To: Dmitry Petukhov <dp@simplexum.com>, bitcoin-dev@lists.linuxfoundation.org
References: <985792b1-e7aa-677b-a7a1-6a5f672da884@riseup.net>
	<94534006-D560-4C90-9D5D-A3A64B698518@gmail.com>
	<20190726143738.0be561da@simplexum.com>
	<3c328312-2bdd-60d9-7425-8db620d09abb@riseup.net>
	<20190731205018.10ed4302@simplexum.com>
From: Chris Belcher <belcher@riseup.net>
Openpgp: preference=signencrypt
Autocrypt: addr=belcher@riseup.net; prefer-encrypt=mutual; keydata=
	mQINBFPk74oBEACzBLjd+Z5z7eimqPuObFTaJCTXP7fgZjgVwt+q94VQ2wM0ctk/Ft9w2A92
	f14T7PiHaVDjHxrcW+6sw2VI2f60T8Tjf+b4701hIybluWL8DntG9BW19bZLmjAj7zkgektl
	YNDUrlYcQq2OEHm/MGk6Ajt2RA56aRKqoz22e+4ZA89gDgamxUAadul7AETSsgqOEUDI0FKR
	FODzoH65w1ien/DLkG1f76jd0XA6AxrESJVO0JzvkTnJGElBcA37rYaMmDi4DhG2MY4u63VE
	8h6DyUXcRhmTZIAj+r+Ht+KMDiuiyQcKywCzzF/7Ui7YxqeAgjm5aPDU2E8X9Qd7cqHQzFM7
	ZCqc9P6ENAk5a0JjHw0d0knApboSvkIJUB0j1xDIS0HaRlfHM4TPdOoDgnaXb7BvDfE+0zSz
	WkvAns9oJV6uWdnz5kllVCjgB/FXO4plyFCHhXikXjm1XuQyL8xV88OqgDFXwVhKrDL9Pknu
	sTchYm3BS2b5Xq1HQqToT3I2gRGTtDzZVZV0izCefJaDp1mf49k2cokDEfw9MroEj4A0Wfht
	0J64pzlBYn/9zor5cZp/EAblLRDK6HKhSZArIiDR1RC7a6s7oTzmfn0suhKDdTzkbTAnDsPi
	Dokl58xoxz+JdYKjzVh98lpcvMPlbZ+LwIsgbdH4KZj7mVOsJwARAQABtB9DaHJpcyBCZWxj
	aGVyIDxmYWxzZUBlbWFpbC5jb20+iQI+BBMBAgAoBQJT5O+KAhsDBQkSzAMABgsJCAcDAgYV
	CAIJCgsEFgIDAQIeAQIXgAAKCRDvc06md/MRKS8jD/9P9fSYSIVjltL9brAMfIu7wJn0H0lX
	TbcuCM2uQitJ3BNxI3c7aq5dEby27u5Ud54otncDJuRPQVDKs6H7t1rInitgJ1MTQ9/aQGFA
	btKcgtVIMFbeClzTTfWr4W7fE45NI7E9EANgk5JfmWh3U+KINYLF5RtqynYocrsP6zOV+G9A
	HCpBemd9TN60CoMLMyMzTHEW1oQffaVAXY8DgthEYO/odWYIod7VTmEm0zU1aSysPqMwPWNm
	8XIl0f8SfKQyZlAU8e1eCFVCenkE44FKC5qQNYc2UxexEYtfCWChTGc4oHKxIyYmTCCefsQF
	LvgwtvlNHRXHSDKSPSNcRcpl8DFpNEKrmMlkJ8Mx+YR05CydlTQ0bI3FBohJC+UHrjD5I3hA
	wJUC1o+yVSOEd+zN3cG1EECIwkEQSmBgG5t/le2RdzfXOdpf9ku2/zoBpq00R54JxUKlfRM7
	OPTv7X+1AKHkxOySdCZwGgvdh2Whuqs4kTvtco00gCFM9fBd5oi1RJuHtxHsj8+/XU15UItb
	jeo96CIlM5YUeoRLPT5mxZYWgYAARFeSFReNq/Tuwq9d8EokUrtAyrPayznliy53UJfWDVzl
	925c0Cz0HWaP2fWj+uFcj/8K0bhptuWJQy0Poht1z3aJC1UjEgr1Xz8I7jeSJmIlA9plcJw2
	k4dhWbkCDQRT5O+KARAAyFxAM28EQwLctr0CrQhYWZfMKzAhCw+EyrUJ+/e4uiAQ4OyXifRr
	ZV6kLRul3WbTB1kpA6wgCShO0N3vw8fFG2Cs6QphVagEH8yfQUroaVxgADYOTLHMOb7INS8r
	KI/uRNmE6bXTX27oaqCEXLMycqYlufad7hr42S/T8zNh5m2vl6T/1Poj2/ormViKwAxM+8qf
	xd8FNI4UKmq2zZE9mZ5PiSIX0qRgM0yCvxV39ex/nhxzouTBvv4Lb1ntplR/bMLrHxsCzhyM
	KDgcX7ApGm+y6YEsOvzw9rRCRuJpE4lth8ShgjTtNTHfklBD6Ztymc7q7bdPWpKOEvO5lDQ6
	q8+KfENv862cOLlWLk7YR2+mHZ1PXGhWC7ggwEkfGJoXo0x8X+zgUKe2+9Jj4yEhfL0IbFYC
	z2J5d+cWVIBktI3xqkwLUZWuAbE3vgYA4h8ztR6l18NTPkiAvpNQEaL4ZRnAx22WdsQ8GlEW
	dyKZBWbLUdNcMmPfGi5FCw2nNvCyN6ktv5mTZE12EqgvpzYcuUGQPIMV9KTlSPum3NLDq8QI
	6grbG8iNNpEBxmCQOKz2/BuYApU2hwt2E44fL8e6CRK3ridcRdqpueg75my6KkOqm8nSiMEc
	/pVIHwdJ9/quiuRaeC/tZWlYPIwDWgb8ZE/g66z35WAguMQ+EwfvgAUAEQEAAYkCJQQYAQIA
	DwUCU+TvigIbDAUJEswDAAAKCRDvc06md/MRKaZwD/9OI3o3gVmst/mGx6hVQry++ht8dFWN
	IiASPBvD3E5EWbqWi6mmqSIOS6CxjU0PncxTBPCXtzxo/WzuHGQg/xtNeQ0T8b2lBScZAw93
	qm1IcHXLUe5w/Tap6YaDmSYCIZAdtbHzYfPW4JK7cmvcjvF8jhTFOBEOFVQkTi19G7caVot0
	+wL1e2DRHDXAe5CinEpaLBlwHeEu/5j6wc3erohUZlK9IbAclj4iZTQbaq3EyqUXl59dBOON
	xmL5edJxzVishIYQGIyA9WP1SylXt+kO82NEqZG2OxdXAlzjuJ8C2pAG+nbLtDo4hcsiN/MA
	aX9/JB7MXclT5ioerF4yNgKEdfq7LmynsTUd8w/Ilyp7AD+BWoujyO94i8h9eKvjf9PvSwxQ
	uAjRpxne7ZJD8vCsMNXBHSbeEK2LiwStHL/w473viXpDD53J6OLxX6a5RummR+rixbMH7dgK
	MJQ7FlyDphm3or6CSkGEir1KA0y1vqQNFtHhguFapAWMDKaJjQQNgvZUmOo6hbZqmvUF1OWc
	d6GA6j3WOUe3fDJXfbq6P9Jmxq64op887dYKsg7xjQq/7KM7wyRcqXXcbBdgvNtVDP+EnzBN
	HyYY/3ms4YIHE5JHxQ9LV4yPcWkYTvb1XpNIFVbrSXAeyGHVNT+SO6olFovbWIC3Az9yesaM
	1aSoTg==
Message-ID: <ae32dcbb-c950-3b3f-22b9-d152d6b221cb@riseup.net>
Date: Fri, 2 Aug 2019 10:21:57 +0100
MIME-Version: 1.0
In-Reply-To: <20190731205018.10ed4302@simplexum.com>
Content-Type: text/plain; charset=utf-8
Content-Language: en-US
Content-Transfer-Encoding: 8bit
Subject: Re: [bitcoin-dev] Improving JoinMarket's resistance to sybil
 attacks using fidelity bonds
Precedence: list

