From mboxrd@z Thu Jan 1 00:00:00 1970 Return-Path: Received: from smtp1.osuosl.org (smtp1.osuosl.org [IPv6:2605:bc80:3010::138]) by lists.linuxfoundation.org (Postfix) with ESMTP id 90816C000E for ; Sat, 10 Jul 2021 01:26:26 +0000 (UTC) Received: from localhost (localhost [127.0.0.1]) by smtp1.osuosl.org (Postfix) with ESMTP id 7E3EF83DEC for ; Sat, 10 Jul 2021 01:26:26 +0000 (UTC) X-Virus-Scanned: amavisd-new at osuosl.org X-Spam-Flag: NO X-Spam-Score: -1.599 X-Spam-Level: X-Spam-Status: No, score=-1.599 tagged_above=-999 required=5 tests=[BAYES_00=-1.9, DKIM_SIGNED=0.1, DKIM_VALID=-0.1, DKIM_VALID_AU=-0.1, DKIM_VALID_EF=-0.1, FREEMAIL_FROM=0.001, FROM_LOCAL_NOVOWEL=0.5, RCVD_IN_MSPIKE_H4=0.001, RCVD_IN_MSPIKE_WL=0.001, SPF_HELO_PASS=-0.001, SPF_PASS=-0.001] autolearn=ham autolearn_force=no Authentication-Results: smtp1.osuosl.org (amavisd-new); dkim=pass (1024-bit key) header.d=protonmail.com Received: from smtp1.osuosl.org ([127.0.0.1]) by localhost (smtp1.osuosl.org [127.0.0.1]) (amavisd-new, port 10024) with ESMTP id Pk7Lc-LwdIpc for ; Sat, 10 Jul 2021 01:26:25 +0000 (UTC) X-Greylist: domain auto-whitelisted by SQLgrey-1.8.0 Received: from mail-4325.protonmail.ch (mail-4325.protonmail.ch [185.70.43.25]) by smtp1.osuosl.org (Postfix) with ESMTPS id F3B3983DEB for ; Sat, 10 Jul 2021 01:26:24 +0000 (UTC) Date: Sat, 10 Jul 2021 01:26:14 +0000 DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=protonmail.com; s=protonmail; t=1625880381; bh=++wpVgAhth6ENN7B9GyezDIFzYpmOlnvcnQU3XTvl+c=; h=Date:To:From:Cc:Reply-To:Subject:In-Reply-To:References:From; b=QShrF/uPNbRSp/ezvPncZSXkpwMiCufecAc0sC6BRanBL9v9mVKbdIBW5U74EuAEy sXs2XiA/h/abWaqzYKAMBRNMNFQ0m8+B8XTh4gt0mGRKDl5mYmsCtB6nMEbhZFCP8w Q/qWveLBzILP1GdXhUs3UYtdzbrUIvnFBS1up3QQ= To: "eric@voskuil.org" From: ZmnSCPxj Reply-To: ZmnSCPxj Message-ID: In-Reply-To: <00fb01d77525$7e9913c0$7bcb3b40$@voskuil.org> References: <00e201d77518$b8ed8e00$2ac8aa00$@voskuil.org> <00fb01d77525$7e9913c0$7bcb3b40$@voskuil.org> MIME-Version: 1.0 Content-Type: text/plain; charset=utf-8 Content-Transfer-Encoding: quoted-printable Cc: 'Bitcoin Protocol Discussion' , 'Billy Tetrud' Subject: Re: [bitcoin-dev] Proof of reserves - recording X-BeenThere: bitcoin-dev@lists.linuxfoundation.org X-Mailman-Version: 2.1.15 Precedence: list List-Id: Bitcoin Protocol Discussion List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Sat, 10 Jul 2021 01:26:26 -0000 Good morning e, Okay, it seems to me that what you are saying is something like this: > Proof-of-reserves would (partially) work for a "pure" warehousing service= (i.e. user pays some fee, service keeps money and provides proofs that mon= ey is kept). > However, "pure" warehousing is not what a typical exchange does (else the= explicit fees in their exchanges would be higher), as it takes on risk due= to having to deal with non-Bitcoin monopoly money (by definition, since th= ey are *exchanges*). > Further, with Bitcoin you can be your own warehouse (including Green-like= multisig schemes where you own your own keys that are part of the scheme),= which is an alternative choice to hiring a "pure warehouse" (i.e. Safe Dep= osit). Would that be a fair (if somewhat rough and undetailed) restatement? Regards, ZmnSCPxj > > Good morning e, > > Good afternoon Z. > > > > Any expectation of interest implies borrowing, in other words, a = loan to > > > > > > > the bank. > > Perhaps this is the key point of contention? > > I'm not sure, but from my observations it's long been a point of confusio= n in Bitcoiner understanding of banking. > > To put a finer point on it, Rothbard's criteria is a vague in a couple wa= ys. Earnings that offset fees are also "interest" in the economic context -= in which he writes. So even a zero-interest account (or negative up to the= full cost of maintaining the account) qualifies under this criterion. Yet = he is careful to say "implies". The arrangement may of course be explicit, = in which case one no longer relies on implied contract, one relies on expli= cit contract. Finally, one may "expect" no interest, and even pay fees, but= it may nonetheless be a loan. This is what contracts are for. > > If one