Re: [bitcoin-dev] OP_DIFFICULTY to enable difficulty hedges (bets) without an oracle and 3rd party.

From: "Jorge Timón" <jtimon@jtimon.cc>
To: Tamas Blummer <tamas.blummer@gmail.com>,
	 Bitcoin Protocol Discussion
	<bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] OP_DIFFICULTY to enable difficulty hedges (bets) without an oracle and 3rd party.
Date: Thu, 23 May 2019 21:03:09 +0200	[thread overview]
Message-ID: <CABm2gDoFS=dNbqzEo+RcWb32Kx4QM7YHLxYLOG54a=RGR8rQcw@mail.gmail.com> (raw)
In-Reply-To: <42F53D61-BAAE-464F-BB0D-4D0CDC554D9A@gmail.com>

The complains I could imagine about this, (apart from being a very
specific use case) are the same complains I heard about op_expiry.
Namely, that in a reorg, the same tx, having been valid in a given
block could potentially become invalid in some other block mining it.
I guess in this case the situation is less likely in this case than
with op_expiry, but it is still possible.
Another complain I could imagine is this kind of forces the
implementation to break some existing encapsulations, but I guess
those are just implementation details not that relevant here.
I personally don't have strong feelings towards this proposal one way
or the other, I'm just imagining what other people may complain about.

On Thu, May 23, 2019 at 8:33 PM Tamas Blummer via bitcoin-dev
<bitcoin-dev@lists.linuxfoundation.org> wrote:
>
> Difficulty change has profound impact on miner’s production thereby introduce the biggest risk while considering an investment.
> Commodity markets offer futures and options to hedge risks on traditional trading venues. Some might soon list difficulty futures.
>
> I think we could do much better than them natively within Bitcoin.
>
> A better solution could be a transaction that uses nLocktime denominated in block height, such that it is valid after the difficulty adjusted block in the future.
> A new OP_DIFFICULTY opcode would put onto stack the value of difficulty for the block the transaction is included into.
> The output script may then decide comparing that value with a strike which key can spend it.
> The input of the transaction would be a multi-sig escrow of those who entered the bet.
> The winner would broadcast.
>
> Once signed by both the transaction would not carry any counterparty risk and would not need an oracle to settle according to the bet.
>
> I plan to draft a BIP for this as I think this opcode would serve significant economic interest of Bitcoin economy, and is compatible with Bitcoin’s aim not to introduce 3rd party to do so.
>
> Do you see a fault in this proposal or want to contribute?
>
> Tamas Blummer
>
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