> If you mean that the age of the encumbrance is the proof of cost, this >> requires no covenant. I don’t believe this is what you intended, just >> covering all bases. > > Not age of encumbrance, quite. > Instead, it is the simple fact that the UTXO is a UTXO (and not yet spent), > that validates the advertisement. Not any UTXO then, one that with sufficient time-locked coin. > No, it does not *require* a covenant. > However, covenants do make it easier to use, in the sense that the renter can > repurpose the UTXO (e.g. change details of advertisement) without having to > contact the owner. So how does one get the owner to sign off on the multisig release? Presumably the renter cares because he wants to recover the remaining value of rental. So he not only needs to contact the owner, he also needs to negotiate with the owner for a pro-rated refund. In other words, he must sell the remaining portion of the rental return - essentially how I described it previously. He might as well just sell the marketable ad space that he controls through the remainder of the term (the same value). Certainly the owner could given him a partially-signed transaction, returning the coin, allowing the renter to exit at any time, but the renter has no reason to sign it without a refund, which must be pro-rated in some way, implying later contact/negotiation with the owner. But it’s worth noting that early recovery of the UTXO entirely eliminates the value of the time lock cost to the ad market. The most obvious example is one encumbering the coin to himself, then releasing it with his own two signatures whenever he wants. In other words, there is no encumbrance at all, just a bunch of pointless obscurantion. >>> Burnt funds cannot be "un-burnt" to easily signal the end of a term for an >>> advertisement. >> >> And as I have shown above, nor can a “locked-up” coin be unlocked to do the >> same. > > You have shown no such thing, merely shown that you have not understood the > proposal. I think I understand the implications of it clearly. Feel free to point out what I’m missing. But I don’t
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
> On Jul 5, 2019, at 12:27, Eric Voskuil wrote: > > >> On Jul 4, 2019, at 21:05, ZmnSCPxj wrote: >> >> Good morning Eric, >> >>> As with Bitcoin mining, it is the consumed cost that matters in this >>> scenario, (i.e., not the hash rate, or in this case the encumbered coin >>> face value). Why would the advertiser not simply be required to burn .1 >>> coin for the same privilege, just as miners burn energy? Why would it not >>> make more sense to spend that coin in support of the secondary network >>> (e.g. paying for confirmation security), just as with the burning of energy >>> in Bitcoin mining? > > Good morning ZmnSCPxj, > >> Using the unspentness-time of a UTXO allows for someone advertising a >> service or producer to "close up shop" by simply spending the advertising >> UTXO. >> For instance, if the advertisement is for sale of a limited stock of goods, >> once the stock has been sold, the merchant (assuming the merchant used own >> funds) can simply recover the locked funds, with the potential to reinvest >> them elsewhere. >> This allows some time-based hedging for the merchant (they may be willing to >> wait indefinitely for the stock to be sold, but once the stock is sold, they >> can immediately reap the rewards of not having their funds locked anymore). > > This is a materially different concept than proposed by Tamas. > > “...he gives up his control of the coins until maturity, he can not use them > elsewhere until then.” > >> Similarly, an entity renting out a UTXO for an advertisement might allow for >> early reclamation of the UTXO in exchange for partial refund of fee; as the >> value in the UTXO is now freed to be spent elsewhere, the lessor can lease >> it to another advertiser. > > You appear to be proposing a design whereby either the owner or the renter > (not entirely clear to me which) can spend the “locked up” coin at any time > (no maturity constraint), by dropping the covenant. > > If the renter can do this he can simply steal the coin from the owner. > > If the owner can do this there is no value to the renter (or as a proof of > cost), as the owner retains full control of the coin. > > If you mean that the age of the encumbrance is the proof of cost, this > requires no covenant. I don’t believe this is what you intended, just > covering all bases. > >> Burnt funds cannot be "un-burnt" to easily signal the end of a term for an >> advertisement. > > And as I have shown above, nor can a “locked-up” coin be unlocked to do the > same. > >> Similarly for miner