Author: AdamISZ 2022-01-25 12:50:32
Published on: 2022-01-25T12:50:32+00:00
In an email exchange on the Bitcoin-dev mailing list, AdamISZ introduced an idea for creating a toy version of sending coins like email, which relies on signature adaptors and CTV or similar covenants. The proposal is for 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. While acknowledging that the limitations are extreme, AdamISZ published the idea in the hope that imaginative minds may be able to develop it further. Responding to the proposal, Billy Tetrud indicated that he thought systems like this mostly fail due to game theory. Specifically, he dismissed penalties via burn as too unstable to use for any serious system. He distinguishes between penalty via burn to unspendable output and penalty via burn to miner fees, stating that the latter has an obvious problem: if counterparties collude with (or are) miners, they may not actually be penalized at all. However, he argues that even provable burn is still extremely unstable, since if the penalty transaction destroys all the money, there would be no incentive for the honest party to punish. Furthermore, he points out the possibility of bribes when combining destruction of most or some of the funds with a smaller payout to the aggrieved party. Tetrud claims that a trustless system using penalties as disincentive can still be counted as trustless as long as the penalty consists of a payment directly from the attacker to the attacked, and that payment is larger than the amount stolen. He believes that this is stable, citing Lightning as having the same model, as long as claiming the whole channel capacity is enough to be larger than what is stolen.
Updated on: 2023-06-15T15:28:19.918792+00:00