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10 sats \ 0 replies \ @shibe 8 Aug 2023 \ on: Utxoracle: A Decentralized Approach To The Oracle Problem bitcoin
Interesting article, it seems to use the fact that BTC payments are often done using exact dollar amounts (for example $5.00 converted to its equivalent amount in sats) and uses that to calculate the price.
But I wonder whether this could start breaking down in the following ways:
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First off, I think this is just a privacy risk and merchants should stop accepting exact USD amounts. It's common advice to not use round payment amounts in BTC (send 0.00010004 BTC instead of 0.0001 BTC) because that makes it easier to figure out which is the change address and which is the payment. I hadn't considered that this was also an issue if you're converting round payment amounts from another currency to BTC, but it should be avoided. Thus merchants should perhaps charge something like $5.001 or $4.999 instead of $5.
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Second, wouldn't this start breaking down if BTC becomes a more common medium of exchange and goods are priced directly in BTC? You could argue by that point there'd be no reason to need a USD oracle at all (it'd be obsolete!) but it's something worth considering