fees. > > Well that’s the point, money spent is no longer under one’s control. The > provable cost of this surrender was your stated objective. Renting at a > fractional cost of coin face value is a non-recoverable spend by the renter > to the owner. Burning or spending the same amount in a way that is provably > not to one’s self achieves the exact same result. > >> The best that can be done would be to have the nodes of the classified ads >> network automatically decay the spent value of older advertisements to let >> them be dropped from their advertisements pool. > > The advertiser can presumably trade control of as space on the ad network. > It’s not clear to me why this is not simply an independent chain of limited > ad space ownership. It might as well be namecoin. > >> Less importantly, burning currently has bad resource usage for practical >> applications. >> Practical burning requires spending to a provably-unspendable P2PKH or P2SH >> or similar output. >> This adds UTXO entries to the UTXO database that will never be removed. I forgot to add that it is certainly possible to burn using a nonstandard script, such as the non-zero OP_RETURN you suggested, without a consensus change. This can be, as you say, made more practical with a policy change. But such changes are up to individual node operators as they require no deviation from consensus. Yet ultimately this is a miner preference, and anyone can mine. Finally, as I pointed out, burning is not necessary. Simply spending the coin as a fee is sufficient. > If an output is provably unspendable (burned) it is not a UTXO. > > It is worth noting that not all full node implementations require a store of > UTXOs, this is an implementation detail. For example, libbitcoin uses a flag > on each output to indicate its spentness on the strong branch. As such the > store size is linear by height. > >> This will of course be remedied by compact UTXO representations later, but >> not today. >> Similarly, it would be very nice to have non-0-amount `OP_RETURN` outputs, >> as `OP_RETURN` outputs are never stored in the UTXO database. >> However, this will require a change in node relay policy, which again will >> take time to make possible, and would not be practical today. >> >> Thus I think use of UTXO is better than burning or mining-fee-spending. > > I don’t believe you have shown this. > > Best, >
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
Good morning Eric, Sent with ProtonMail Secure Email. ‐‐‐ Original Message ‐‐‐ On Saturday, July 6, 2019 3:27 AM, Eric Voskuil wrote: > > On Jul 4, 2019, at 21:05, ZmnSCPxj zmnsc...@protonmail.com wrote: > > Good morning Eric, > > > > > As with Bitcoin mining, it is the consumed cost that matters in this > > > scenario, (i.e., not the hash rate, or in this case the encumbered coin > > > face value). Why would the advertiser not simply be required to burn .1 > > > coin for the same privilege, just as miners burn energy? Why would it not > > > make more sense to spend that coin in support of the secondary network > > > (e.g. paying for confirmation security), just as with the burning of > > > energy in Bitcoin mining? > > Good morning ZmnSCPxj, > > > Using the unspentness-time of a UTXO allows for someone advertising a > > service or producer to "close up shop" by simply spending the advertising > > UTXO. > > For instance, if the advertisement is for sale of a limited stock of goods, > > once the stock has been sold, the merchant (assuming the merchant used own > > funds) can simply recover the locked funds, with the potential to reinvest > > them elsewhere. > > This allows some time-based hedging for the merchant (they may be willing > > to wait indefinitely for the stock to be sold, but once the stock is sold, > > they can immediately reap the rewards of not having their funds locked > > anymore). > > This is a materially different concept than proposed by Tamas. > > “...he gives up his control of the coins until maturity, he can not use them > elsewhere until then.” Possibly. In a way, this is giving up control of the coin, until he no longer needs the advertisement, i.e. dynamically select the maturity age needed. > > Similarly, an entity renting out a UTXO for an advertisement might allow > > for early reclamation of the UTXO in exchange for partial refund of fee; as > > the value in the UTXO is now freed to be spent elsewhere, the lessor can > > lease it to another advertiser. > > You appear to be proposing a design whereby either the owner or the renter > (not entirely clear to me which) can spend the “locked up” coin at any time > (no maturity constraint), by dropping the covenant. > > If the