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 <0A99CF2C-36E4-475F-9160-A999D4AFDA7F@voskuil.org>
In-Reply-To: <0A99CF2C-36E4-475F-9160-A999D4AFDA7F@voskuil.org>
From: Billy Tetrud <billy.tetrud@gmail.com>
Date: Fri, 9 Jul 2021 15:02:23 -0700
Message-ID: <CAGpPWDYgYjUp+PRirca-QrbJZxwtyAnaQmr1kLbuKHSs2K+OBw@mail.gmail.com>
To: Eric Voskuil <eric@voskuil.org>, 
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
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Subject: Re: [bitcoin-dev] Proof of reserves - recording
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@Voskuil
> You can prove that in your own wallet. All other scenarios imply lending
(which is what is implied by =E2=80=9Creserve=E2=80=9D) and lending cannot =
be 100% reserve.

You're using terms in non-standard ways. Putting money into a bank is not
considered "lending" to the bank. You may make a case that you're lending
to a bank, and that they legally owe you repayment of that money on demand
limited by the terms you mentioned. But regardless of a case that can be
made there, pretty much no one considers that "lending". Since you you like
defining things legally, depositing money in a bank is legally not defined
as lending to the bank.

So no, all other scenarios do not imply lending. You can have your coins in
custody with someone else, and that someone else can keep 100% reserves if
they choose (or agreed to) and can prove it to you via the method I
described or the methods others have linked to.

> They are time deposits, read your bank agreement.

You are not correct
<https://www.investopedia.com/terms/t/timedeposit.asp#:~:text=3DA%20time%20=
deposit%20is%20an,pre%2Dset%20date%20of%20maturity.&text=3DTime%20deposits%=
20generally%20pay%20a,of%20investment%20is%20term%20deposit.>.
Another source
<https://www.slsp.sk/en/personal/faq/what-is-the-difference-between-a-term-=
deposit-and-savings-account>
if you don't believe me. The only way you would be correct is if banks were
committing fraud and calling something a "savings account" when it isn't in
fact a savings account.

> money markets have had no reserve requirement and have a nearly spotless
record of satisfying their obligations.

Lol, money markets are so new that they've had no opportunity to show their
true risk. In the finance world, things work fine for a long time until
they fail spectacularly, losing more than the gain they made in the first
place. This is a regular occurence. Its the reason bitcoin was created.

> Irrelevant.

It is certainly not irrelevant. People have been lead to believe that they
can withdraw their money from their accounts. People expect this. Banks are
doing nothing to educate people on the limitations of that fact. PoR would
give people the ability to see quite accurately how much reserves there are
and can use this knowledge to put pressure on institutions to keep the
reserves those people think they should keep.

> Without 100% =E2=80=9Creserve=E2=80=9D there is no way to cryptographical=
ly demonstrate
=E2=80=9Csolvency=E2=80=9D.

You can show proof that you're 80% solvent, and then claim the other 20% is
in other assets. This is, again, still useful.

>The schemes don=E2=80=99t preclude hacks, insider or otherwise, bankruptcy=
, or
state seizure, no matter what the reserve

You're right, but that's irrelevant.

But it seems like you're not interested in understanding what I'm saying or
discussing these things honestly. So I'm going to end my conversation with
you here.


On Fri, Jul 9, 2021 at 11:32 AM Eric Voskuil via bitcoin-dev <
bitcoin-dev@lists.linuxfoundation.org> wrote:

