Author: Andy Schroder 2020-07-21 05:25:44
Published on: 2020-07-21T05:25:44+00:00
The article delves into the concept of a Cryptographic Relay, which is an electrical component that enables control of an electrical circuit using a public key. The relay only needs to know its current owner and can receive messages with a signature verifiable by the public key. This relay can be used in a Succinct Atomic Swaps operation, which allows for an atomic swap between two assets that do not exist in a single asset-assignment system.However, it is not possible to transport this construction over the Lightning Network because it requires different timeouts at each forwarding hop. Therefore, the article proposes giving the Cryptographic Relay a notion of time that makes it compatible with PTLCs that can be routed over Lightning. This notion of time can be implemented using block header hashes, as they are low-entropy.The article also discusses the concept of Maxwell's Demon, which is an entity that guards a hole between two containers containing air and lets high-temperature molecules pass from one side to another. Refrigerators work on the same principle but consume mechanical energy and emit heat, increasing the universal level of entropy.Using Cryptographic Relays, lenders can check whether a car is still under ownership by verifying its blockchain history and checking if the time lock has expired. This eliminates the need for a centralized third party to verify ownership and allows for more secure and efficient lending. The proposed Cryptographic Relay device is simple and requires no consensus system, making it easy to implement and manufacture by multiple manufacturers. It allows for secure ownership transfer and delegation of operators, making it suitable for use in smart devices. In the scenario of tight financial straits, a borrower may need to take out a loan using Bitcoin as collateral. With SIGHASH_ANYPREVOUT and Taproot, it is now possible to arrange a collateralized loan on a cryptographic car in a trustless manner. The loan shark and borrower generate two keypairs: one for the loan-out transaction and another for the loan-payback transaction. The loan shark then arranges the loan in a multi-step process involving multiple PTLC-like constructions.Once the loan is secured, the borrower can pay back the loan before the due date or risk losing their car to recoup the loan shark's losses. It is possible to use similar setups over Lightning, but there is no need for a SIGHASH_ANYPREVOUT in this case. Instead, the loan shark may issue a long-lived invoice that lets the borrower learn its signature share for the collateral-reclaim command signature. Overall, this process requires generating multiple commands and signatures involving the borrower, their husbands, and the loan shark. If successful, the borrower can obtain the loan they need while keeping their cryptographic car as collateral. Although using a publicly-auditable blockchain may seem like a solution to tr\*st issues, it does not necessarily guarantee that the real-world asset will respond to the public key assigned to it. Ultimately, possession remains 9/10ths of the law, but the use of Cryptographic Relays can provide an additional layer of security.
Updated on: 2023-06-14T03:05:00.952102+00:00