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From: Eric Voskuil <eric@voskuil.org>
In-Reply-To: <0851B842-34A1-427F-95DC-A1D6AB416FB9@voskuil.org>
Date: Fri, 5 Jul 2019 18:46:45 -0700
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To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Generalized covenants with taproot enable
	riskless or risky lending,
	prevent credit inflation through fractional reserve
Precedence: list


> On Jul 5, 2019, at 18:28, Eric Voskuil <eric@voskuil.org> wrote:
>=20
>=20
>=20
>> On Jul 5, 2019, at 17:17, ZmnSCPxj <ZmnSCPxj@protonmail.com> wrote:
>>=20
>> Good morning Eric,
>>=20
>>> But it=E2=80=99s worth noting that early recovery of the UTXO entirely e=
liminates 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 o=
wn two signatures whenever he wants. In other words, there is no encumbrance=
 at all, just a bunch of pointless obscurantion.
>>=20
>> You still do not understand.
>> I strongly suggest actually reading the post instead of skimming it.
>=20
> I am responding to the cryptoeconomic principles, not the implementation d=
etails. Based on your comments here I am not misrepresenting those principle=
s.
>=20
> For example, I have shown that the multisig unlock implementation reduces t=
he presumably-encumbered UTXO to simply a UTXO. You have not disputed that. I=
n fact below you have accepted it (more below).
>=20
>> 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 va=
lid and will be outright deleted by existing nodes, and new nodes will not l=
earn of them (and would consider it spam if it is forced to them when the UT=
XO is already spent, possibly banning the node that pushes the advertisement=
 at them).
>>=20
>> Thus the locked-ness of the UTXO is the lifetime of the advertisement.
>=20
> The term =E2=80=9Clocked=E2=80=9D here is misused. A unspent output that c=
an be spent at any time is just an unspent output. The fact that you can =E2=
=80=9Cunencumber=E2=80=9D your own coins should make this exceedingly obviou=
s:
>=20
>> Once you disencumber the coins (whether your own, or rented) then your ad=
vertisement is gone; forever.
>=20
> As I have shown, there is no *actual* encumbrance.
>=20
>> Your advertisement exists only as long as the UTXO is unspent.
>=20
> Exactly, which implies *any* UTXO is sufficient. All that the ad network r=
equires is proof of ownership of any UTXO.
>=20
> 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 incr=
emental cost of identifying those coins to =E2=80=9Cback=E2=80=9D ads.This i=
sn=E2=80=99t altered by the proposed design.
>=20
> 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 amou=
nt of that opportunity cost can simply be spent (or burned) by the advertise=
r, representing the same cost. So covering the case where one cannot raise t=
he capital to =E2=80=9Cback=E2=80=9D one=E2=80=99s ad does not require renta=
l, as the cost of the otherwise rental can just be spent outright.
>=20
> Presumably it would be ideal to transfer the value of those spends to peop=
le who provably present the ads for effective viewing (i.e., the AdWords bus=
iness model). It is of course this market-driven cost of presenting an ad th=
at provides the spam protection/definition for AdWords.

It=E2=80=99s worth pointing out at this point that this implies Google, etc.=
 would achieve the same result by simply accepting Bitcoin for ad placement.=
 In your model the advertiser is paying only for access to people who wish t=
o avoid spam, not for targeted and actual placement. In other words your ad s=
ystem would be directly competing with others that provide material addition=
al value for the advertiser beyond anti-spam. If nothing else this implies t=
he return on coin =E2=80=9Clock-up=E2=80=9D would be exceeded by its opportu=
nity cost.

> Best,
> Eric
>=20
>> Regards.
>> ZmnSCPxj