Subject: Re: [bitcoin-dev] BIP proposal: Timelocked address fidelity bond for BIP39 seeds

From: Chris Belcher <[email-masked]>
Date: Fri, 13 May 2022 11:02:20 +0100

Hello waxwing,

 > A user sacrifices X amount of time-value-of-money (henceforth TVOM) 
by committing in Joinmarket with FB1. He then uses the same FB1 in 
Teleport, let's say. If he gets benefit Y from using FB1 in Joinmarket, 
and benefit Z in Teleport, then presumably he'll only do it if 
(probabilistically) he thinks Y+Z > X.

 > But as an assessor of FB1 in Joinmarket, I don't know if it's also 
being used for Teleport, and more importantly, if it's being used 
somewhere else I'm not even aware of. Now I'm not an economist I admit, 
so I might not be intuit-ing this situation right, but it fees to me 
like the right answer is "It's fine for a closed system, but not an open 
one." (i.e. if the set of possible usages is not something that all 
participants have fixed in advance, then there is an effective Sybilling 
problem, like I'm, as an assessor, thinking that sacrificed value 100 is 
there, whereas actually it's only 15, or whatever.)

I don't entirely agree with this. The value of the sacrifice doesn't 
change if the fidelity bond owner starts using it for Teleport as well 
as Joinmarket. The sacrifice is still 100. Even if the owner doesn't run 
any maker at all the sacrifice would still be 100, because it only 
depends on the bitcoin value and locktime. In your equation Y+Z > X, 
using a fidelity bond for more applications increases the 
left-hand-side, while the right-hand-side X remains the same. As 
protection from a sybil attack is calculated using only X, it makes no 
difference what Y and Z are, the takers can still always calculate that 
"to sybil attack the coinjoin I'm about to make, it costs A btc locked 
up for B time".

Regarding fidelity bonds being used for both, I expect that most 
fidelity bond owners will use their bonds with both Joinmarket and 
Teleport, to not do that is just leaving money on the table.

If an attacker locks up the 100k btc or whatever the requirement is now, 
and actually does a successful sybil attack against Joinmarket, then 
they could at the same time do a successful sybil attack against 
teleport with little added cost. So both markets form a single fidelity 
bond ecosystem. This is a similar situation to merge-mining bitcoin with 
an altcoin that also uses SHA256^2 for proof of work. The two or more 
coins form one mining ecosystem. This results in the users of the small 
altcoin benefiting from having their transactions protected by bitcoin's 
massive hashrate. In this analogy the new small Teleport system can very 
quickly benefit from the large amount of fidelity bonds already used in 
Joinmarket.

Yes the hypothetical attacker can attack all systems at once, but the 
defenders can defend all systems at once (and we can say not just that 
they "can" do it, but that they "will" do it, or else they leave money 
on the table). The mathematics which gives a huge advantage to the 
defender still applies.

----

You've convinced me that specifying the exact form of the fidelity bond 
certificate is a bad idea. I'll leave it more general, saying just that 
wallets should be able to do SignMessage using the timelocked privkey. 
And I'll leave the example signature in the test vectors.

I've made edits to this effect on the gist:
https://gist.github.com/chris-belcher/7257763cedcc014de2cd4239857cd36e/revisions#diff-4f1f364f340b78bdfe9dca2ff50784bd312d49be220e5e5c2e4675447f79c6e8

It's worth noting that even if the certificate message is different 
across the two systems, a fidelity bond owner can still create two 
signatures over two different messages (e.g. 
"fidelity-bond-cert|<pubkey>|<expiry>" and 
"fidelity-bond-cert-teleport|<pubkey>|<expiry>").