Date: Mon, 08 Aug 2022 13:12:44 +0000
To: Ali Sherief <ali@notatether.com>
From: alicexbt <alicexbt@protonmail.com>
Reply-To: alicexbt <alicexbt@protonmail.com>
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Cc: "bitcoin-dev@lists.linuxfoundation.org"
 <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] P2P trading replacement transactions
Precedence: list

Hi Ali,

> It would probably only work out if each output got their own private keys=
, since otherwise Alice can't share any outputs with Bob and vice versa.
> The whole thing sounds like an HTLC with an additional trading of private=
 keys for the actual trades instead of in the HLTC. How are they going to s=
hare their private keys securely, with PGP?

Alice and Bob can share outputs and these are swapped in the replacement tr=
ansactions. A 2of3 multisig and Carol is required so that nobody cheats. Tr=
ading of private keys is not required. I have explained things in a differe=
nt way in my [last email][1] sent to Michael Folkson.

[1]: https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-August/02=
0841.html

/dev/fd0

Sent with Proton Mail secure email.

------- Original Message -------
On Saturday, August 6th, 2022 at 7:46 PM, Ali Sherief <ali@notatether.com> =
wrote:


> It would probably only work out if each output got their own private keys=
, since otherwise Alice can't share any outputs with Bob and vice versa.
>
> The whole thing sounds like an HTLC with an additional trading of private=
 keys for the actual trades instead of in the HLTC. How are they going to s=
hare their private keys securely, with PGP?
> Perhaps Taproot with its selective revealing of certain script branches c=
an help here, but I'm not sure about details.
> - Ali
>
>
> > Hi Bitcoin Developers,
> >
> > Does it make sense to trade replacement transactions for privacy? I hav=
e shared basic details to implement this and would love to read opinions ab=
out it or ways to improve it:
> >
> > =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
> > alice
> > =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
> >
> > tx1: input a (0.01) -> output b1 (0.008)
> > -> change c1 (0.001)
> >
> > tx2: input a (0.01) -> output e2 (0.007)
> > -> output f2 (0.001)
> >
> > =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
> >
> > bob
> > =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
> >
> > tx1: input d (0.011) -> output e1 (0.007)
> > -> change f1 (0.003)
> >
> > tx2: input d (0.011) -> output b2 (0.008)
> > -> output c2 (0.001)
> >
> > =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
> >
> > carol
> > =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D
> >
> > - creates an API to manage trades that will use 2 of 3 multisig
> > - alice and bob create orders for replacement
> > - either they could be matched automatically using some algorithm or bo=
b manually accepts the offer
> > - 2 of 3 multisig is created with Alice, Bob and Carol keys
> > - bob locks 0.01 BTC in it and shares outputs e2,f2 with alice
> > - alice signs tx2 and shares tx with bob
> > - alice locks 0.011 BTC in it and shares outputs b2,c2 with bob
> > - bob signs tx2 and shares with alice
> > - both replacement txs can be broadcasted
> > - funds are released from 2 of 3 multisig with a tx having 3 outputs (o=
ne to pay fee which goes to carol)
> >
> > positives:
> >
> > - privacy
> >
> > negatives:
> >
> > - extra fees
> > - will take some time although everything will be managed by wallet wit=
h API provided by carol
> > - need to lock bitcoin with same amount as used in tx1
> > - amounts could still be used to link txs in some cases- carol and othe=
r peer knows the details
>
>
>