A cryptographic alternative to escrow agents (Matts' half coin)

[Matts Kallioniemi <matts@pi.se>]

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Black Unicorn wrote (was: Why does the state still stand)

>> .  What if a company does not pay as expected - other than adopting
>> Assassination Politics, what method could an employee use towards
>> getting their expected remuneration for work done?
>
>If payment is made weekly, it should be made in advance to an escrow agent
>who would issue a certificate that the payment for employee r2dd54 has
>been received.  The payment would then not be released to anyone without
>the consent of the corporation and the employee.
>
>Obviously the escrow agent would have to be trusted.

It should be possible to avoid that trusted escrow agent using blinded
ecash and Matts' half coin algorithm.

Bob wants to buy a $100 service from Alice. Alice wants to get paid if she
performs the service.

Bob and Alice each create half of a $300 ecash coin. They send their half
coins to the ecash mint for signing, with instructions to withdraw $200
from Bob's account and $100 from Alice's account for the signing of a
$300 coin.

When the mint has received both half coins, it signs the complete coin,
withdraws the money and returns the signature to both Alice and Bob.
Nobody can now use the coin alone because they don't know the other half
of the random coin number.

Next, Alice delivers the service to Bob.

If Bob is satisfied with the service, he and Alice write a message to the
mint requesting that the complete coin be credited with $100 to Bob's
account and $200 to Alice'. Alice has now been paid.

If Bob refuses to pay, Alice will never give him her half coin and he loses
$200, but he got a $100 service, resulting in a net loss of $100.

If Alice refuses to deliver the service, Bob keeps his half coin and she
loses $100.

Both participants lose $100 each if they don't complete the deal. That
way they have the same incentive to come to an agreement.

To simplify the messages to the mint you could use two coins. One for
$100 and one for $200. That way there would be a one-to-one relation
between deposits, withdrawals and coins.

The algorithm described above (Matts' half coin) is copyrighted by
yours truly Matts Kallioniemi. Patents pending.


Matts Kallioniemi <matts@pi.se>


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