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

[Tamas Blummer]

The parameter used is property of the block just like the block height is a property and is already evaluated in scripts,
so no new kind of dependency or encapsulation break.

The transaction itself was not invalid in a re-org but evtl. others spending it if the difficulty on that fork is different,
this is however intended as then on that fork the other was the winner.

Tamas Blummer

> On May 23, 2019, at 21:03, Jorge Timón <jtimon at jtimon.cc> wrote:
> 
> The complains I could imagine about this, (apart from being a very
> specific use case) are the same complains I heard about op_expiry.
> Namely, that in a reorg, the same tx, having been valid in a given
> block could potentially become invalid in some other block mining it.
> I guess in this case the situation is less likely in this case than
> with op_expiry, but it is still possible.
> Another complain I could imagine is this kind of forces the
> implementation to break some existing encapsulations, but I guess
> those are just implementation details not that relevant here.
> I personally don't have strong feelings towards this proposal one way
> or the other, I'm just imagining what other people may complain about.
> 
> On Thu, May 23, 2019 at 8:33 PM Tamas Blummer via bitcoin-dev
> <bitcoin-dev at 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
>> 
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>> bitcoin-dev at lists.linuxfoundation.org
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