Re: [bitcoin-dev] PathCoin

[Billy Tetrud <billy.tetrud@gmail.com>]

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> what is the incentive for the honest party to punish?

Justice. Also, there's no incentive for the honest party to not punish -
presumably their software would automatically punish, and why go through
any effort to stop it? A 1 cent bribe certainly wouldn't be enough. Maybe a
$10 bribe might get someone somewhere to install hacked up software to be
able to fulfill such a bribe, but even then i think it would be a rare
person that would stoop to that. Were it to become a true negotiation, the
cheater has more to lose, and therefore the bribee has a lot of leverage.

> my strong intuition is that it will never be properly stable.

I'm curious what you mean by "stable". You had mentioned the game theory is
"fragile" and I'm wondering if there's more to this than just "what
incentive does the honest party have to burn?"

To be clear, I'm not advocating for Sabu and I haven't done any deep
thinking about burn based incentives.

One thing I thought of regarding path coin, if there's ever a situation
where there are multiple choices in path, whatever punishment there is
probably needs to be able to handle the multiple of the number of paths.
The only way around this i can imagine is to have some method of
coordination between payees, eg a place where a payee records their payment
such that a payee who has been double spent on to become aware they've been
double spent on and initiate the punishment. But once you have that
coordination mechanism it starts not looking more like an on chain
transaction.

On Tue, Jan 25, 2022, 06:50 AdamISZ <AdamISZ@protonmail.com> wrote:

> Hi Billy,
> I read through the description. I think systems like this *mostly* fail
> due to game theory.
>
> With punishment-by-burn you have various issues that make it to my mind
> pretty unstable, too unstable to use for any serious system. To be fair,
> this isn't cut-and-dried. So let me unpack:
>
> (I briefly touched on why I dismissed penalties via burn in my gist,
> section: "Not feeling the burn".)
>
> There is a distinction between penalty via burn to unspendable output and
> penalty via burn to miner fees. The latter has an obvious problem: if your
> counterparties collude with (or are) miners, they may not actually be
> penalized at all (now to be clear, that is a problematic attack ex nihilo:
> nobody usually can be sure who's mining the next block, but markets have a
> way of solving and coordinating such things: see e.g. the various MEV
> discussions and initiatives in Ethereum for an example of that).
>
> But the former (provable burn) is still imo extremely unstable: if the
> penalty tx destroys all the money, what is the incentive for the honest
> party to punish? In such a scenario even a one cent donation from the
> attacker to the victim might prevent the penalty from happening.
> You can combine 'destruction of most, or some, of the funds' with a
> smaller payout to the aggrieved party, but then again you have to factor in
> the possibility of bribes. The Sabu post you linked describes it as: "There
> are precise and delicate formulas for calculating the amount of loss of the
> issuer and the creditor, which ensures that just and true act in both
> parties are cost-effective in all situations." I agree it's delicate, but
> after having spent time looking into these things, my strong intuition is
> that it will never be properly stable.
>
> In the PathCoin description I am specifically looking for a trustless
> system, with this finesse: we still count it as trustless even though we
> are using penalties as disincentive, because the penalty *consists of a
> payment directly from the attacker to the attacked, and that payment is
> larger than the amount stolen*. I claim that that *is* stable.
>
> Notice that Lightning has the same model (in LN-Penalty), as long as
> 'claiming the whole channel capacity' is enough to be larger than what is
> stolen (see: channel reserves etc.).
>
> Sent with ProtonMail <https://protonmail.com/> Secure Email.
>
>
> ‐‐‐‐‐‐‐ Original Message ‐‐‐‐‐‐‐
> On Tuesday, January 25th, 2022 at 11:53, Billy Tetrud via bitcoin-dev <
> bitcoin-dev@lists.linuxfoundation.org> wrote:
>
> There was a protocol someone mentioned a while back called Sabu that had
> the same goals. As i recall, it had some pretty promising constructs, but
> would have a critical vulnerability that could be exploited by miners. This
> is the write up:
>
>
> https://raymo-49157.medium.com/time-to-boost-bitcoin-circulation-million-transactions-per-second-and-privacy-1eef8568d180
>
> Perhaps some of the techniques there could be combined with your ideas to
> get closer to a solution.
>
> On Mon, Jan 24, 2022, 08:51 AdamISZ via bitcoin-dev <
> bitcoin-dev@lists.linuxfoundation.org> wrote:
>
>> Hello list,
>>
>> I took the time to write up this rather out-there idea:
>>
>> Imagine you wanted to send a coin just like email, i.e. just transfer
>> data to the counterparty.
>>
>> Clearly this is in general entirely impossible; but with what
>> restrictions and assumptions could you create a toy version of it?
>>
>> See this gist for a detailed build up of the idea:
>>
>> https://gist.github.com/AdamISZ/b462838cbc8cc06aae0c15610502e4da
>>
>> Basically: using signature adaptors and CTV or a similar covenant, you
>> could create a fully trustless transfer of control of a utxo from one party
>> to another with no interaction with the rest of the group, at the time of
>> transfer (modulo of course lots and lots of one-time setup).
>>
>> The limitations are extreme and as you'd imagine. In the gist I feel like
>> I got round one of them, but not the others.
>>
>> (I very briefly mention comparison to e.g. statechains or payment pools;
>> they are making other tradeoffs against the 'digital cash' type of goal.
>> There is no claim that this 'pathcoin' idea is even viable yet, let alone
>> better than those ideas).
>>
>> Publishing this because I feel like it's the kind of thing imaginative
>> minds like the ones here, may be able to develop further. Possibly!
>>
>>
>> waxwing / AdamISZ
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>
>

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