contracts for warehousing service, such Safe Deposit, as opposed t= o a time deposit, such as Certificate of Deposit, Savings Account, or Check= ing Account, then one gets a warehousing service - full fees and a contract= ual obligation to maintain 100% of the deposit. There are also money transm= ission services that move money around for a fee. The inability to distingu= ish money from credit (including money substitutes) and warehousing from in= vestment (including "banking") leads directly to false conclusions regardin= g money and banking. Unfortunately a good number of self-described "Austria= ns" perpetuate these errors. > > > In cases where Bitcoin is given over to an exchange, there is no expect= ation > > of interest, at least in the sense that there is no expectation that th= e number > > of Bitcoins deposited in the exchange increase over time. > > (There may be an expectation of an increase in the number of green-ink > > historical commemoration papers it can buy, but the point is that the n= umber > > of Bitcoins held in behalf of the user is not expected to change) > > The expectation is that exchanges earn money from the difference betwee= n > > buy-price and sell-price, and the money-warehousing service they provid= e is > > simply provided for free to facilitate their main business (i.e. broker= s for > > exchange). > > Thus, the expectation is that the exchange provides a warehouse service= , > > not a bank service, and this service is provided for free since it enab= les their > > real business of earning from bid-ask spreads. > > I'm not aware of what are people's expectations, nor would I judge what q= ualifies as someone's "real" business, but a warehouse that facilitates tra= des for a fee is of course a possible business model. PayPal's intended (re= al?) business model was to earn from the float. That didn't pan out, becaus= e people didn't retain money in their transmitter service. > > Exchanges that deal in monopoly money must move this through traditional = finance. This incurs all manner of risk. When someone sends them monopoly m= oney, there is no crypto-surety possible. This is part of their "reserve" j= ust as is the other side of trades. > > What matters is what people contract for - agree to, voluntarily. > > > On the other hand, not your keys not your coins, so anyone who uses suc= h a > > warehouse has whatever happens to the funds coming for them... > > One of the essential benefits of Bitcoin being that you can be your own w= arehouse, and be your own money transmitter. > > But all production requires investment, which inherently entails letting = go of your money, producing something with it, and selling it to people for= other money. All investment is from someone's "reserve". Full reserve inve= stment (including banking) is an oxymoron. So whether through exchanges or = otherwise, there will be production, risk, loss and earnings. Otherwise the= re will be nothing at all to buy, and all money will be worthless. This ide= a of assuring that money is fully reserved applies only to that which one d= oes not invest (one's hoard); it does not apply to banks, or the capital of= any other companies. If it can help people feel better about their Safe De= posit (warehousing), I'm all for it. But if one wants a 20% bitcoin reserve= , one can certainly place 20% into cold storage. > > > And of course exchanges need not earn money just from bid-ask spreads > > in practice, so they are unlikely to provide proof-of-reserves either. > > If they did not earn money as a bank, the explicit cost of their services= would be that much higher. Which people prefer is of course entirely up to= them. I don't know which is more likely. > > > Indeed, money warehousing may very well be provided by means other than > > proof-of-reserves, such as by using multisig the way Green wallet does,= with > > better security. > > Right, this is an aspect of using your own wallet. > > > Perhaps "pure exchanges" would be more amenable to such a scheme > > rather than proof-of-reserves. > > Or simply pairing traders, which is of course an existing model. > > Best, > e > > > Regards, > > ZmnSCPxj