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From: Tamas Blummer <tamas.blummer@gmail.com>
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Date: Sat, 6 Jul 2019 12:12:44 +0200
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To: 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
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> On Jul 6, 2019, at 01:16, ZmnSCPxj <ZmnSCPxj@protonmail.com> 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 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 =
<mailto:eric@voskuil.org>> 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 scenario, (i.e., not the 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, just as miners burn energy? Why =
would it not make more sense to spend that coin in support of the =
secondary network (e.g. paying for confirmation 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 service or producer to "close up shop" by simply spending the =
advertising UTXO.
>>> For instance, if the advertisement is for sale of a limited stock of =
goods, once the stock has 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 be =
willing 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 anymore).
>>=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 not 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 =
advertizement service. Yes, the owner lock up until maturity. But those =
using the UTXO for the advertizement service could transfer (sell) the =
UTXO to someone else as soon as they do not need it, so it is dynamic =
maturity for them The new owner could use them for an other =
advertizement or for an entirely different purpose.

Regarding burning: I think burning is unsustainable as usage of services =
is unlimited while coin suply is limited.

>>=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 the proposal.
>=20
> Regards,
> ZmnSCPxj

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

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 initiate an update to the memory
- global replicas guaranteed to apply updates of the memory within a =
short time period.

This is a utility that is sufficient to implement money.

Such a reliable shared memory could have however more uses than tracking =
money, It could keep track of, and thereby make scarce, arbitary other =
things.

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

The covenant achives this separation temporarily. A UTXO with a covenant =
that guarantees that current owner re-gains control at a later time =
means,
that the current owner temporarily forgoes the UTXOs use as money and =
thereby allows its temporary use to keep track of something else.
UTXOs with different covenants or without covenant are not fungible.

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

The current owner of a regular UTXO will want to be paid for temporarily =
giving up control, and that payment represents interest. Riskless, since =
it is certain to re-gain control.

