From mboxrd@z Thu Jan 1 00:00:00 1970 Return-Path: Received: from smtp4.osuosl.org (smtp4.osuosl.org [IPv6:2605:bc80:3010::137]) by lists.linuxfoundation.org (Postfix) with ESMTP id 1EDFEC002D for ; Wed, 18 May 2022 06:29:34 +0000 (UTC) Received: from localhost (localhost [127.0.0.1]) by smtp4.osuosl.org (Postfix) with ESMTP id F26EA40213 for ; Wed, 18 May 2022 06:29:33 +0000 (UTC) X-Virus-Scanned: amavisd-new at osuosl.org X-Spam-Flag: NO X-Spam-Score: -1.601 X-Spam-Level: X-Spam-Status: No, score=-1.601 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, SPF_HELO_PASS=-0.001, SPF_PASS=-0.001] autolearn=ham autolearn_force=no Authentication-Results: smtp4.osuosl.org (amavisd-new); dkim=pass (2048-bit key) header.d=protonmail.com Received: from smtp4.osuosl.org ([127.0.0.1]) by localhost (smtp4.osuosl.org [127.0.0.1]) (amavisd-new, port 10024) with ESMTP id N_f_oDUMshTx for ; Wed, 18 May 2022 06:29:32 +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 smtp4.osuosl.org (Postfix) with ESMTPS id BA388401ED for ; Wed, 18 May 2022 06:29:32 +0000 (UTC) Date: Wed, 18 May 2022 06:29:23 +0000 DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=protonmail.com; s=protonmail2; t=1652855369; x=1653114569; bh=nsq/r5liY6A0EQ5P7X8GRkeEb6+EmhYT9HqF7jJ2JXU=; h=Date:To:From:Cc:Reply-To:Subject:Message-ID:In-Reply-To: References:Feedback-ID:From:To:Cc:Date:Subject:Reply-To: Feedback-ID:Message-ID; b=JxBkdN2QQBvgx0wdgAk6mwPKGV5hm1Eq0DyCceBY2PKqZUDNpzITeP5b0r55rOw5T UT85FpU0mqIMKKfGsrrvD6JD7V7MfOPF5CQjAnMsVujGk9dtNQEOJLp+jtllmFI0V+ DoUvg0B7OrsGg4AQMRuvTnoRiiLyovhK40p0BSZcA0Jjqx6m+PIp+kB+aiqDyKymE+ 2PWnzJ2Svlyg7/HaZYO4XVjCA9dxRrMlozp5W7Qnk2aHx0XhcOvGfbnxJbQ3TpXlkd FBavYpUT5KXlQNtphJ/wGq+/eKNPvG9iMszHUpC4/Mb/67byCxFcUyJVh/glp7Uc5p NtJW17XxIzF5w== To: eric@voskuil.org From: ZmnSCPxj Reply-To: ZmnSCPxj Message-ID: In-Reply-To: <01d901d86a64$452ef9d0$cf8ced70$@voskuil.org> References: <48D4B621-D862-4031-AE43-3F54D34FB0B5@voskuil.org> <01c401d86a5c$956ddbd0$c0499370$@voskuil.org> <01d901d86a64$452ef9d0$cf8ced70$@voskuil.org> Feedback-ID: 2872618:user:proton MIME-Version: 1.0 Content-Type: text/plain; charset=utf-8 Content-Transfer-Encoding: quoted-printable Cc: 'Bitcoin Protocol Discussion' Subject: Re: [bitcoin-dev] BIP proposal: Timelocked address fidelity bond for BIP39 seeds 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: Wed, 18 May 2022 06:29:34 -0000 Good morning e, > Good evening ZmnSCPxj, > > Sorry for the long delay... Thank you very much for responding. > > > Good morning e, > > > > > Good evening ZmnSCPxj, > > > > > > For the sake of simplicity, I'll use the terms lender (Landlord), bor= rower > > > (Lessor), interest (X), principal (Y), period (N) and maturity (heigh= t after N). > > > > > > The lender in your scenario "provides use" of the principal, and is p= aid > > > interest in exchange. This is of course the nature of lending, as a p= eriod > > > without one's capital incurs an opportunity cost that must be offset = (by > > > interest). > > > > > > The borrower's "use" of the principal is what is being overlooked. To > > > generate income from capital one must produce something and sell it. > > > Production requires both capital and time. Borrowing the principle fo= r the > > > period allows the borrower to produce goods, sell them, and return th= e > > > "profit" as interest to the lender. Use implies that the borrower is = spending > > > the principle - trading it with others. Eventually any number of othe= rs end up > > > holding the principle. At maturity, the coin is returned to the lende= r (by > > > covenant). At that point, all people the borrower traded with are bag= holders. > > > Knowledge of this scam results in an imputed net present zero value f= or the > > > borrowed principal. > > > > But in this scheme, the principal is not being used as money, but as a = billboard > > for an advertisement. > > > > Thus, the bitcoins are not being used as money due to the use of the fi= delity > > bond to back a "you can totally trust me I am not a bot!!" assertion. > > This is not the same as your scenario --- the funds are never transferr= ed, > > instead, a different use of the locked funds is invented. > > > > As a better analogy: I am borrowing a piece of gold, smelting it down t= o make > > a nice shiny advertisement "I am totally not a bot!!", then at the end = of the > > lease period, re-smelting it back and returning to you the same gold pi= ece > > (with the exact same atoms constituting it), plus an interest from my b= usiness, > > which gained customers because of the shiny gold advertisement claiming= "I > > am totally not a bot!!". > > > > That you use the same piece of gold for money does not preclude me usin= g > > the gold for something else of economic value, like making a nice shiny > > advertisement, so I think your analysis fails there. > > Otherwise, your analysis is on point, but analyses something else entir= ely. > > > Ok, so you are suggesting the renting of someone else's proof of "burn" (= opportunity cost) to prove your necessary expense - the financial equivalen= t of your own burn. Reading through the thread, it looks like you are sugge= sting this as a way the cost of the burn might be diluted across multiple u= ses, based on the obscuration of the identity. And therefore identity (or a= t least global uniqueness) enters the equation. Sounds like a reasonable co= ncern to me. > > It appears that the term "fidelity bond" is generally accepted, though I = find this an unnecessarily misleading analogy. A bond is a loan (capital at= risk), and a fidelity bond is also capital at risk (to provide assurance o= f some behavior). Proof of burn/work, such as Hash Cash (and Bitcoin), is m= erely demonstration of a prior expense. But in those cases, the expense is = provably associated. As you have pointed out, if the burn is not associated= with the specific use, it can be reused, diluting the demonstrated expense= to an unprovable degree. Indeed, that is why defiads used the term "advertisement" and not "fidelity= bond". One could say that defiads was a much-too-ambitious precursor of this propo= sed scheme. > I can see how you come to refer to selling the PoB as "lending" it, becau= se the covenant on the underlying coin is time constrained. But nothing is = actually lent here. The "advertisement" created by the covenant (and its pr= esumed exclusivity) is sold. This is also entirely consistent with the idea= that a loan implies capital at risk. While this is nothing more than a ter= minology nit, the use of "fidelity bond" and the subsequent description of = "renting" (the fidelity bond) both led me down another path (Tamas' proposa= l for risk free lending under covenant, which we discussed here years ago). Yes, that is why Tamas switched to defiads, as I had convinced him that it = would be similar enough without actually being a covenant scam like you des= cribed. > In any case, I tend to agree with your other posts on the subject. For th= e burn to be provably non-dilutable it must be a cost provably associated t= o the scenario which relies upon the cost. This provides the global uniquen= ess constraint (under cryptographic assumptions of difficulty). Indeed. I suspect the only reason it is not *yet* a problem with existing JoinMarke= t and Teleport is simply that no convenient software currently exists which= allows the same bond to be used by both, thus making it safe in practice b= ut not in theory. But the theory implies that if somebody does make such software, effectivel= y both systems will become joined as effectively only a single identity exi= sts in both systems. This may not be a problem either since the intent is that Teleport will obs= olete JoinMarket someday, but if other applications start using the same sc= heme without requiring a commitment to a specific application, this may als= o effectively render Teleport less useful as well. Regards, ZmnSCPxj