Re: [bitcoin-dev] OP_DIFFICULTY to enable difficulty hedges (bets) without an oracle and 3rd party.

From: Tamas Blummer <tamas.blummer@gmail•com>
To: Nathan Cook <nathan.cook@gmail•com>
Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] OP_DIFFICULTY to enable difficulty hedges (bets) without an oracle and 3rd party.
Date: Thu, 23 May 2019 21:54:43 +0200	[thread overview]
Message-ID: <FC1E77CA-929C-40E1-A80E-ADC1CBD65A6E@gmail.com> (raw)
In-Reply-To: <09724852-6971-4E5A-AAB5-3FBAEEA1D995@gmail.com>

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Block hash can suggest much higher difficulty than what is in effect, so OP_CHECKBLOCKATHEIGHT would not work to decide if difficulty is above the level of the bet.

> On May 23, 2019, at 21:45, Tamas Blummer <tamas.blummer@gmail•com> wrote:
> 
> I see. The uncompressing needs to be done either to compare. How are chances for that BIP?
> 
> This BIP would be explicitly offering risk managment of miners biggest risk.
> Doing so without relying on external markets or oracle, self cointained would be an impressive and adequate feature.
> 
> Tamas Blummer
> 
>> On May 23, 2019, at 21:21, Nathan Cook <nathan.cook@gmail•com> wrote:
>> 
>> It's true that it fetches the block hash; the idea is to compare the block hash's numeric value to the desired (uncompressed) difficulty directly, using a 256-bit version of OP_LESSTHAN.
>> 
>> Nathan Cook
>> 
>> 
>> On Thu, 23 May 2019 at 22:18, Tamas Blummer <tamas.blummer@gmail•com> wrote:
>> That opcode would not help as it fetches block hash and not the content of the header.
>> 
>>> On May 23, 2019, at 21:05, Nathan Cook <nathan.cook@gmail•com> wrote:
>>> 
>>> You can get the same effect with OP_CHECKBLOCKATHEIGHT as proposed by Luke Dashjr (https://github.com/luke-jr/bips/blob/bip-cbah/bip-cbah.mediawiki) if you also re-enable/extend certain opcodes like OP_AND and OP_LESSTHAN. See https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2016-September/013149.html and the ensuing thread.
>>> 
>>> Nathan Cook
>>> 
>>> 
>>> On Thu, 23 May 2019 at 21:33, Tamas Blummer via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org> wrote:
>>> Difficulty change has profound impact on miner’s production thereby introduce the biggest risk while considering an investment.
>>> Commodity markets offer futures and options to hedge risks on traditional trading venues. Some might soon list difficulty futures.
>>> 
>>> I think we could do much better than them natively within Bitcoin.
>>> 
>>> A better solution could be a transaction that uses nLocktime denominated in block height, such that it is valid after the difficulty adjusted block in the future.
>>> A new OP_DIFFICULTY opcode would put onto stack the value of difficulty for the block the transaction is included into.
>>> The output script may then decide comparing that value with a strike which key can spend it.
>>> The input of the transaction would be a multi-sig escrow of those who entered the bet.
>>> The winner would broadcast.
>>> 
>>> Once signed by both the transaction would not carry any counterparty risk and would not need an oracle to settle according to the bet.
>>> 
>>> I plan to draft a BIP for this as I think this opcode would serve significant economic interest of Bitcoin economy, and is compatible with Bitcoin’s aim not to introduce 3rd party to do so.
>>> 
>>> Do you see a fault in this proposal or want to contribute?
>>> 
>>> Tamas Blummer
>>> 
>>> _______________________________________________
>>> bitcoin-dev mailing list
>>> bitcoin-dev@lists•linuxfoundation.org
>>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>> 
> 

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