Return-Path: Received: from smtp1.linuxfoundation.org (smtp1.linux-foundation.org [172.17.192.35]) by mail.linuxfoundation.org (Postfix) with ESMTPS id B0E6C1C5F for ; Sat, 6 Jul 2019 22:37:48 +0000 (UTC) X-Greylist: whitelisted by SQLgrey-1.7.6 Received: from mail-pf1-f195.google.com (mail-pf1-f195.google.com [209.85.210.195]) by smtp1.linuxfoundation.org (Postfix) with ESMTPS id C0295893 for ; Sat, 6 Jul 2019 22:37:47 +0000 (UTC) Received: by mail-pf1-f195.google.com with SMTP id g2so990040pfq.0 for ; Sat, 06 Jul 2019 15:37:47 -0700 (PDT) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=voskuil-org.20150623.gappssmtp.com; s=20150623; h=mime-version:subject:from:in-reply-to:date:cc :content-transfer-encoding:message-id:references:to; bh=DBM33Sb51phkBGiGsWmvuoZUdCqZ/VxQAE9rGEgPXqg=; b=dYQAFQQw15Ibyk32rlox5rwx+rrlIDU7qqiKPy4tSl7xiUbiEw2towEgKrmi82S19N +j0/BkSCKlGG02YyvqNNrUzd9e8JIXv73BtZFJMVQblOxrO+CXy+1oxUQbz9LA36kwLT TI+L3JmkWBB5drz7rqGoqMbPoJed8MIGX8MX1/RsBinEV4dCBBsQW2AJZuzznEYIS5po PElhPnn5QCH4dl3qpHkgK++aQvIECOD+QeRQtV2DcGVcJxLa6ncL+tWWuCyKyroIvWut InTfeUA6XYGiZE6syNcT2KRHU5vJPPEt0Ydb24OegIz9oT/tjOeAh0/tUtHimxUnDQjw PvYA== X-Google-DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=1e100.net; s=20161025; h=x-gm-message-state:mime-version:subject:from:in-reply-to:date:cc :content-transfer-encoding:message-id:references:to; bh=DBM33Sb51phkBGiGsWmvuoZUdCqZ/VxQAE9rGEgPXqg=; b=ZvIr5dTRWU/27N4snnDvFz1XT4/W0Db1rSH+/z0+6bQrcttjNOpVRaUcc4DCinimA7 hT7r03a1fNnrThze7Vdw/uXfapsIYaSk1A122on09uSTaPY+mXJ5oVrtWGcBBtJ9opUA VpRZ1P5EP1mDeYH7F0vqv+mAX48U9t+IJ9N+ZdsGayrJ9aFQ6ecndPkrenEzWjX4cmAT OnRd1/KrCPdbInA5wyS9RrTZFn/srfLzUwFBJGi+Dt9Eoqab2zthTlbjG2nGTlyQ4IkE gjh21OV3gapJ47CXm80w5jHwMzCh8n1VX+IlRpan4aSHbyDUu2dBpCprBylJjgeXZ1Gv 1feg== X-Gm-Message-State: APjAAAUqN0Bl/aXEGAhZoebNtvMWIa0oCuHr/AVyBQ0RfEfO72bddYpX V4W1oFUVl4sDxlhe5CIHaKLD/A== X-Google-Smtp-Source: APXvYqyVhk2PSHcU1aJOjsa23b/7LeiCHrSSkkroUdO4SWYumeBti3RqUUIZ2Fv9RgeZFlU9SOUwFA== X-Received: by 2002:a17:90a:25af:: with SMTP id k44mr13639208pje.122.1562452667207; Sat, 06 Jul 2019 15:37:47 -0700 (PDT) Received: from ?IPv6:2600:380:7031:6d39:a1fb:7c32:9a36:499? ([2600:380:7031:6d39:a1fb:7c32:9a36:499]) by smtp.gmail.com with ESMTPSA id 22sm14229442pfu.179.2019.07.06.15.37.46 (version=TLS1_2 cipher=ECDHE-RSA-AES128-GCM-SHA256 bits=128/128); Sat, 06 Jul 2019 15:37:46 -0700 (PDT) Content-Type: multipart/alternative; boundary=Apple-Mail-5BDE4D26-59D3-454D-BC29-BFDC27E8AB91 Mime-Version: 1.0 (1.0) From: Eric Voskuil X-Mailer: iPhone Mail (16F203) In-Reply-To: <16B09501-7AE3-4F8E-A1A4-3E5F6B12D127@gmail.com> Date: Sat, 6 Jul 2019 15:37:45 -0700 Content-Transfer-Encoding: 7bit Message-Id: References: <0DBC0DEA-C999-4AEE-B2E1-D5337ECD9405@gmail.com> <0AA10217-E1CC-46D1-9B43-038CEEF942CD@gmail.com> <6B9A04E2-8EEE-40A0-8B39-64AA0F478CAB@voskuil.org> <4mT6iC4Va7Afg15a5NLbddAnF2a_vAcQSXYr_jg_5IyEK2ezblJff7EJZakoqvp4BJlLitt9Zlq1_l5JadR0nVss7VDPW-pv8jXGh7lkFC4=@protonmail.com> <16B09501-7AE3-4F8E-A1A4-3E5F6B12D127@gmail.com> To: Tamas Blummer X-Spam-Status: No, score=-1.9 required=5.0 tests=BAYES_00,DKIM_SIGNED, DKIM_VALID, HTML_MESSAGE, MIME_QP_LONG_LINE, RCVD_IN_DNSWL_NONE autolearn=ham version=3.3.1 