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Re: A problem with anonymity

On Thu, 31 Aug 1995, Timothy C. May wrote:

> You don't have to look to death and inheritance for this problem to crop
> up. Similar situations arise when:

But these are problems of fraud that the criminal and civil
justice systems already comprehend.  I think what is posited
is something a bit more unique.

> - a pseudonym simply decides to dissolve the current pseudonym and shift
> focus to another pseudonym (perhaps transferring a bunch of assets, then
> simply vanishing and leaving "no forwarding address')
> (This is of course the basis of any number of scams and "boiler room
> operations." Crypto does not completey eliminate scams like this, and, in
> fact, generates some new kinds of scams.)
> - this is also a well-known problem with any services that handle money,
> valuables, etc. For example, the money courier who vanishes to Rio de
> Janeiro.

I don't think bonding is applicable in this posit, given the 
assumed established creditworthiness of the original anonym.
Perhaps he originally posted a bond, but the market would 
probably have dispensed with that condition as an unnecessary
formality at some point in his glowing credit history.

> This is one thing that _bonding_ is designed to partially ameliorate. One
> posts a bond which is greater than the amount being carried, or at least is
> some large amount. (Calculations are complex, and various agencies may have
> various policies, depending on other reputation factors.)
> >Since the anonym behaved reputably during its life, it developed what
> >would have been a credit-worthy reputation, had it been a (traceable)
> >pseudonym.  But, since there's nothing to link the anonym to its heirs
> >(or ancestors), the creditors of the anonym must eat the loss.
> The concept of "reputation capital" is a critical one.
> ideally, one never "trusts" an agent with a transaction greater than the
> value of the reputation capital he will lose if he defaults.
> There are still scams and manouvers to thwart this reputation capital
> scheme. The agent planning to "defect" (default, split, abscond, renege,
> etc.) can try to pile up as many pending transactions as possible,
> anticipating that the various transactees will be unaware of each other.
> (This of course happens in real life.)
> Whether cryptographic protocols (cf. the "encrypted open books" proposal by
> eric Hughes for one approach which may be useful) solve this problem is not
> known at this time. But the non-crypto world has of course not solved this
> problem, either.
> ...
> >A market which permits anonyms to have credit based on reputation will
> >probably have a constant stream of defaults caused by such behavior,
> >representing a significant risk factor in extending credit to anonyms
> >which can't be predicted by reputation.
> >
> >Comments?
> Lots of issues need to be thought about. My hunch is that economists, game
> theorists, and scam artists will all discover digital money and pseudonyms
> and will explore various aspects of this situation.
> I devoted a pretty big chunk of my Cyphernomicon to these "darker sides" of
> anonymity, of reputation capital, and suchlike. By no means did I cover all
> the issues of "crypto anarchy," but I suggest interested folks take a look
> at the chapter on crypto anarchy for more discussion.
> --Tim May
> ---------:---------:---------:---------:---------:---------:---------:----
> Timothy C. May              | Crypto Anarchy: encryption, digital money,
> [email protected]  408-728-0152 | anonymous networks, digital pseudonyms, zero
> Corralitos, CA              | knowledge, reputations, information markets,
> Higher Power: 2^756839      | black markets, collapse of governments.
> "National borders are just speed bumps on the information superhighway."