renter can do this he can simply steal the coin from the owner. > > If the owner can do this there is no value to the renter (or as a proof of > cost), as the owner retains full control of the coin. > Obviously this will require a 2-of-2 multisig, with an timelocked transaction that lets the owner recover at a futuredate, so that it is the agreement of *both* that is needed to perform any actions before the timelock. I already described this in the link I provided. > If you mean that the age of the encumbrance is the proof of cost, this > requires no covenant. I don’t believe this is what you intended, just > covering all bases. Not age of encumbrance, quite. Instead, it is the simple fact that the UTXO is a UTXO (and not yet spent), that validates the advertisement. No, it does not *require* a covenant. However, covenants do make it easier to use, in the sense that the renter can repurpose the UTXO (e.g. change details of advertisement) without having to contact the owner. > > > Burnt funds cannot be "un-burnt" to easily signal the end of a term for an > > advertisement. > > And as I have shown above, nor can a “locked-up” coin be unlocked to do the > same. You have shown no such thing, merely shown that you have not understood the proposal. Regards, ZmnSCPxj ___ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
> On Jul 4, 2019, at 21:05, ZmnSCPxj wrote: > > Good morning Eric, > >> As with Bitcoin mining, it is the consumed cost that matters in this >> scenario, (i.e., not the hash rate, or in this case the encumbered coin face >> value). Why would the advertiser not simply be required to burn .1 coin for >> the same privilege, just as miners burn energy? Why would it not make more >> sense to spend that coin in support of the secondary network (e.g. paying >> for confirmation security), just as with the burning of energy in Bitcoin >> mining? Good morning ZmnSCPxj, > Using the unspentness-time of a UTXO allows for someone advertising a service > or producer to "close up shop" by simply spending the advertising UTXO. > For instance, if the advertisement is for sale of a limited stock of goods, > once the stock has been sold, the merchant (assuming the merchant used own > funds) can simply recover the locked funds, with the potential to reinvest > them elsewhere. > This allows some time-based hedging for the merchant (they may be willing to > wait indefinitely for the stock to be sold, but once the stock is sold, they > can immediately reap the rewards of not having their funds locked anymore). This is a materially different concept than proposed by Tamas. “...he gives up his control of the coins until maturity, he can not use them elsewhere until then.” > Similarly, an entity renting out a UTXO for an advertisement might allow for > early reclamation of the UTXO in exchange for partial refund of fee; as the > value in the UTXO is now freed to be spent elsewhere, the lessor can lease it > to another advertiser. You appear to be proposing a design whereby either the owner or the renter (not entirely clear to me which) can spend the “locked up” coin at any time (no maturity constraint), by dropping the covenant. If the renter can do this he can simply steal the coin from the owner. If the owner can do this there is no value to the renter (or as a proof of cost), as the owner retains full control of the coin. If you mean that the age of the encumbrance is the proof of cost, this requires no covenant. I don’t believe this is what you intended, just covering all bases. > Burnt funds cannot be "un-burnt" to easily signal the end of a term for an > advertisement. And as I have shown above, nor can a “locked-up” coin be unlocked to do the same. > Similarly for miner fees. Well that’s the point, money spent is no longer under one’s control. The provable cost of this surrender was your stated objective. Renting at a fractional cost of coin face value is a non-recoverable spend by the renter to the owner. Burning or spending the same amount in a way that is provably not to one’s self achieves the exact same result. > The best that can be done would be to have the nodes of the classified ads > network automatically decay the spent value of older advertisements to let > them be dropped from their advertisements pool. The advertiser can presumably trade control of as space on the ad network. It’s not clear to me why this is not simply an independent chain of limited ad space ownership. It might as well be namecoin. > Less importantly, burning currently has bad resource usage for practical > applications. > Practical burning requires spending to a provably-unspendable P2PKH or P2SH > or similar output. > This