if your btc is held in a multisig vault, does that get closer to the ideal? re the peoples reserve approach?
Discussion
So like a 2 of 3, multisig, whereby the lender has 2 keys and you have one?
Yes and No.
Multisig is not the safe option it is thought to be.
To recreate a multisig wallet you need the XPUB of all 3 keys, if one of the parties looses their keys and doesn't have the XPUB backed up and the original wallet is lost, there is no way to recreate this wallet and the funds are lost for ever.
This is explained here:
okay but *everyone* keeps a copy of the 3 xpubs, you and the lender, and it can be copied infinitely
and if it is leaked there is no risk except transaction privacy… so, basically misinfo
Correct. An absolute nothing burger
No, the information is correct, which is the very opposite of misinformation 😂
the misinfo is how you pointed out as if this was a huge risk 😅
if there’s 1 copy it’s safe. put it in your favorite cloud, or even encrypted on Nostr, doesn’t matter
Still no, if you move the goal posts to be a different argument, or tell me I said something I didn't say, then I don't need to make any further proof.
Your argument style is common in weak discussions. I prefer not to have weak discussions.
You said it was not as safe as thought, while linking to a clickbaity video?
No I didn't.
Stick to the facts 😂
You've ended up down such a false trail, that you failed to spot the original error:
the xpubs can be put on google drive, emailed to yourself, etc etc. make infinite copies and put it anywhere.
so while you do HAVE to have all 3 xpubs, i can’t image a scenario of someone knowing that, and losing them.
not knowing you need all three, and then losing it, 100% see that happening.
so yes, don’t do multi sig if u don’t understand it
I think we missed a more important point:
yeah, i missed the front end context of the thread.
didn’t realize i was hoping in mid stream
I also don't see the point of this. Having only one of the three keys still leaves you powerless without the permission of whoever holds the others. Am I missing something?
Yes, as the borrower, you SHOULD be powerless to withdraw their funds.
The lender "owns" your Bitcoin, so should retain control of the 2 of 3 keys until you pay off your loan.
I agree. I just don't see how that's a defense in people's minds. It isn't any better than just giving someone total control of your Bitcoin. You're still doing that even if you have one key. You've effectively converted yourself to paper Bitcoin when you do that.
Actually a multisig does nothing here, as you can observe the address you sent the funds to, unless the lender moves the coins.
I think the point Jack Mallers is making is that they DO need to move the coins to whoever is providing the local fiat loan, so your coins get mixed with other borrowers, meaning that you only end up seeing "paper" Bitcoin until your Bitcoin is returned at the conclusion of your loan.
It does absolutely nothing except maybe prove your identity if such a model was done KYC free. That's the only way you'd know for sure who owns what (as only the holder of that key could sign it). Other than that, I see multi-sig as moot. You have to give up control of your Bitcoin to get a loan. That makes sense. Holding 1/3 keys doesn't change that fact regardless of any other details. It would be retarded to give a loan against Bitcoin otherwise.
nostr:nprofile1qqswswmx4rkj6d7q05dtafhpkqq2z42fc62s37jvtp642m2jkpfxc2cpz3mhxue69uhhyetvv9ujuerpd46hxtnfduq3wamnwvaz7tmwdae8g6tn9ehx7um5wgcjucm0d5q3wamnwvaz7tmxd9k8getj9ehx7um5wgh8w6twv5nrafuh I get lost in the sauce on some of these threads. Lol Sorry for the confusing replies.
What you're saying makes sense in multiple regards. It isn't controversial to me that he's sending Bitcoin to a lender. No fucking shit. No one would give a loan with zero ability to get it back. They'd be retarded if they did. Or they have access to a money printer.
Actually your previous response makes a lot of sense. Instead of using lending "agents" who subcontract the loans out to geographical providers, why not use local agents who provide the loans directly.
Your coins stay in the wallet you sent them to and you can observe them until they are returned to you at the conclusion of the loan.
The only point here is, what if the lender DOES move your coins 😱
I think it's the same risk regardless. You give up control of your Bitcoin. It may be less risky (meaning the IOU has a better shot of being returned depending on who you give it to), but the underlying reality is the same. You converted to paper Bitcoin. I'm not even shitting on that if that's what people want to do. My only point is that multi-sig doesn't negate that reality. You're essentially selling your Bitcoin and buying it back over time with interest. That probably IS better from a Bitcoin gain vs fiat interest perspective (versus vanilla spend and replace through cash flow). But the value of Bitcoin for ME is that I control it. Loaning against it is marginally better for me because I've put myself right back into the fiat world. I gave up my power again. To each their own, but that is reality. Of course you can reduce the risks and should.
Agreed 💯
To be clear, I don't advocate Bitcoin loans at all.
I am 💯 in the camp of "Not your keys, not your coins"
I get it. People should be aware of the entire story. If they are, go for it. Have fun. Not my cheese.
I have a better picture of multisig after that discussion. Ta. In this case, if one party holds two of three, there is no protection against collusion.
Aren't there smart contracts where the only way the borrowers bitcoin can be liquidated is if they don't make a payment. And if the agreement is upheld to term, the bitcoin is automatically returned to the borrower? With human intervention, to release the value of a bitcoin stash with full peace of mind , as you mentioned in another thread - spend the btc or sell it for fiat and spend it.
If it's being rehypothicated, multisig will not work.
I have used Hodl Hodl in the past before I realized stablecoins were a shitcoin.
This is more like agorism and it has Lindy. I could see using something like that under very specific circumstances, but it's not marketed like that so it's not humble enough for me.
Agreed and I think that's the point, even if it's not rehypothicated, it is at least moved to the local fiat lender to back the loan.
I juat know the banks wouldn't let me buy a mortgage without putting sats in Coinbase. If that's your only option to get a mortgage, I could see taking the risk, but that's not the way it is being marketed.
At least with a bank, they have government guarantees, which do not extend to exchanges.
We trust the banks, because we trust the government. Yes you heard me, we trust the government 😂
I think perhaps a more secure way of lending would be with a 1 of 2 multisig walletb(borrower and lender each holding a key) with each party signing a commitment transaction for the term of the loan. The borrower is then timelocked from the bitcoin until the end of the loan term, but the lender can spend the bitcoin at any time.
Then, the borrower has some guarantees that if the lender goes belly up during the loan period, then can retrieve their bitcoin after the timelock is up. But the lender has guarantees of the collateral value during the life of the loan.
This is similar to how the lightning network HTLCs work. Just a thought.
Not sure how that'd work in the legal world though. Usually a company that goes belly up sells off their assets, of which the loans still need to be paid back. But still probably better than traditional multisig.
Time locks are great for inheritance though!
Yes, Timelocked contracts would work here.
However, if the borrower failed to repay the loan, the coins would be unlocked in any case, so the lender would need some form of additional collateral.
The lender would have full control of the bitcoin locked in the 2 of 2 multisig since they would be the one given the bitcoin in the commitment transaction. So there shouldn't be any need for additional collateral.
You said 1 of 2 in your original proposition?
I meant 2 of 2, so I edited it. They locknthe bitcion in a 2 of 2 multisig. But it is like lightning where they both sign an unbroadcasted commitment transaction allowing either of them reclaim the bitcoin, but have it time locked for the borrower until after the loan term. At any time the lender can claim the bitcoin without a timelock because the borrower signed a commitment transaction handing giving the bitcoin to them without a timelock.