Regards,

Tamas Blummer






--Apple-Mail=_CEF1A73F-8208-4C70-8393-3190AA52BDF7
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<html><head><meta http-equiv=3D"Content-Type" content=3D"text/html =
charset=3Dutf-8"></head><body style=3D"word-wrap: break-word; =
-webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" =
class=3D""><br class=3D""><div><blockquote type=3D"cite" class=3D""><div =
class=3D"">On Jul 6, 2019, at 01:16, ZmnSCPxj &lt;<a =
href=3D"mailto:ZmnSCPxj@protonmail.com" =
class=3D"">ZmnSCPxj@protonmail.com</a>&gt; wrote:</div><br =
class=3D"Apple-interchange-newline"><div class=3D""><span =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; float: none; =
display: inline !important;" class=3D"">Good morning Eric,</span><br =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><br=
 style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><br=
 style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" =
class=3D""><span style=3D"font-family: Helvetica; font-size: 12px; =
font-style: normal; font-variant-caps: normal; font-weight: normal; =
letter-spacing: normal; text-align: start; text-indent: 0px; =
text-transform: none; white-space: normal; word-spacing: 0px; =
-webkit-text-stroke-width: 0px; float: none; display: inline =
!important;" class=3D"">Sent with ProtonMail Secure Email.</span><br =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><br=
 style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" =
class=3D""><span style=3D"font-family: Helvetica; font-size: 12px; =
font-style: normal; font-variant-caps: normal; font-weight: normal; =
letter-spacing: normal; text-align: start; text-indent: 0px; =
text-transform: none; white-space: normal; word-spacing: 0px; =
-webkit-text-stroke-width: 0px; float: none; display: inline =
!important;" class=3D"">=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=
=90=E2=80=90 Original Message =E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=
=E2=80=90=E2=80=90</span><br style=3D"font-family: Helvetica; font-size: =
12px; font-style: normal; font-variant-caps: normal; font-weight: =
normal; letter-spacing: normal; text-align: start; text-indent: 0px; =
text-transform: none; white-space: normal; word-spacing: 0px; =
-webkit-text-stroke-width: 0px;" class=3D""><span style=3D"font-family: =
Helvetica; font-size: 12px; font-style: normal; font-variant-caps: =
normal; font-weight: normal; letter-spacing: normal; text-align: start; =
text-indent: 0px; text-transform: none; white-space: normal; =
word-spacing: 0px; -webkit-text-stroke-width: 0px; float: none; display: =
inline !important;" class=3D"">On Saturday, July 6, 2019 3:27 AM, Eric =
Voskuil &lt;</span><a href=3D"mailto:eric@voskuil.org" =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
orphans: auto; text-align: start; text-indent: 0px; text-transform: =
none; white-space: normal; widows: auto; word-spacing: 0px; =
-webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px;" =
class=3D"">eric@voskuil.org</a><span style=3D"font-family: Helvetica; =
font-size: 12px; font-style: normal; font-variant-caps: normal; =
font-weight: normal; letter-spacing: normal; text-align: start; =
text-indent: 0px; text-transform: none; white-space: normal; =
word-spacing: 0px; -webkit-text-stroke-width: 0px; float: none; display: =
inline !important;" class=3D"">&gt; wrote:</span><br style=3D"font-family:=
 Helvetica; font-size: 12px; font-style: normal; font-variant-caps: =
normal; font-weight: normal; letter-spacing: normal; text-align: start; =
text-indent: 0px; text-transform: none; white-space: normal; =
word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><br =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" =
class=3D""><blockquote type=3D"cite" style=3D"font-family: Helvetica; =
font-size: 12px; font-style: normal; font-variant-caps: normal; =
font-weight: normal; letter-spacing: normal; orphans: auto; text-align: =
start; text-indent: 0px; text-transform: none; white-space: normal; =
widows: auto; word-spacing: 0px; -webkit-text-size-adjust: auto; =
-webkit-text-stroke-width: 0px;" class=3D""><blockquote type=3D"cite" =
class=3D"">On Jul 4, 2019, at 21:05, ZmnSCPxj <a =
href=3D"mailto:ZmnSCPxj@protonmail.com" =
class=3D"">ZmnSCPxj@protonmail.com</a> wrote:<br class=3D"">Good morning =
Eric,<br class=3D""><br class=3D""><blockquote type=3D"cite" class=3D"">As=
 with Bitcoin mining, it is the consumed cost that matters in this =
scenario, (i.e., not the 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, just as miners burn energy? Why would it =
not make more sense to spend that coin in support of the secondary =
network (e.g. paying for confirmation security), just as with the =
burning of energy in Bitcoin mining?<br =
class=3D""></blockquote></blockquote><br class=3D"">Good morning =
ZmnSCPxj,<br class=3D""><br class=3D""><blockquote type=3D"cite" =
class=3D"">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.<br class=3D"">For instance, if the advertisement =
is for sale of a limited stock of goods, once the stock has been sold, =
the merchant (assuming the merchant used own funds) can simply recover =
the locked funds, with the potential to reinvest them elsewhere.<br =
class=3D"">This allows some time-based hedging for the merchant (they =
may be willing 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 anymore).<br class=3D""></blockquote><br =
class=3D"">This is a materially different concept than proposed by =
Tamas.<br class=3D""><br class=3D"">=E2=80=9C...he gives up his control =
of the coins until maturity, he can not use them elsewhere until =
then.=E2=80=9D<br class=3D""></blockquote><br style=3D"font-family: =
Helvetica; font-size: 12px; font-style: normal; font-variant-caps: =
normal; font-weight: normal; letter-spacing: normal; text-align: start; =
text-indent: 0px; text-transform: none; white-space: normal; =
word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><span =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; float: none; =
display: inline !important;" class=3D"">Possibly.</span><br =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" =