adds UTXO entries to the UTXO database that will never be removed. If an output is provably unspendable (burned) it is not a UTXO. It is worth noting that not all full node implementations require a store of UTXOs, this is an implementation detail. For example, libbitcoin uses a flag on each output to indicate its spentness on the strong branch. As such the store size is linear by height. > This will of course be remedied by compact UTXO representations later, but > not today. > Similarly, it would be very nice to have non-0-amount `OP_RETURN` outputs, as > `OP_RETURN` outputs are never stored in the UTXO database. > However, this will require a change in node relay policy, which again will > take time to make possible, and would not be practical today. > > Thus I think use of UTXO is better than burning or mining-fee-spending. I don’t believe you have shown this. Best, Eric > Also, mostly trivia: > The use of UTXOs to advertise services is not original to me --- I found the > LN channel gossip to be the inspiration for this. > Publicly-announced channels indicate the backing UTXO that funds the channel. > The purpose of publicly announcing the channels is to be able to provide the > service, of forwarding across the Lightning Network; thus the public > announcement serves as an advertisement for the service. > Channel closure immediately spends the UTXO, and also doubles to "revoke" the > existing "advertisement". > I found this ability to "revoke" the advertisement appealing, and thereby > designed the Bitcoin Classified Ads Network around the UTXO
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
> On Jul 4, 2019, at 12:10, Tamas Blummer wrote: > > Hi Eric, > > there are some other ways to impose cost on use without direct billing, e.g.: > > - Burn Bitcoins to use the service, as you mentioned. This could work and > would benefit remaining Bitcoin owner, but is unsustainable. > > - Pay high fees in self dealing transactions. This could work and would > benefit miner. > > - Time lock own Bitcoins. This is forgoing control of an UTXO for a time > period, which implies opportunity cost. This could be done with CLTV > (OP_HODL). It damages the current owner but benefits no one. I meant to point out that a voluntarily trade cannot represent “damage” to the person making it. The person chooses the action because it is preferred over alternatives (i.e. it is beneficial). Such choices are the only objective expression of preference, a fundamental principle of praxeology. > The problem is one might not have substantial UTXO to imply high enough > opportunity cost. > > - Pay someone else to time lock. This is paying someone to lock an UTXO for a > time span. Payment and time lock could be combined in the same transaction. > > - Transferable borrowed Bitcoin. This needs the covenant. This benefits > those who consciously give up control for a time span. Its advantage is that > since transferable it can be sold if no longer needed, thereby shortening the > term of the original arrangement. It coul be re-rented for a shorter time > period. > > Tamas Blummer > > >> On Jul 4, 2019, at 18:43, Eric Voskuil wrote: >> >> Hi ZmnSCPxj, >> >> Generalizing a bit this appears to be the same with one exception. The >> amount of encumbered coin is relevant to an external observer. Of course the >> effective dust limit is the maximum necessary encumbrance otherwise. >> >> In the case of simple tracking, the market value of the coin is not >> relevant, all that is required is a valid output. Hence the devolution to 1 >> sat tracking. In your scenario the objective is to establish a meaningful >> cost for the output. >> >> A community of people using this as a sort of hashcash spam protection can >> raise the amount of encumbered coin (i.e. advertising threshold price) >> required in that context. The cost of this encumberance includes not only at >> least one tx fee but market cost of the coin rental. >> >> At a 1 year advertisement term, 10% APR capital cost, and threshold of 1 >> encumbered coin, the same is achieved by burning .1 coin. In other words the >> renter (advertiser) has actually paid to the coin owner .1 coin to rent 1 >> coin for one year. >> >> As with Bitcoin mining, it is the consumed cost that matters in this >> scenario, (i.e., not the hash rate, or in this case the encumbered coin face >> value). Why would the advertiser not simply be required to burn .1 coin for >> the same privilege, just as miners burn energy? Why would it not make more >> sense to spend that coin in support of the secondary network (e.g. paying >> for confirmation security), just as with the burning of energy in Bitcoin >> mining? >> >> e >> >>> On Jul 3, 2019, at 23:57, ZmnSCPxj wrote: >>> >>> Good morning Eric, >>> >>> > and thanks to you and ZmnSCPxj we now have two additional uses cases for > UTXOs that are only temporarily accessible to their current owner. Actually you have a single potentially-valid use case, the one I have presented. The others I have shown to be invalid (apart from scamming) and no additional information to demonstrate errors in my conclusions have been offered. >>> >>> I presented another use case, that of the "Bitcoin Classified Ads Network". >>> https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2019-July/017083.html >>> >>> Advertisements are "backed" by an unspent TXO. >>> In order to limit their local resource consumption, nodes of this network >>> will preferentially keep advertisements that are backed by higher UTXO >>> values divided by advertisement size, and drop those with too low UTXO >>> value divided by advertisement size. >>> >>> Thus, spammers will either need to rent larger UTXO values for their spam, >>> paying for the higher rent involved, or fall back to pre-Bitcoin spamming >>> methods. >>> Thus I think I have presented a use-case that is viable for this and does >>> not simply devolve to "just burn a 1-satoshi output". >>> >>> I still do not quite support generalized covenants as the use-case is >>> already possible on current Bitcoin (and given that with just a little more >>> transaction introspection this enables Turing-completeness), but the basic >>> concept of "renting a UTXO of substantial value" appears sound to me. >>> >>> >>> Regards, >>> ZmnSCPxj > ___ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
> On Jul 4, 2019, at 12:10, Tamas Blummer wrote: > > Hi Eric, > > there are some other ways to impose cost on use without direct billing, e.g.: > > - Burn Bitcoins to use the service, as you mentioned. This could work and > would benefit remaining Bitcoin owner, but is unsustainable. Burning is not an economic concern and cannot be prevented. As there are fewer coins, all things being equal, the cost of each increases, and thus fewer must be burned to achieve the same cost. So assuming sufficient divisibility (an existing Bitcoin assumption) it is sustainable. But as I demonstrated, it’s not necessary. > - Pay high fees in self dealing transactions. This could work and would > benefit miner. This is essentially what I suggested, though presumably you mean Bitcoin fees not secondary network. > - Time lock own Bitcoins. This is forgoing control of an UTXO for a time > period, which implies opportunity cost. This could be done with CLTV > (OP_HODL). It damages the current owner but benefits no one. The problem is > one might not have substantial UTXO to imply high enough opportunity cost. Another reason why simply spending or burning them is preferential. > - Pay someone else to time lock. This is paying someone to lock an UTXO for a > time span. Payment and time lock could be combined in the same transaction. This implies additional complexity with no benefit to anyone required by the scenario, which was my implication. > - Transferable borrowed Bitcoin. This needs the covenant. This benefits > those who consciously give up control for a time span. Its advantage is that > since transferable it can be sold if no longer needed, thereby shortening the > term of the original arrangement. It coul be re-rented for a shorter time > period. The terms lend/borrow are misleading here, as I have previously shown. The coin is neither spendable nor consumable. This is why I have used the terms owner/renter. Yes, the renter can sell the remaining rental expense to another. Yes, the potential incremental value over the other scenarios is transferability of the output, but this accrues to both to the advertiser/renter and the owner (trade always benefits both parties trading). This transfer incurs a fee if on chain, and in the tracking scenario may easily overwhelm the effective benefit (fraction of the rental, no higher than dust, not yet expired), making it economically non-transferrable. In the advertising scenario this transfer can be achieved independent of Bitcoin, by simply changing the advertisement (e.g. publish a provably-superseding ad for the same output), avoiding the material on-chain fee. Recall that the value of the coin cannot be captured by the advertiser through transfer, just the tracking cost. e > Tamas Blummer > > >> On Jul 4, 2019, at 18:43, Eric Voskuil wrote: >> >> Hi ZmnSCPxj, >> >> Generalizing a bit this appears to be the same with one exception. The >> amount of encumbered coin is relevant to an external observer. Of course the >> effective dust