X-Spam-Checker-Version: SpamAssassin 3.3.1 (2010-03-16) on smtp1.linux-foundation.org X-Mailman-Approved-At: Sun, 07 Jul 2019 03:31:26 +0000 Cc: Bitcoin Protocol Discussion Subject: Re: [bitcoin-dev] Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve X-BeenThere: bitcoin-dev@lists.linuxfoundation.org X-Mailman-Version: 2.1.12 Precedence: list List-Id: Bitcoin Protocol Discussion List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Sat, 06 Jul 2019 22:37:48 -0000 --Apple-Mail-5BDE4D26-59D3-454D-BC29-BFDC27E8AB91 Content-Type: text/plain; charset=utf-8 Content-Transfer-Encoding: quoted-printable > On Jul 6, 2019, at 03:12, Tamas Blummer wrote: >=20 >=20 >> On Jul 6, 2019, at 01:16, ZmnSCPxj wrote: >>=20 >> Good morning Eric, >>=20 >>=20 >> Sent with ProtonMail Secure Email. >>=20 >> =E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90 Original M= essage =E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90 >> On Saturday, July 6, 2019 3:27 AM, Eric Voskuil wrote:= >>=20 >>>> On Jul 4, 2019, at 21:05, ZmnSCPxj ZmnSCPxj@protonmail.com wrote: >>>> Good morning Eric, >>>>=20 >>>>> As with Bitcoin mining, it is the consumed cost that matters in this s= cenario, (i.e., not the hash rate, or in this case the encumbered coin face v= alue). Why would the advertiser not simply be required to burn .1 coin for t= he same privilege, just as miners burn energy? Why would it not make more se= nse to spend that coin in support of the secondary network (e.g. paying for c= onfirmation security), just as with the burning of energy in Bitcoin mining?= >>>=20 >>> Good morning ZmnSCPxj, >>>=20 >>>> Using the unspentness-time of a UTXO allows for someone advertising a s= ervice or producer to "close up shop" by simply spending the advertising UTX= O. >>>> For instance, if the advertisement is for sale of a limited stock of go= ods, once the stock has been sold, the merchant (assuming the merchant used o= wn funds) can simply recover the locked funds, with the potential to reinves= t them elsewhere. >>>> This allows some time-based hedging for the merchant (they may be willi= ng to wait indefinitely for the stock to be sold, but once the stock is sold= , they can immediately reap the rewards of not having their funds locked any= more). >>>=20 >>> This is a materially different concept than proposed by Tamas. >>>=20 >>> =E2=80=9C...he gives up his control of the coins until maturity, he can n= ot use them elsewhere until then.=E2=80=9D >>=20 >> Possibly. >> In a way, this is giving up control of the coin, until he no longer needs= the advertisement, i.e. dynamically select the maturity age needed. >>=20 > My proposal would separate the owner of the funds from the one using the a= dvertizement service. No, it would not. I have seen no proposal requiring identity in the two role= s, which is necessary to show that two distinct individuals operate in the r= oles. Furthermore, even identity would be insufficient, as two individuals c= an clearly collude in these roles. > Yes, the owner lock up until maturity. But those using the UTXO for the ad= vertizement service could transfer (sell) the UTXO to someone else as soon a= s they do not need it, so it is dynamic maturity for them The new owner coul= d use them for an other advertizement or for an entirely different purpose. Agree, and it is the unremovable time constraint that ensures the opportunit= y cost. This is why in your proposal it is of no consequence that both roles= can be the same person. > Regarding burning: I think burning is unsustainable as usage of services i= s unlimited while coin suply is limited.