>
> > On Jul 9, 2021, at 10:44, Billy Tetrud <billy.tetrud@gmail.com> wrote:
> >
> > >  there is an unsupportable leap being made here
> >
> > You think that because you're misinterpreting me. I'm in no way claimin=
g
> that any solvent company can prove it, I'm simply claiming that any compa=
ny
> can prove that they have bitcoin reserves to cover bitcoins promised as
> account balances.
>
> You can prove that in your own wallet. All other scenarios imply lending
> (which is what is implied by =E2=80=9Creserve=E2=80=9D) and lending canno=
t be 100% reserve.
>
> > > Banks (lending institutions) do not operate under any such pretense
> >
> > You seem to be saying that banks are under no legal obligation to serve
> cash on demand to customers. While you might be right,
>
> I am, as banks are lending institutions.
>
> > again you're misinterpreting me. Banks do in fact make claims to their
> customers that they'll be able to get cash out of their account on demand=
.
>
> Up to the insured limit, in 7 days. This is of course true because the
> taxpayer has insured the bank to that level.
>
> > They're called demand deposit accounts for a reason.
>
> They are time deposits, read your bank agreement. Not that it makes any
> difference. How the contract is satisfied is not a term of the contract,
> just that it is. And as I pointed out, money markets have had no reserve
> requirement and have a nearly spotless record of satisfying their
> obligations.
>
> > And certainly customers expect to be able to withdraw their cash on
> demand.
>
> Irrelevant.
>
> > > With a 100% of investment cash hoard, there is zero lending and zero
> return
> >
> > I did say "pretend" did I not?
>
> See above.
>
> > > =E2=80=9Crelate to=E2=80=9D is a far cry from 100% =E2=80=9Creserve=
=E2=80=9D
> >
> > Indeed. Again, you seem to be misunderstanding me. You're putting the
> words "100% reserve" in my mouth, when I never said any such thing. Proof
> of 80%/50%/20% reserves is still useful if that's the clear expectation f=
or
> the customer/client.
>
> Without 100% =E2=80=9Creserve=E2=80=9D there is no way to cryptographical=
ly demonstrate
> =E2=80=9Csolvency=E2=80=9D. And even with that, investors would have to a=
ccept the promise
> that there are no other liabilities.
>
> The schemes don=E2=80=99t preclude hacks, insider or otherwise, bankruptc=
y, or
> state seizure, no matter what the reserve.
>
> It=E2=80=99s information, sure, but it=E2=80=99s not what people seem to =
think. If one
> wants full reserve banking, use a wallet. If one wants to invest, the mon=
ey
> will be spent - that=E2=80=99s why it was raised. There can be no covenan=
t placed
> on it that will ensure it=E2=80=99s return.
>
> e
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>

