Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve [combined summary]

• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-09 20:32:53+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-07 09:18:04+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-06 13:34:31+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-06 10:12:44+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-04 17:10:31+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-02 12:51:31+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-02 10:14:32+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-02 09:47:09+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-02 09:30:31+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-02 06:38:55+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-07-02 05:08:53+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-06-30 20:26:29+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-06-30 19:55:41+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-06-30 18:35:33+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-06-30 10:56:46+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve David A. Harding 2019-06-29 18:21:03+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-06-28 19:21:56+00:00
• Generalized covenants with taproot enable riskless or risky lending, prevent credit inflation through fractional reserve Tamas Blummer 2019-06-28 08:27:16+00:00

Published on: 2019-07-09T20:32:53+00:00

Summary:

The email thread revolves around the concept of a "Bitcoin Classified Ads Network" (BCAN) and its potential to create censorship-resistant networks that provide riskless interest on Bitcoin. In BCAN, nodes share advertisements referring to unspent transaction outputs (UTXOs) at the chain tip. Advertisements have a size limit and include a commitment to the text. If nodes exceed this limit, they sort advertisements by value-rate and remove low-value ones. Sellers aim to minimize the value in UTXOs backing their ads. Rent for advertisements is paid to joinmarket makers and LN forwarding nodes. Users can query their own BCAN node for specific advertisements without compromising privacy.The author criticizes Eric's cryproeconomic theories, stating that they accurately describe Bitcoin as money but fail to consider reliable memory for other uses. They argue that if memory had more uses, even temporarily, it would have utility and value. However, Bitcoin lacks consensus rules to enable reliable alternate uses. The finite supply of coins implies a finite memory capacity, making units temporarily un-fungible. This leads to competition for memory units and a price paid to enable alternate use. Giving up temporary control has a positive price, and return of control is certain, resulting in riskless interest. The author suggests designing systems to sustain Bitcoin while avoiding burning for unlimited uses.The conversation between Eric Voskuil and ZmnSCPxj focuses on encumbering UTXOs in an ad market and its relationship to opportunity cost. ZmnSCPxj argues that early recovery of UTXOs eliminates time lock costs, but Eric asserts that he is discussing cryptoeconomic principles, not implementation details. Eric claims that multisig unlock reduces UTXOs to just UTXOs, removing actual encumbrance. Any UTXO can prove ownership in the ad network, but higher-value UTXOs may be prioritized by limited-bandwidth services. Tamas Blummer concludes the email chain.Another email exchange between ZmnSCPxj and Eric Voskuil discusses using the unspentness-time of a UTXO for advertising services or producers. This allows merchants to recover locked funds by spending the advertising UTXO once the stock is sold. The proposal separates fund owners from users, enabling dynamic maturity. Burning is considered unsustainable, so the covenant enables temporary use of UTXOs for something other than money. The current owner of a UTXO will be paid for temporarily giving up control, representing interest.Tamas Blummer and Eric Voskuil discuss imposing costs on use without direct billing. Methods include burning Bitcoins, paying high fees in self-dealing transactions, time-locking own Bitcoins, paying someone else to time-lock, and transferable borrowed Bitcoin. Eric suggests that community hashcash spam protection can raise encumbered coin requirement for advertising threshold price. They also discuss "renting a UTXO of substantial value" and its viability. However, Eric is not fully supportive of generalized covenants as he believes the use-case already exists. ZmnSCPxj presents another use case involving a "Bitcoin Classified Ads Network," where nodes preferentially keep higher-value backed advertisements.Tamas Blummer and ZmnSCPxj discuss the use of temporary control UTXOs for services that require it. If there is demand, users pay fees to the service provider and cover opportunity cost paid to the original holder. Temporary access to significant-value UTXOs induces opportunity cost for users, while burning ordinary UTXOs is seen as unsustainable. Temporary access UTXOs with covenants can build spam-limited public services without an operator and offer HODLers riskless interest.The value of an encumbered UTXO is reduced due to governance by different rules in a de-facto side chain. Renting an encumbered UTXO is only valuable for the advertisement, not opportunity cost. Temporary access through covenants allows anyone with control to recover the cost by sub-renting. Committing to a public key instead of advertisements is suggested, but it risks the HODLer's funds if the advertiser misbehaves.Tamas Blummer and ZmnSCPxj discuss solving problems using covenants. Consensus support is necessary only if an unchained setup is closed uncooperatively. An advertising scheme involving committing a public key on the UTXO is proposed, but it requires trusting the advertising service, which goes against the trustless separation provided by covenants.ZmnSCPxj suggests the Graftroot idea, committing a public key on the UTXO and using a SCRIPT signed by the public key to unlock it.

Updated on: 2023-08-02T01:04:01.587059+00:00