limit is the maximum necessary encumbrance otherwise. >> >> In the case of simple tracking, the market value of the coin is not >> relevant, all that is required is a valid output. Hence the devolution to 1 >> sat tracking. In your scenario the objective is to establish a meaningful >> cost for the output. >> >> A community of people using this as a sort of hashcash spam protection can >> raise the amount of encumbered coin (i.e. advertising threshold price) >> required in that context. The cost of this encumberance includes not only at >> least one tx fee but market cost of the coin rental. >> >> At a 1 year advertisement term, 10% APR capital cost, and threshold of 1 >> encumbered coin, the same is achieved by burning .1 coin. In other words the >> renter (advertiser) has actually paid to the coin owner .1 coin to rent 1 >> coin for one year. >> >> As with Bitcoin mining, it is the consumed cost that matters in this >> scenario, (i.e., not the hash rate, or in this case the encumbered coin face >> value). Why would the advertiser not simply be required to burn .1 coin for >> the same privilege, just as miners burn energy? Why would it not make more >> sense to spend that coin in support of the secondary network (e.g. paying >> for confirmation security), just as with the burning of energy in Bitcoin >> mining? >> >> e >> >>> On Jul 3, 2019, at 23:57, ZmnSCPxj wrote: >>> >>> Good morning Eric, >>> >>> > and thanks to you and ZmnSCPxj we now have two additional uses cases for > UTXOs that are only temporarily accessible to their current owner. Actually you have a single potentially-valid use case, the one I have presented. The others I have shown to be invalid (apart from scamming) and no additional information to demonstrate errors in my conclusions have been offered. >>> >>> I presented another use case, that of the "Bitcoin
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
Hi Eric, there are some other ways to impose cost on use without direct billing, e.g.: - Burn Bitcoins to use the service, as you mentioned. This could work and would benefit remaining Bitcoin owner, but is unsustainable. - Pay high fees in self dealing transactions. This could work and would benefit miner. - Time lock own Bitcoins. This is forgoing control of an UTXO for a time period, which implies opportunity cost. This could be done with CLTV (OP_HODL). It damages the current owner but benefits no one. The problem is one might not have substantial UTXO to imply high enough opportunity cost. - Pay someone else to time lock. This is paying someone to lock an UTXO for a time span. Payment and time lock could be combined in the same transaction. - Transferable borrowed Bitcoin. This needs the covenant. This benefits those who consciously give up control for a time span. Its advantage is that since transferable it can be sold if no longer needed, thereby shortening the term of the original arrangement. It coul be re-rented for a shorter time period. Tamas Blummer > On Jul 4, 2019, at 18:43, Eric Voskuil wrote: > > Hi ZmnSCPxj, > > Generalizing a bit this appears to be the same with one exception. The amount > of encumbered coin is relevant to an external observer. Of course the > effective dust limit is the maximum necessary encumbrance otherwise. > > In the case of simple tracking, the market value of the coin is not relevant, > all that is required is a valid output. Hence the devolution to 1 sat > tracking. In your scenario the objective is to establish a meaningful cost > for the output. > > A community of people using this as a sort of hashcash spam protection can > raise the amount of encumbered coin (i.e. advertising threshold price) > required in that context. The cost of this encumberance includes not only at > least one tx fee but market cost of the coin rental. > > At a 1 year advertisement term, 10% APR capital cost, and threshold of 1 > encumbered coin, the same is achieved by burning .1 coin. In other words the > renter (advertiser) has actually paid to the coin owner .1 coin to rent 1 > coin for one year. > > As with Bitcoin mining, it is the consumed cost that matters in this > scenario, (i.e., not the hash rate, or in this case the encumbered coin face > value). Why would the advertiser not simply be required to burn .1 coin for > the same privilege, just as miners burn energy? Why would it not make more > sense to spend that coin in support of the secondary network (e.g. paying for > confirmation security), just as with the burning of energy in Bitcoin mining? > > e > >> On Jul 3, 2019, at 23:57, ZmnSCPxj wrote: >> >> Good morning Eric, >> >> and thanks to you and ZmnSCPxj we now have two additional uses