=20 Loss is perpetual, so this implies Bitcoin is unsustainable. >>>=20 >>> And as I have shown above, nor can a =E2=80=9Clocked-up=E2=80=9D coin be= unlocked to do the same. >>=20 >> You have shown no such thing, merely shown that you have not understood t= he proposal. >>=20 >> Regards, >> ZmnSCPxj >=20 > I also struggle to communicate to Eric and likely many other reader the ge= neric utility of temporary control of an UTXO. Let me try again: No, you do not. This is not the point at issue. See my previous response. > Bitcoin offers a memory with remarkable properties: > - it can be read by anyone anywhere > - anyone anywhere who knows a key controlling an UTXO, and only them, can i= nitiate an update to the memory > - global replicas guaranteed to apply updates of the memory within a short= time period. >=20 > This is a utility that is sufficient to implement money.=20 No, it isn=E2=80=99t. Ownership must be perpetually (actually) transferable,= not just known. The use of a covenant breaks this transferability, see prev= ious posts. > Such a reliable shared memory could have however more uses than tracking m= oney, It could keep track of, and thereby make scarce, arbitary other things= . For the same reason this cannot work for money, it cannot work for any perpe= tual asset. See previous posts. > We can unlock these uses by separating the money use of memory from other u= ses.=20 >=20 > The covenant achives this separation temporarily. A UTXO with a covenant t= hat guarantees that current owner re-gains control at a later time means,=20= > that the current owner temporarily forgoes the UTXOs use as money and ther= eby allows its temporary use to keep track of something else. Only if the asset expires at or before the covenant maturity. > UTXOs with different covenants or without covenant are not fungible. Of course. > Why use UTXOs of significant value to track something that is not money? B= ecause the reason the registry is used is to create scarcity and scarcity ca= n be tailored to more or > less severe by requiring more or less satoshis to track something. Only 1 satoshi is required for tracking. It is only the scarcity of a satosh= i that creates this scarcity, not the covenant on it. The covenant represent= s only the destruction of opportunity of the value represented by the 1 sato= shi, not a new system of scarcity. > The current owner of a regular UTXO will want to be paid for temporarily g= iving up control, and that payment represents interest. Yes, opportunity cost. > Riskless, since it is certain to re-gain control. But of no value to anyone as money. Best, Eric > Regards, >=20 > Tamas Blummer --Apple-Mail-5BDE4D26-59D3-454D-BC29-BFDC27E8AB91 Content-Type: text/html; charset=utf-8 Content-Transfer-Encoding: quoted-printable

