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From: Tamas Blummer <tamas.blummer@gmail.com>
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Date: Tue, 2 Jul 2019 07:08:53 +0200
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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
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> On Jul 1, 2019, at 20:52, Eric Voskuil <eric@voskuil.org> wrote:
>=20
> I said that I would make no further comment given the belief that no =
new ideas were surfacing. However, after giving it some more thought on =
my own, I believe I have found the one case in which a person could =
value such encumbered coins.
>=20
> In the case of tracking an asset that becomes worthless at a specific =
time, one could value a record of ownership, and the ability to trade =
ownership of the asset during the period. Consider colored coin type =
tracking of a theater ticket for a specific show, where the ticket is =
worthless by the end of the show.
>=20


In other words you now see the utility of a register offered by UTXOs =
that are only temporary availability to current owner. If there is a =
utility there is also a value in it for them.
I am glad we are on the same side on this utility and thanks to you and =
ZmnSCPxj we now have two additional uses cases for UTXOs that are only =
temporarily accessible to their current owner.

Since ZmnSCPxj also raised the question if covenants are needed at all, =
let me continue my thoughts on this in reply to his mail.

Tamas Blummer

>=20
>=20
>> On Jun 30, 2019, at 13:26, Tamas Blummer <tamas.blummer@gmail.com> =
wrote:
>>=20
>> My argument does not need the comparison with ICOs.
>>=20
>> They were just an example that people pay for the utility of register =
even though others think the tokens they keep track of are worthless.
>>=20
>> Tamas Blummer
>>=20
>>=20
>>> On Jun 30, 2019, at 22:13, Eric Voskuil <eric@voskuil.org> wrote:
>>>=20
>>> ICO tokens can be traded (indefinitely) for other things of value, =
so the comparison isn=E2=80=99t valid. I think we=E2=80=99ve both made =
our points clearly, so I=E2=80=99ll leave it at that.
>>>=20
>>> Best,
>>> Eric
>>>=20
>>>> On Jun 30, 2019, at 12:55, Tamas Blummer <tamas.blummer@gmail.com> =
wrote:
>>>>=20
>>>>=20
>>>>> On Jun 30, 2019, at 20:54, Eric Voskuil <eric@voskuil.org> wrote:
>>>>>=20
>>>>> Could you please explain the meaning and utility of =E2=80=9Cunforge=
able register=E2=80=9D as it pertains to such encumbered coins?
>>>>=20
>>>> I guess we agree that some way of keeping track of ownership is =
prerequisite for something to aquire value.
>>>> We likely also agree that the security of that ownership register =
has great influence to the value.
>>>>=20
>>>> The question remains if a register as utility in itself gives value =
to the thing needed to use that register.
>>>> I think it does, if people are interested in what it keeps track =
of, for whatever reason, even for reasons you find bogus.
>>>>=20
>>>> It was not intentional, but I think I just explained why Ethereum =
aquired higher market value by being register of ICO tokens.
>>>>=20
>>>> Now back to the coins encumbered with the debt covenant:
>>>> Transactions moving them constitute a register of covered debt and =
you need them to update that register.
>>>> Should some people find such a register useful then those coins =
needed to update this register will aquire value.
>>>> Does not matter if you think the concept of covered debt is just as =
bogus as ICOs.
>>>>=20
>>>> Here some good news: If they aquire value then they offer a way to =
generate income for hodler by temporarily giving up control.
>>>>=20
>>>> Tamas Blummer
>>>>=20
>>>>>=20
>>>>> The meaning in terms of Bitcoin is clear - the =E2=80=9Cowner=E2=80=9D=
 of outputs that represent value (i.e. in the ability to trade them for =
something else) is recorded publicly and, given Bitcoin security =
assumptions, cannot be faked. What is not clear is the utility of a =
record of outputs that cannot be traded for something else. You seem to =
imply that a record is valuable simply because it=E2=80=99s a record.
>>>>>=20
>>>>> e
>>>>>=20
>>>>>> On Jun 30, 2019, at 11:35, Tamas Blummer =
<tamas.blummer@gmail.com> wrote:
>>>>>>=20
>>>>>>=20
