Date: Thu, 31 Aug 1995 18:32:01 -0500 From: Scott Brickner <sjb@austin.ibm.com> I was thinking about some issues related to electronic commerce, and it occurred to me that there is a significant problem in conducting business with untraceable pseudonyms (anonyms?). The problem occurred to me while considering inheritance. If one operates a business under an anonym (as opposed to the sort of conditionally traceable pseudonym proposed by AT&T in "Anonymous Credit Cards" <URL:ftp://ftp.research.att.com/dist/anoncc/anoncc.ps.Z>), there's a strategy for transferring unlimited funds to one's posterity. Consider a business which typically has a lot of assets, but which are offset by a lot of liabilities --- almost any sort of VAR will do, for instance. In your will, you leave the key to unlock a private message to your heir, in which you hand over the information necessary to assume your anonym. Since the heir presumably has his own identity (whether anonymous or not is immaterial, except to *his* heirs), and the anonym can't be linked to you, he has no reason to care about maintaining the reputation of the anonym. In dismantling the anonym, he sells its assets to his own identity at a fraction of their worth, and defaults on the liabilities. 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. Since the process of taking an anonym from scratch to a positive reputation would be reasonably short (presumably not too much longer than taking a real name or pseudonym the same distance), especially when helped along by being fed the profits from the legitimate business of an ancestor anonym, it's likely that a single individual could pull off such an asset transfer at least two or three times a decade, as well as at inheritance time. 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?