Author: Thomas Hartman 2020-08-16 15:41:30
Published on: 2020-08-16T15:41:30+00:00
The context begins with paying respects to Tamas Blummer, who proposed an additional opcode for enabling Bitcoin difficulty futures. Trusted third parties are security holes and oracles in blockchain clothing are just trusted third parties, so truly TTP-free oracle-free on-chain contracts are good. Difficulty is a proxy for energy, which is a proxy for USD, which everyone currently cares about, which is bad. Energy is real. Bitcoin traders should care about future difficulty, not future USD price. The idea of adding a single op_difficulty operation is proposed, which would enable binary options on difficulty. However, binary options are more of a gamble than a hedge and are prone to fraud and hence banned by regulators in many jurisdictions as a form of gambling. True difficulty futures can be far healthier for bitcoin than binary options. Additional opcodes and protocol changes beyond just op_difficulty are required to get true difficulty futures on-chain. An example of a difficulty future that pays out in sats of the next difficulty divided by a trillion is given, where one address gets current difficulty / trillion, and the other address gets however much value is locked in the utxo minus that amount and miner fee. One additional opcode required is division. It is unclear if there is a way to solve the accounting for the payouts, but perhaps there is a way to do this with covenants. The author seeks advice on this as he is new to protocol and script.
Updated on: 2023-06-14T15:10:28.174989+00:00