>>>>>>> On Jun 30, 2019, at 19:41, Eric Voskuil <eric@voskuil.org> =
wrote:
>>>>>>>=20
>>>>>>>=20
>>>>>>>> On Jun 30, 2019, at 03:56, Tamas Blummer =
<tamas.blummer@gmail.com> wrote:
>>>>>>>>=20
>>>>>>>> Hi Eric,
>>>>>>>>=20
>>>>>>>>> On Jun 29, 2019, at 23:21, Eric Voskuil <eric@voskuil.org> =
wrote:
>>>>>>>>>=20
>>>>>>>>> What loan? Alice has paid Bob for something of no possible =
utility to her, or anyone else.
>>>>>>>>=20
>>>>>>>> Coins encumbered with the described covenant represent =
temporary control of a scarce resource.
>>>>>>>>=20
>>>>>>>> Can this obtain value? That depends on the availability of =
final control and ability to deal with temporary control.
>>>>>>>=20
>>>>>>> For something to become property (and therefore have marketable =
value) requires that it be both scarce and useful. Bitcoin is useful =
only to the extent that it can be traded for something else that is =
useful. Above you are only dealing with scarcity, ignoring utility.
>>>>>>=20
>>>>>> There is a deeper utility of Bitcoin than it can be traded for =
something else. That utility is to use its unforgeable register.
>>>>>> We have only one kind of units in this register and by having =
covenants we would create other kinds that are while encumbered not =
fungible with the common ones.
>>>>>>=20
>>>>>> Units are certainly less desirable if encumbered with a debt =
covenant. You say no one would assign them any value.
>>>>>>=20
>>>>>> I am not that sure as they still offer the utility of using the =
unforgeable register, in this case a register of debt covered by =
reserves.
>>>>>> You also doubt forcing debt to be covered by reserves is a good =
idea, I got that, but suppose we do not discuss this here.
>>>>>> If there are people who think it is a good idea, then they would =
find having an unforgeable register of it useful and therefore units =
needed to maintain that register valuable to some extent.
>>>>>>=20
>>>>>>>=20
>>>>>>>> I think you do not show the neccesary respect of the market.
>>>>>>>=20
>>>>>>> I=E2=80=99m not sure what is meant here by respect, or how much =
of it is necessary. I am merely explaining the market.
>>>>>>=20
>>>>>> You are not explaining an existing market but claim that market =
that is not yet there will follow your arguments.
>>>>>>=20
>>>>>>>> Your rant reminds me of renowed economists who still argue =
final control Bitcoin can not have value, you do the same proclaiming =
that temporary control of Bitcoin can not have value.
>>>>>>>=20
>>>>>>> It seems to me you have reversed the meaning of temporary and =
final. Bitcoin is useful because of the presumption that there is no =
finality of control. One presumes an ability to trade control of it for =
something else. This is temporary control. Final control would be the =
case in which, at some point, it can no longer be traded, making it =
worthless at that point. If this is known to be the case it implies that =
it it worthless at all prior points as well.
>>>>>>>=20
>>>>>>> These are distinct scenarios. The fact that temporary (in my =
usage) control implies the possibility of value does not imply that =
finality of control does as well. The fact that (renowned or otherwise) =
people have made errors does not imply that I am making an error. These =
are both non-sequiturs.
>>>>>>>=20
>>>>>>>> I say, that temporary control does not have value until means =
dealing with it are offered, and that is I work on. Thereafter might =
obtain value if final control is deemed too expensive or not attainable, =
we shall see.
>>>>>>>=20
>>>>>>> The analogy to rental of a consumable good does not apply to the =
case of a non-consumable good. If it cannot be traded and cannot be =
consumed it cannot obtain marketable value. To this point it matters not =
whether it exists.
>>>>>>=20
>>>>>> I meant with control the control of entries in the register which =
I think is the deeper utility of Bitcoin. Final control is meant to be =
the opposite of temporary which is the time limited control with some =
expiry.
>>>>>>=20
>>>>>> Thank you for your thoughts as they help to sharpen my arguments.
>>>>>>=20
>>>>>> Best,
>>>>>>=20
>>>>>> Tamas Blummer
>>>>>>=20
>>>>>>> Best,
>>>>>>> Eric
>>>>>>>=20
>>>>>>>> Tamas Blummer
>>=20


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