On 31/07/2019 16:50, Dmitry Petukhov wrote:
> В Tue, 30 Jul 2019 22:39:14 +0100
> Chris Belcher via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org>
> wrote:
> 
>> This is where a sacrifice of V bitcoins creates a
>> bond of value V^2. The formula provides a strong incentive for
>> profit-motivated makers to use all their fidelity bond coins with just
>> one maker, not spread them out over many makers.
> 
> The attacker derives additional value from the use of
> locked utxo - the deanonimyzation capabilities.
> 
> An entity M can use all of its locked coins to run a maker, and then
> earn value X. It will also incur some operational expenses in the course
> of running the maker, so the profit will be less than X.
> 
> If these locked coins are given to the attacker A as a package, an
> attacker can derive a value of X+D where D is a value of increased
> deanonymization capabilities for an attacker. Operational expenses
> for an attacker are the same as before (without timelocked bonds),
> because they need to operate a lot of makers either way.
> 
> If M is profit-driven and non-ideological, it can rent out all of its
> coins to A as a package, for the price X, and get the same value without
> running a maker and dedicating any resources and time to it, not
> incurring any operatinal expenses (thus having a bigger profit in the
> end).
> 
> Attacker A will run a maker with M's coins, get profit X, pay X to M,
> get increased deanonymization capabilities. 
> 
> If renting out of utxo is done in a way that the owner always gets X
> after the lock expires, the operation will be riskless for the owner.
> The attacker will need to lock amount X along with owner's coins, but
> hopefully makes X back by running a maker operation. 
> 
> The price for renting out the coins will be determined on the size of
> the 'coin package', so it will not be feasible for the owners of the
> coins to rent them out separately.
> 
> An attacker can even rent coins from several entities and combine them
> to create a more 'powerful' maker. If I understand correctly, such
> 'powerful' maker can have bigger profit than two less 'powerful'
> makers. It seems like a centralization risk to me.
> 