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<div dir=3D"ltr"><div>@Voskuil<br></div><div>&gt; You can prove that in you=
r own wallet. All other scenarios imply lending (which is what is implied b=
y =E2=80=9Creserve=E2=80=9D) and lending cannot be 100% reserve.</div><div>=
<br></div><div>You&#39;re using terms in non-standard ways. Putting money i=
nto a bank is not considered &quot;lending&quot; to the bank. You may make =
a case that you&#39;re lending to a bank, and that they legally owe you rep=
ayment of that money on demand limited by the terms you mentioned. But rega=
rdless of a case that can be made there, pretty much no one considers that =
&quot;lending&quot;. Since you you like defining things legally, depositing=
 money in a bank is legally not defined as lending to the bank.=C2=A0</div>=
<div><br></div><div>So no, all other scenarios do not imply lending. You ca=
n have your coins in custody with someone else, and that someone else can k=
eep 100% reserves if they choose (or agreed to) and can prove it to you via=
 the method I described or the methods others have linked to.=C2=A0</div><d=
iv><br></div><div>&gt; They are time deposits, read your bank agreement.</d=
iv><div><br></div>You are <a href=3D"https://www.investopedia.com/terms/t/t=
imedeposit.asp#:~:text=3DA%20time%20deposit%20is%20an,pre%2Dset%20date%20of=
%20maturity.&amp;text=3DTime%20deposits%20generally%20pay%20a,of%20investme=
nt%20is%20term%20deposit.">not correct</a>. <a href=3D"https://www.slsp.sk/=
en/personal/faq/what-is-the-difference-between-a-term-deposit-and-savings-a=
ccount">Another source</a> if you don&#39;t believe me. The only way you wo=
uld be correct is if banks were committing fraud and calling something a &q=
uot;savings account&quot; when it isn&#39;t in fact a savings account.<div>=
<br></div><div>&gt; money markets have had no reserve requirement and have =
a nearly spotless record of satisfying their obligations.</div><div><br></d=
iv><div>Lol, money markets are so new that they&#39;ve had no opportunity t=
o show their true risk. In the finance world, things work fine for a long t=
ime until they fail spectacularly, losing more than the gain they made in t=
he first place. This is a regular occurence. Its the reason bitcoin was cre=
ated.</div><div><br></div><div>&gt; Irrelevant.</div><div><br></div><div>It=
 is certainly not irrelevant. People have been lead to believe that they ca=
n withdraw their money from their accounts. People expect this. Banks are d=
oing nothing to educate people on the limitations of that fact. PoR would g=
ive people the ability to see quite accurately how much reserves there are =
and can use this knowledge to put pressure on institutions to keep the rese=
rves those people think they should keep.=C2=A0</div><div><br></div><div>&g=
t; Without 100% =E2=80=9Creserve=E2=80=9D there is no way to cryptographica=
lly demonstrate =E2=80=9Csolvency=E2=80=9D.=C2=A0</div><div><br></div><div>=
You can show proof that you&#39;re 80% solvent, and then claim the other 20=
% is in other assets. This is, again, still useful.=C2=A0</div><div><br></d=
iv><div>&gt;The schemes don=E2=80=99t preclude hacks, insider or otherwise,=
 bankruptcy, or state seizure, no matter what the reserve</div><div><br></d=
iv><div>You&#39;re right, but that&#39;s irrelevant.=C2=A0</div><div><br></=
div><div>But it seems like you&#39;re not interested in understanding what =
I&#39;m saying or discussing these things honestly. So I&#39;m going to end=
 my conversation with you here.=C2=A0</div><div><br></div></div><br><div cl=
ass=3D"gmail_quote"><div dir=3D"ltr" class=3D"gmail_attr">On Fri, Jul 9, 20=
21 at 11:32 AM Eric Voskuil via bitcoin-dev &lt;<a href=3D"mailto:bitcoin-d=
ev@lists.linuxfoundation.org">bitcoin-dev@lists.linuxfoundation.org</a>&gt;=
 wrote:<br></div><blockquote class=3D"gmail_quote" style=3D"margin:0px 0px =
0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><br>
&gt; On Jul 9, 2021, at 10:44, Billy Tetrud &lt;<a href=3D"mailto:billy.tet=
rud@gmail.com" target=3D"_blank">billy.tetrud@gmail.com</a>&gt; wrote:<br>
&gt; <br>
&gt; &gt;=C2=A0 there is an unsupportable leap being made here<br>
&gt; <br>
&gt; You think that because you&#39;re misinterpreting me. I&#39;m in no wa=
y claiming that any solvent company can prove it, I&#39;m simply claiming t=
hat any company can prove that they have bitcoin reserves to cover bitcoins=
 promised as account balances. <br>
<br>
You can prove that in your own wallet. All other scenarios imply lending (w=
hich is what is implied by =E2=80=9Creserve=E2=80=9D) and lending cannot be=
 100% reserve.<br>
<br>
&gt; &gt; Banks (lending institutions) do not operate under any such preten=
se<br>
&gt; <br>
&gt; You seem to be saying that banks are under no legal obligation to serv=
e cash on demand to customers. While you might be right,<br>
<br>
I am, as banks are lending institutions.<br>
<br>
&gt; again you&#39;re misinterpreting me. Banks do in fact make claims to t=
heir customers that they&#39;ll be able to get cash out of their account on=
 demand.<br>
<br>
Up to the insured limit, in 7 days. This is of course true because the taxp=
ayer has insured the bank to that level.<br>
<br>
&gt; They&#39;re called demand deposit accounts for a reason.<br>
<br>
They are time deposits, read your bank agreement. Not that it makes any dif=
ference. How the contract is satisfied is not a term of the contract, just =
that it is. And as I pointed out, money markets have had no reserve require=
ment and have a nearly spotless record of satisfying their obligations.<br>
<br>
&gt; And certainly customers expect to be able to withdraw their cash on de=
mand. <br>
<br>
Irrelevant.<br>
<br>
&gt; &gt; With a 100% of investment cash hoard, there is zero lending and z=
ero return<br>
&gt; <br>
&gt; I did say &quot;pretend&quot; did I not?<br>
<br>
See above.<br>
<br>
&gt; &gt; =E2=80=9Crelate to=E2=80=9D is a far cry from 100% =E2=80=9Creser=
ve=E2=80=9D<br>
&gt; <br>
&gt; Indeed. Again, you seem to be misunderstanding me. You&#39;re putting =
the words &quot;100% reserve&quot; in my mouth, when I never said any such =
thing. Proof of 80%/50%/20% reserves is still useful if that&#39;s the clea=
r expectation for the customer/client.<br>
<br>
Without 100% =E2=80=9Creserve=E2=80=9D there is no way to cryptographically=
 demonstrate =E2=80=9Csolvency=E2=80=9D. And even with that, investors woul=
d have to accept the promise that there are no other liabilities.<br>
<br>
The schemes don=E2=80=99t preclude hacks, insider or otherwise, bankruptcy,=
 or state seizure, no matter what the reserve.<br>
<br>
It=E2=80=99s information, sure, but it=E2=80=99s not what people seem to th=
ink. If one wants full reserve banking, use a wallet. If one wants to inves=
t, the money will be spent - that=E2=80=99s why it was raised. There can be=
 no covenant placed on it that will ensure it=E2=80=99s return.<br>
<br>
e<br>
_______________________________________________<br>
bitcoin-dev mailing list<br>
<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank">=
bitcoin-dev@lists.linuxfoundation.org</a><br>
<a href=3D"https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev" =
rel=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mail=
man/listinfo/bitcoin-dev</a><br>
</blockquote></div>

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