Subject: Re: [bitcoin-dev] Proof of reserves - recording

From: Billy Tetrud <[email-masked]>
Date: Fri, 9 Jul 2021 15:02:23 -0700

@Voskuil
> You can prove that in your own wallet. All other scenarios imply lending
(which is what is implied by “reserve”) and lending cannot be 100% reserve.

You're using terms in non-standard ways. Putting money into a bank is not
considered "lending" to the bank. You may make a case that you're lending
to a bank, and that they legally owe you repayment of that money on demand
limited by the terms you mentioned. But regardless of a case that can be
made there, pretty much no one considers that "lending". Since you you like
defining things legally, depositing money in a bank is legally not defined
as lending to the bank.

So no, all other scenarios do not imply lending. You can have your coins in
custody with someone else, and that someone else can keep 100% reserves if
they choose (or agreed to) and can prove it to you via the method I
described or the methods others have linked to.

> They are time deposits, read your bank agreement.

You are not correct
<https://www.investopedia.com/terms/t/timedeposit.asp#:~:text=A%20time%20deposit%20is%20an,pre%2Dset%20date%20of%20maturity.&text=Time%20deposits%20generally%20pay%20a,of%20investment%20is%20term%20deposit.>.
Another source
<https://www.slsp.sk/en/personal/faq/what-is-the-difference-between-a-term-deposit-and-savings-account>
if you don't believe me. The only way you would be correct is if banks were
committing fraud and calling something a "savings account" when it isn't in
fact a savings account.

> money markets have had no reserve requirement and have a nearly spotless
record of satisfying their obligations.

Lol, money markets are so new that they've had no opportunity to show their
true risk. In the finance world, things work fine for a long time until
they fail spectacularly, losing more than the gain they made in the first
place. This is a regular occurence. Its the reason bitcoin was created.

> Irrelevant.

It is certainly not irrelevant. People have been lead to believe that they
can withdraw their money from their accounts. People expect this. Banks are
doing nothing to educate people on the limitations of that fact. PoR would
give people the ability to see quite accurately how much reserves there are
and can use this knowledge to put pressure on institutions to keep the
reserves those people think they should keep.

> Without 100% “reserve” there is no way to cryptographically demonstrate
“solvency”.

You can show proof that you're 80% solvent, and then claim the other 20% is
in other assets. This is, again, still useful.

>The schemes don’t preclude hacks, insider or otherwise, bankruptcy, or
state seizure, no matter what the reserve

You're right, but that's irrelevant.

But it seems like you're not interested in understanding what I'm saying or
discussing these things honestly. So I'm going to end my conversation with
you here.

On Fri, Jul 9, 2021 at 11:32 AM Eric Voskuil via bitcoin-dev <
[email-masked]> wrote:

>
> > On Jul 9, 2021, at 10:44, Billy Tetrud <[email-masked]> wrote:
> >
> > >  there is an unsupportable leap being made here
> >
> > You think that because you're misinterpreting me. I'm in no way claiming
> that any solvent company can prove it, I'm simply claiming that any company
> can prove that they have bitcoin reserves to cover bitcoins promised as
> account balances.
>
> You can prove that in your own wallet. All other scenarios imply lending
> (which is what is implied by “reserve”) and lending cannot be 100% reserve.
>
> > > Banks (lending institutions) do not operate under any such pretense
> >
> > You seem to be saying that banks are under no legal obligation to serve
> cash on demand to customers. While you might be right,
>
> I am, as banks are lending institutions.
>
> > again you're misinterpreting me. Banks do in fact make claims to their
> customers that they'll be able to get cash out of their account on demand.
>
> Up to the insured limit, in 7 days. This is of course true because the
> taxpayer has insured the bank to that level.
>
> > They're called demand deposit accounts for a reason.
>
> They are time deposits, read your bank agreement. Not that it makes any
> difference. How the contract is satisfied is not a term of the contract,
> just that it is. And as I pointed out, money markets have had no reserve
> requirement and have a nearly spotless record of satisfying their
> obligations.
>
> > And certainly customers expect to be able to withdraw their cash on
> demand.
>
> Irrelevant.
>
> > > With a 100% of investment cash hoard, there is zero lending and zero
> return
> >
> > I did say "pretend" did I not?
>
> See above.
>
> > > “relate to” is a far cry from 100% “reserve”
> >
> > Indeed. Again, you seem to be misunderstanding me. You're putting the
> words "100% reserve" in my mouth, when I never said any such thing. Proof
> of 80%/50%/20% reserves is still useful if that's the clear expectation for
> the customer/client.
>
> Without 100% “reserve” there is no way to cryptographically demonstrate
> “solvency”. And even with that, investors would have to accept the promise
> that there are no other liabilities.
>
> The schemes don’t preclude hacks, insider or otherwise, bankruptcy, or
> state seizure, no matter what the reserve.
>
> It’s information, sure, but it’s not what people seem to think. If one
> wants full reserve banking, use a wallet. If one wants to invest, the money
> will be spent - that’s why it was raised. There can be no covenant placed
> on it that will ensure it’s return.
>
> e
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