There's a few different issues here.

Yes TXO fidelity bonds can be rented out, but that doesn't make a sybil
attack cheaper. The aim of the fidelity bond scheme is to require makers
to sacrifice value, renting out their fidelity bond coins doesn't avoid
that sacrifice because the sacrifice is the paid rent. Because of the
maths and market forces the rent paid by the attacker should be about
the same as the cost of just buying the bitcoins and locking them.

Centralization and decentralization are not ends in themselves, the main
aim in JoinMarket is to improve privacy while keeping the other
properties of bitcoin (e.g. censorship resistance). A single maker can
never deanonoymize coinjoins no matter how valuable their bond is,
because takers always choose multiple makers, and all of them need to be
controlled by the sybil attacker for the attack to succeed. If a sybil
attacker splits up their fidelity bonds (rented or not) amongst multiple
maker bots then they reduce the value of their bonds because of the V^2
term.

Rented TXOs does destroy the effect of "A long-term holder probably
won't want to attack a system like JoinMarket which makes his own
investment coins more private and more fungible". However this is not
the main effect which would protect JoinMarket's privacy. The main
effect is the cost which for real-life numbers would be about 45-120
bitcoin sent to burner outputs.

Perhaps then rented TXOs is an argument against using coin age as a way
to create fidelity bonds. Hodlers would be far less likely to rent out
their coins if they have to specifically move them to a special
time-locked address. Another point is that for privacy reasons creators
of fidelity bonds should mix their coins before and after using them,
because those TXOs are revealed to the world. So it's likely that
fidelity bonds creators will need to install and run JoinMarket anyway.