cases for UTXOs that are only temporarily accessible to their current owner. >>> >>> Actually you have a single potentially-valid use case, the one I have >>> presented. The others I have shown to be invalid (apart from scamming) and >>> no additional information to demonstrate errors in my conclusions have been >>> offered. >> >> I presented another use case, that of the "Bitcoin Classified Ads Network". >> https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2019-July/017083.html >> >> Advertisements are "backed" by an unspent TXO. >> In order to limit their local resource consumption, nodes of this network >> will preferentially keep advertisements that are backed by higher UTXO >> values divided by advertisement size, and drop those with too low UTXO value >> divided by advertisement size. >> >> Thus, spammers will either need to rent larger UTXO values for their spam, >> paying for the higher rent involved, or fall back to pre-Bitcoin spamming >> methods. >> Thus I think I have presented a use-case that is viable for this and does >> not simply devolve to "just burn a 1-satoshi output". >> >> I still do not quite support generalized covenants as the use-case is >> already possible on current Bitcoin (and given that with just a little more >> transaction introspection this enables Turing-completeness), but the basic >> concept of "renting a UTXO of substantial value" appears sound to me. >> >> >> Regards, >> ZmnSCPxj signature.asc Description: Message signed with OpenPGP ___ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve
Good morning Eric, > As with Bitcoin mining, it is the consumed cost that matters in this > scenario, (i.e., not the hash rate, or in this case the encumbered coin face > value). Why would the advertiser not simply be required to burn .1 coin for > the same privilege, just as miners burn energy? Why would it not make more > sense to spend that coin in support of the secondary network (e.g. paying for > confirmation security), just as with the burning of energy in Bitcoin mining? Using the unspentness-time of a UTXO allows for someone advertising a service or producer to "close up shop" by simply spending the advertising UTXO. For instance, if the advertisement is for sale of a limited stock of goods, once the stock has been sold, the merchant (assuming the merchant used own funds) can simply recover the locked funds, with the potential to reinvest them elsewhere. This allows some time-based hedging for the merchant (they may be willing to wait indefinitely for the stock to be sold, but once the stock is sold, they can immediately reap the rewards of not having their funds locked anymore). Similarly, an entity renting out a UTXO for an advertisement might allow for early reclamation of the UTXO in exchange for partial refund of fee; as the value in the UTXO is now freed to be spent elsewhere, the lessor can lease it to another advertiser. Burnt funds cannot be "un-burnt" to easily signal the end of a term for an advertisement. Similarly for miner fees. The best that can be done would be to have the nodes of the classified ads network automatically decay the spent value of older advertisements to let them be dropped from their advertisements pool. Less importantly, burning currently has bad resource usage for practical applications. Practical burning requires spending to a provably-unspendable P2PKH or P2SH or similar output. This adds UTXO entries to the UTXO database that will never be removed. This will of course be remedied by compact UTXO representations later, but not today. Similarly, it would be very nice to have non-0-amount `OP_RETURN` outputs, as `OP_RETURN` outputs are never stored in the UTXO database. However, this will require a change in node relay policy, which again will take time to make possible, and would not be practical today. Thus I think use of UTXO is better than burning or mining-fee-spending. Also, mostly trivia: The use of UTXOs to advertise services is not original to me --- I found the LN channel gossip to be the inspiration for this. Publicly-announced channels indicate the backing UTXO that funds the channel. The purpose of publicly announcing the channels is to be able to provide the service, of forwarding across the Lightning Network; thus the public announcement serves as an advertisement for the service. Channel closure immediately spends the UTXO, and also doubles to "revoke" the existing "advertisement". I found this ability to "revoke" the advertisement appealing, and thereby designed the Bitcoin Classified Ads Network around the UTXO spentness mechanism. Regards, ZmnSCPxj ___ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
