Cold channels and PathCoin redux

The sender acknowledges that their earlier conceptions were too specific and that there is a wide range of possibilities for transferring coins in this manner. One particular concept that stood out to them is what they refer to as "Cold channels." These are payment channels where there is no hot wallet requirement and payments can be made to offline entities. However, the tradeoff is that only the whole channel capacity can be paid, i.e., a fixed denomination.

The sender introduces the concept of CTLCs (Covenant Time Locked Contracts), which involve chaining together participants using a primitive formula: (A and CLTV) OR (S_A and CTV). By chaining these primitives together, the flow of money can be controlled similarly to airlocks. The sender provides an example of how the chaining works, with participants A, B, C, D, and E.

The sender then introduces the concept of Optimistic PathCoin, which is the simplest variant of PathCoin. In this variant, participant A can spontaneously choose a path A-B-C-D-E, set up the CTV chain, fund the coin, and then make a payment to participant B by sending S_A. This variant has similar limitations to the original suggestion, with different tradeoffs. The coin denomination and path are fixed, but it doesn't require a penalty or an initial coordination/signing session. However, the negative aspect is that whoever spends the coin on-chain has to broadcast the CTLC chain, so there is no saving in chain space and privacy gain is limited.

The sender then discusses Cold channels, which are the simplest kind of path requiring minimal coordination. It involves a 2-cycle pattern of A-B-A-B and can be used in a peer-to-peer relationship between two non-professional entities. The CTLC chain is lifted off-chain by funding a 2-of-2 (AB) multisig and presigning the initial funding. To close cooperatively, the CTLC chain is overwritten to avoid broadcasting the whole chain on-chain. This construction is attractive because payments do not require the receiver to be online, and there is no hot signing-wallet requirement after setup.

The sender briefly mentions routing but admits that they haven't thought about it extensively. They suggest that typical atomicity techniques may apply, but the structure is limited by its fixed denomination. They propose that using multiple channels simultaneously may help alleviate this limitation.

Finally, the sender briefly mentions private PathCoin, which involves penalty-based setups and offers better privacy. However, they focus on the optimistic variant and off-chain channels as the most interesting concepts.

Overall, the email discusses various concepts related to PathCoin, including CTLCs, chaining participants, Cold channels, and Optimistic PathCoin. The sender explores different tradeoffs and limitations of these concepts while highlighting the potential benefits they offer.