Date: Tue, 02 Jul 2019 08:12:26 +0000
To: Tamas Blummer <tamas.blummer@gmail.com>
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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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

Good morning Tamas,

> Note that the advertizing service provider would need temporary access to=
 UTXOs of signficant value, so opportunity cost and thereby cost of adverti=
zing becomes significant.
> Covenants would allow the separation of the advertizing service from HODL=
er funding it with significant UTXOs.
> HODLer could give temporary control to the service and the service could =
broker those to others, but the original HODLer was sure to receive the UTX=
Os back and the HODLer would not be bothered with the operation of the serv=
ice.

Thank you for this thought.
It has challenged me to consider how to bring this capability out of the Bi=
tcoin blockchain.

As a counterargument, I observe that committing to the advertisement on the=
 UTXO is similar to committing to a SCRIPT on a UTXO.
And I observe the Graftroot idea, wherein we commit to a public key on the =
UTXO, and admit a SCRIPT that is signed by the public key as a SCRIPT that =
unlocks the UTXO for spending.

By analogy, in my "advertising" scheme, instead of committing the advertise=
ment on the UTXO, I can instead commit a public key (for example, the hash =
of the "advertiser pubkey" is used to tweak the onchain public key).
Then we use this advertiser pubkey to admit advertisements on the advertisi=
ng network.

This advertiser pubkey is used to sign an "advertisement chain", which is a=
 merklized singly-linked list whose contents are the actual advertisements,=
 each node being signed using the advertiser pubkey.
To ensure that the advertiser does not sign multiple versions of this chain=
, we can have the signing nonce be derived from the height of the advertcha=
in, such that signing the same height multiple times leads to private key r=
evelation.
Each header of the advertchain also includes a `CLTV`-like construct, which=
 is the Bitcoin blockheight that must be reached first before another adver=
tchain header can be added, containing a new advertisement that replaces th=
e previous one.

This lets an advertising broker pay for some onchain UTXO to a HODLer, prov=
iding a `nLockTime`d onchain transaction returning the funds to the HODLer,=
 with the UTXO paying to a 2-of-2 with a commitment to the advertiser pubke=
y.
Then the advertising broker can rent out the UTXO to providers who wish to =
advertise, though I have to figure out how to make this atomic (i.e. paying=
 the advertiser onchain or on Lightning, would be enough for the provider t=
o derive the advertchain header and its signature, for its own advertisemen=
t --- perhaps some minimal SCRIPT-like language on the advertchain can be d=
one).

This lets the advertising broker case to work even without generalized cove=
nants on the Bitcoin blockchain, while providing the same benefit of not bo=
thering the HODLer who ultimately owns the funds each time advertisements n=
eed to be changed.
This gives the advantage that changes to the advertisement that is attested=
 by a UTXO do not have any activity on the Bitcoin blockchain itself, only =
on the advertchain; at the cost that the advertising network now takes on t=
he added bandwidth of handling several tiny blockchains of limited lifetime=
, instead of keeping the data on "which advertisement is valid" on the Bitc=
oin blockchain.

Regards,
ZmnSCPxj