On Jul 6, 2019, at 03:12, Tamas Blummer <tamas.blummer@gmail.com> wrote= :


On Jul 6, 2019, at 01:16, Z= mnSCPxj <ZmnSCPxj@p= rotonmail.com> wrote:

Good morning Eric,


Sent with ProtonMail Secur= e Email.
=
=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90 O= riginal Message =E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80= =90
On Saturday, July 6, 2019 3:27 AM, Eric Voskuil <eric@voskuil.org> wrote:

On Jul 4= , 2019, at 21:05, ZmnSCPxj ZmnSCPxj@protonmail.com wrote:
Good morning Eric,

As with Bitcoin= mining, it is the consumed cost that matters in this scenario, (i.e., not t= he hash rate, or in this case the encumbered coin face value). Why would the= advertiser not simply be required to burn .1 coin for the same privilege, j= ust as miners burn energy? Why would it not make more sense to spend that co= in in support of the secondary network (e.g. paying for confirmation securit= y), just as with the burning of energy in Bitcoin mining?

Good morning ZmnSCPxj,
Using the unspentness-time= of a UTXO allows for someone advertising a service or producer to "close up= shop" by simply spending the advertising UTXO.
For instance, i= f the advertisement is for sale of a limited stock of goods, once the stock h= as been sold, the merchant (assuming the merchant used own funds) can simply= recover the locked funds, with the potential to reinvest them elsewhere.This allows some time-based hedging for the merchant (they may b= e willing to wait indefinitely for the stock to be sold, but once the stock i= s sold, they can immediately reap the rewards of not having their funds lock= ed anymore).

This is a materially d= ifferent concept than proposed by Tamas.

=E2=80= =9C...he gives up his control of the coins until maturity, he can not use th= em elsewhere until then.=E2=80=9D

Po= ssibly.
In a way, this is giving up control of the coin, u= ntil he no longer needs the advertisement, i.e. dynamically select the matur= ity age needed.

My proposal would separate the owner of th= e funds from the one using the advertizement service.

No, it would not. I have seen no proposal requir= ing identity in the two roles, which is necessary to show that two distinct i= ndividuals operate in the roles. Furthermore, even identity would be insuffi= cient, as two individuals can clearly collude in these roles.

Yes, the owner lock up unti= l maturity. But those using the UTXO for the advertizement service could tra= nsfer (sell) the UTXO to someone else as soon as they do not need it, so it i= s dynamic maturity for them The new owner could use them for an other advert= izement or for an entirely different purpose.
=

Agree, and it is the unremovable time constraint that en= sures the opportunity cost. This is why in your proposal it is of no consequ= ence that both roles can be the same person.

Regarding burning: I think burning is unsusta= inable as usage of services is unlimited while coin suply is limited. <= /div>

Loss is perpetual, so this= implies Bitcoin is unsustainable.


= And as I have shown above, nor can a =E2=80=9Clocked-up=E2=80=9D coin be unl= ocked to do the same.

You have shown= no such thing, merely shown that you have not understood the proposal.

R= egards,
ZmnSCPxj

I also struggle to communicate to Eric and likely many ot= her reader the generic utility of temporary control of an UTXO. Let me try a= gain:

No, you do not. This is no= t the point at issue. See my previous response.

Bitcoin offers a memory with remarka= ble properties:
- it can be read by anyone anywhere
- anyone anywhere who knows a key controlling an UTXO, and= only them, can initiate an update to the memory
- global replicas gu= aranteed to apply updates of the memory within a short time period.

This is a utility that is s= ufficient to implement money. 

<= div>No, it isn=E2=80=99t. Ownership must be perpetually (actually) transfera= ble, not just known. The use of a covenant breaks this transferability, see p= revious posts.
Such a reliable shared memory could have however more uses than track= ing money, It could keep track of, and thereby make scarce, arbitary other t= hings.

For the same reason this c= annot work for money, it cannot work for any perpetual asset. See previous p= osts.

We= can unlock these uses by separating the money use of memory from other uses= . 

The covena= nt achives this separation temporarily. A UTXO with a covenant that guarante= es that current owner re-gains control at a later time means, 
that the current owner temporarily forgoes the UTXOs use as mon= ey and thereby allows its temporary use to keep track of something else.

Only if the asset expires at or bef= ore the covenant maturity.

UTXOs with different covenants or without covenant are no= t fungible.

Of course.

=
Why use UTXOs of s= ignificant value to track something that is not money? Because the reason th= e registry is used is to create scarcity and scarcity can be tailored to mor= e or
less severe by requiring more or less satoshis to t= rack something.

Only 1 satoshi i= s required for tracking. It is only the scarcity of a satoshi that creates t= his scarcity, not the covenant on it. The covenant represents only the destr= uction of opportunity of the value represented by the 1 satoshi, not a new s= ystem of scarcity.

The current owner of a regular UTXO will want to be paid for tempo= rarily giving up control, and that payment represents interest.
<= /blockquote>

Yes, opportunity cost.

Riskless, since it is certain to re-gain= control.

But of no value to any= one as money.

Best,
Eric

Regards,

Tamas Blummer
= --Apple-Mail-5BDE4D26-59D3-454D-BC29-BFDC27E8AB91--