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The sentence "Both parties can now construct the script and P2SH address for the HTLC." was broken with part appearing below the list item.
81 lines
3.7 KiB
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81 lines
3.7 KiB
Plaintext
<pre>
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BIP: 199
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Layer: Applications
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Title: Hashed Time-Locked Contract transactions
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Author: Sean Bowe <sean@z.cash>
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Daira Hopwood <daira@z.cash>
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Comments-Summary: No comments yet.
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Comments-URI: https://github.com/bitcoin/bips/wiki/Comments:BIP-0199
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Status: Draft
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Type: Standards Track
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Created: 2017-03-27
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License: BSD-3-Clause
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CC0-1.0
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</pre>
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==Abstract==
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This BIP describes a script for generalized off-chain contract negotiation.
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==Summary==
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A Hashed Time-Locked Contract (HTLC) is a script that permits a designated party (the "seller") to spend funds by disclosing the preimage of a hash. It also permits
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a second party (the "buyer") to spend the funds after a timeout is reached, in a refund situation.
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The script takes the following form:
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OP_IF
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[HASHOP] <digest> OP_EQUALVERIFY OP_DUP OP_HASH160 <seller pubkey hash>
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OP_ELSE
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<num> [TIMEOUTOP] OP_DROP OP_DUP OP_HASH160 <buyer pubkey hash>
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OP_ENDIF
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OP_EQUALVERIFY
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OP_CHECKSIG
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[HASHOP] is either OP_SHA256 or OP_HASH160.
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[TIMEOUTOP] is either OP_CHECKSEQUENCEVERIFY or OP_CHECKLOCKTIMEVERIFY.
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===Interaction===
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* Victor (the "buyer") and Peggy (the "seller") exchange public keys and mutually agree upon a timeout threshold. Peggy provides a hash digest. Both parties can now construct the script and P2SH address for the HTLC.
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* Victor sends funds to the P2SH address.
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* Either:
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** Peggy spends the funds, and in doing so, reveals the preimage to Victor in the transaction; OR
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** Victor recovers the funds after the timeout threshold.
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Victor is interested in a lower timeout to reduce the amount of time that his funds are encumbered in the event that Peggy does not reveal the preimage. Peggy is
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interested in a higher timeout to reduce the risk that she is unable to spend the funds before the threshold, or worse, that her transaction spending the funds does
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not enter the blockchain before Victor's but does reveal the preimage to Victor anyway.
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==Motivation==
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In many off-chain protocols, secret disclosure is used as part of a settlement mechanism. In some others, the secrets themselves are valuable. HTLC transactions are
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a safe and cheap method of exchanging secrets for money over the blockchain, due to the ability to recover funds from an uncooperative counterparty, and the
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opportunity that the possessor of a secret has to receive the funds before such a refund can occur.
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===Lightning network===
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In the lightning network, HTLC scripts are used to perform atomic swaps between payment channels.
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Alice constructs K and hashes it to produce L. She sends an HTLC payment to Bob for the preimage of L. Bob sends an HTLC payment to Carol for the same preimage and
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amount. Only when Alice releases the preimage K does any exchange of value occur, and because the secret is divulged for each hop, all parties are compensated. If
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at any point some parties become uncooperative, the process can be aborted via the refund conditions.
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===Zero-knowledge contingent payments===
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Various practical zero-knowledge proving systems exist which can be used to guarantee that a hash preimage derives valuable information. As an example, a
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zero-knowledge proof can be used to prove that a hash preimage acts as a decryption key for an encrypted sudoku puzzle solution. (See
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[https://github.com/zcash/pay-to-sudoku pay-to-sudoku] for a concrete example of such a protocol.)
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HTLC transactions can be used to exchange such decryption keys for money without risk, and they do not require large or expensive-to-validate transactions.
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==Implementation==
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https://github.com/bitcoin/bitcoin/pull/7601
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==Copyright==
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This document is dual licensed as BSD 3-clause, and Creative Commons CC0 1.0 Universal.
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