Date: Wed, 04 May 2022 04:19:25 +0000
To: eric@voskuil.org
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Reply-To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Message-ID: <eOgoO8s47NFSV5fH_lewnKmRPHTNq09XL6mGVrY6H9P8l0LyeXKtebXCzJkztyS3FZv3VRJVLzPXlnVcntt8CpuLdRq72-rIs2yS4AGyR_0=@protonmail.com>
In-Reply-To: <03d701d85f6c$027c5900$07750b00$@voskuil.org>
References: <f3892570-6c45-47ee-2804-9988ff18bdf5@riseup.net>
 <48D4B621-D862-4031-AE43-3F54D34FB0B5@voskuil.org>
 <ipHZZpEipF7oliIh-RlPP2e6rcWkIFW22jEOwaCPIfJUuoDh4JfmzvGC2i7tZK-kT0o0osyxFyWxZKDRZOWI_dqdSWNWOLR7KpN3CsN6BRE=@protonmail.com>
 <03d701d85f6c$027c5900$07750b00$@voskuil.org>
Feedback-ID: 2872618:user:proton
MIME-Version: 1.0
Content-Type: text/plain; charset=utf-8
Content-Transfer-Encoding: quoted-printable
Cc: 'Bitcoin Protocol Discussion' <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIP proposal: Timelocked address fidelity bond
	for BIP39 seeds
Precedence: list

Good morning e,

> Good evening ZmnSCPxj,
>
> For the sake of simplicity, I'll use the terms lender (Landlord), borrowe=
r (Lessor), interest (X), principal (Y), period (N) and maturity (height af=
ter 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 in=
terest).
>
> The borrower's "use" of the principal is what is being overlooked. To gen=
erate income from capital one must produce something and sell it. Productio=
n requires both capital and time. Borrowing the principle for the period al=
lows the borrower to produce goods, sell them, and return the "profit" as i=
nterest to the lender. Use implies that the borrower is spending the princi=
ple - trading it with others. Eventually any number of others end up holdin=
g the principle. At maturity, the coin is returned to the lender (by covena=
nt). At that point, all people the borrower traded with are bag holders. Kn=
owledge of this scam results in an imputed net present zero value for the b=
orrowed principal.

But in this scheme, the principal is not being used as money, but as a bill=
board for an advertisement.
Thus, the bitcoins are not being used as money due to the use of the fideli=
ty 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 ma=
ke a nice shiny advertisement "I am totally not a bot!!", then at the end o=
f 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 c=
laiming "I am totally not a bot!!".

That you use the same piece of gold for money does not preclude me using th=
e gold for something else of economic value, like making a nice shiny adver=
tisement, so I think your analysis fails there.
Otherwise, your analysis is on point, but analyses something else entirely.

Regards,
ZmnSCPxj