class=3D""><span style=3D"font-family: Helvetica; font-size: 12px; =
font-style: normal; font-variant-caps: normal; font-weight: normal; =
letter-spacing: normal; text-align: start; text-indent: 0px; =
text-transform: none; white-space: normal; word-spacing: 0px; =
-webkit-text-stroke-width: 0px; float: none; display: inline =
!important;" class=3D"">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.</span><br style=3D"font-family: Helvetica; =
font-size: 12px; font-style: normal; font-variant-caps: normal; =
font-weight: normal; letter-spacing: normal; text-align: start; =
text-indent: 0px; text-transform: none; white-space: normal; =
word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><br =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" =
class=3D""></div></blockquote><div><br class=3D""></div><div>My proposal =
would separate the owner of the funds from the one using the =
advertizement service. Yes, the owner lock up until maturity. But those =
using the UTXO for the advertizement service could transfer (sell) the =
UTXO to someone else as soon as they do not need it, so it is dynamic =
maturity for them The new owner could use them for an other =
advertizement or for an entirely different purpose.</div><div><br =
class=3D""></div><div>Regarding burning: I think burning is =
unsustainable as usage of services is unlimited while coin suply is =
limited.&nbsp;</div><div><br class=3D""></div><blockquote type=3D"cite" =
class=3D""><div class=3D""><blockquote type=3D"cite" style=3D"font-family:=
 Helvetica; font-size: 12px; font-style: normal; font-variant-caps: =
normal; font-weight: normal; letter-spacing: normal; orphans: auto; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; widows: auto; word-spacing: 0px; -webkit-text-size-adjust: auto; =
-webkit-text-stroke-width: 0px;" class=3D""><br class=3D"">And as I have =
shown above, nor can a =E2=80=9Clocked-up=E2=80=9D coin be unlocked to =
do the same.<br class=3D""></blockquote><br style=3D"font-family: =
Helvetica; font-size: 12px; font-style: normal; font-variant-caps: =
normal; font-weight: normal; letter-spacing: normal; text-align: start; =
text-indent: 0px; text-transform: none; white-space: normal; =
word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><span =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; float: none; =
display: inline !important;" class=3D"">You have shown no such thing, =
merely shown that you have not understood the proposal.</span><br =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><br=
 style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px;" =
class=3D""><span style=3D"font-family: Helvetica; font-size: 12px; =
font-style: normal; font-variant-caps: normal; font-weight: normal; =
letter-spacing: normal; text-align: start; text-indent: 0px; =
text-transform: none; white-space: normal; word-spacing: 0px; =
-webkit-text-stroke-width: 0px; float: none; display: inline =
!important;" class=3D"">Regards,</span><br style=3D"font-family: =
Helvetica; font-size: 12px; font-style: normal; font-variant-caps: =
normal; font-weight: normal; letter-spacing: normal; text-align: start; =
text-indent: 0px; text-transform: none; white-space: normal; =
word-spacing: 0px; -webkit-text-stroke-width: 0px;" class=3D""><span =
style=3D"font-family: Helvetica; font-size: 12px; font-style: normal; =
font-variant-caps: normal; font-weight: normal; letter-spacing: normal; =
text-align: start; text-indent: 0px; text-transform: none; white-space: =
normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; float: none; =
display: inline !important;" =
class=3D"">ZmnSCPxj</span></div></blockquote></div><br class=3D""><div =
class=3D"">I also struggle to communicate to Eric and likely many other =
reader the generic utility of temporary control of an UTXO. Let me try =
again:</div><div class=3D""><br class=3D""></div><div class=3D"">Bitcoin =
offers a memory with remarkable properties:</div><div class=3D"">- it =
can be read by anyone anywhere</div><div class=3D"">- anyone anywhere =
who knows a key controlling an UTXO, and only them, can initiate an =
update to the memory&nbsp;</div><div class=3D"">- global replicas =
guaranteed to apply updates of the memory within a short time =
period.</div><div class=3D""><br class=3D""></div><div class=3D"">This =
is a utility that is sufficient to implement money.&nbsp;</div><div =
class=3D""><br class=3D""></div><div class=3D"">Such a reliable shared =
memory could have however more uses than tracking money, It could keep =
track of, and thereby make scarce, arbitary other things.</div><div =
class=3D""><br class=3D""></div><div class=3D"">We can unlock these uses =
by separating the money use of memory from other uses.&nbsp;</div><div =
class=3D""><br class=3D""></div><div class=3D"">The covenant achives =
this separation temporarily. A UTXO with a covenant that guarantees that =
current owner re-gains control at a later time means,&nbsp;</div><div =
class=3D"">that the current owner temporarily forgoes the UTXOs use as =
money and thereby allows its temporary use to keep track of something =
else.&nbsp;</div><div class=3D"">UTXOs with different covenants or =
without covenant are not fungible.</div><div class=3D""><br =
class=3D""></div><div class=3D"">Why use UTXOs of significant value to =
track something that is not money? Because the reason the registry is =
used is to create scarcity and scarcity can be tailored to more =
or</div><div class=3D"">less severe by requiring more or less satoshis =
to track something.</div><div class=3D""><br class=3D""></div><div =
class=3D"">The current owner of a regular UTXO will want to be paid for =
temporarily giving up control, and that payment represents interest. =
Riskless, since it is certain to re-gain control.</div><div class=3D""><br=
 class=3D""></div><div class=3D"">Regards,</div><div class=3D""><br =
class=3D""></div><div class=3D"">Tamas Blummer</div><div class=3D""><br =
class=3D""></div><div class=3D""><br class=3D""></div><div class=3D""><br =
class=3D""></div><div class=3D""><br class=3D""></div><div class=3D""><br =
class=3D""></div></body></html>=

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