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From: Eric Voskuil <eric@voskuil.org>
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Date: Fri, 5 Jul 2019 18:28:03 -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 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 el=
iminates the value of the time lock cost to the ad market. The most obvious e=
xample is one encumbering the coin to himself, then releasing it with his ow=
n two signatures whenever he wants. In other words, there is no encumbrance a=
t all, just a bunch of pointless obscurantion.
>=20
> You still do not understand.
> I strongly suggest actually reading the post instead of skimming it.

I am responding to the cryptoeconomic principles, not the implementation det=
ails. Based on your comments here I am not misrepresenting those principles.=


For example, I have shown that the multisig unlock implementation reduces th=
e presumably-encumbered UTXO to simply a UTXO. You have not disputed that. I=
n fact below you have accepted it (more below).

> The advertisement is broadcast to new nodes on the ad network if and only i=
f its backing UTXO remains unspent.
> Once the UTXO is spent, then the advertisement is considered no longer val=
id and will be outright deleted by existing nodes, and new nodes will not le=
arn of them (and would consider it spam if it is forced to them when the UTX=
O is already spent, possibly banning the node that pushes the advertisement a=
t them).
>=20
> Thus the locked-ness of the UTXO is the lifetime of the advertisement.

The term =E2=80=9Clocked=E2=80=9D here is misused. A unspent output that can=
 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 obvious:

> Once you disencumber the coins (whether your own, or rented) then your adv=
ertisement is gone; forever.

As I have shown, there is no *actual* encumbrance.

> Your advertisement exists only as long as the UTXO is unspent.

Exactly, which implies *any* UTXO is sufficient. All that the ad network req=
uires is proof of ownership of any UTXO.

Unspentness is not actually a necessary cost (expense). All coin is always r=
epresented as UTXOs. If one has a hoard of coin there is no necessary increm=
ental cost of identifying those coins to =E2=80=9Cback=E2=80=9D ads.This isn=
=E2=80=99t altered by the proposed design.

The only cost would be to have a hoard that one does not otherwise desire, r=
epresenting an opportunity cost. Yet, as I have also pointed out, the amount=
 of that opportunity cost can simply be spent (or burned) by the advertiser,=
 representing the same cost. So covering the case where one cannot raise the=
 capital to =E2=80=9Cback=E2=80=9D one=E2=80=99s ad does not require rental,=
 as the cost of the otherwise rental can just be spent outright.

Presumably it would be ideal to transfer the value of those spends to people=
 who provably present the ads for effective viewing (i.e., the AdWords busin=
ess model). It is of course this market-driven cost of presenting an ad that=
 provides the spam protection/definition for AdWords.

Best,
Eric

> Regards.
> ZmnSCPxj