-----BEGIN PGP SIGNED MESSAGE----- At 1:19 PM -0500 on 12/1/01, Adam Shostack wrote:
Right. Now the seller has the cash, and the buyer has nothing. The seller has lost only the future value of the nym, which was presumably accounted for in the price. The seller loses no "real" reputation, because the nym can't be tied back to the is-a-person seller. The buyer, meanwhile, is out the price of the nym, and must either destroy the nym in order to ensure that the seller actually loses all that value, or accept damaged goods.
So, why would a buyer agree to such a transaction, where he will remain at the mercy of the seller?
I look at nyms as a contingent claim on some asset, which should be
handled just as any other security. Certainly you can destroy the
value of a nym, just like you can any real property, but it might be
better not to do that. I agree with something that Wei Dai said a
long time ago that any nym would only be worth it's ability to
control some independantly-verified asset, though, which, frankly, is
as it should be when you think about it.
Just to sort of thrash things a bit, in a capital markets
transaction, an exchange isn't such a hard thing to do, in the sense
that a secondary bearer-form asset transaction (primary is like an
IPO, or, for cash, a collateral asset conversion like an ATM
transaction), cash for bond, say, would require the participation of
the underwriters in the exchange protocol.
viz, with apologies for my ascii art,
Uc
/\|\
/ | \
/ | \
/ | \
/ | \/
Bb<========>Sb
/\ | /
\ | /
\ | /
\ | /
\ |\/
Ub
Uc = Underwriter of cash
Bb = Buyer of bond
Sb = Seller of bond
Ub = Underwriter of bond
At primary issuance, a trustee is involved, so, that probably
supervises the Underwriter, who ever it is owns the underwriting
engine. The above should hold for all kinds of unique, uncopyable
things, teleoperated surgery, or opinions, for instance.
I expect, for physical goods, some variant of this model holds,
because there's someone responsible for the physical supervision of a
given asset with a net-based audit/authentication of that supervision
of some kind, signed video, or whatever.
For "software", in the Gary Becker sense of something that can be
copied, all we're really looking for is something which authenticates
that a given copy of an information good is in fact signed by the
person proported to be the "author" of that information/content/code.
Coupled with a decent third-party time-signature mechanism, you're
fine, because, after the first copy, such a good is a purely fungible
commodity ala Hughes' "Institutional Piracy", or the Agoric guys'
"digital silk road", or my "recursive geodesic auction" stuff. Such
situations are classic examples of so-called "perfect competition",
as found in physical graded-commodity markets everywhere.
So, if we're looking at case 1, where there's a uniquely identified
digital good, like a financial instrument, we're covered enough for a
market to function because the underwriter supervises the
transaction, and the trustee/custodian supervises the underwriter.
Collusion gets harder with more conspirators, which we all know from
our first year accounting class. If you exhaust the prices of the
transaction by selling that data sans participants, but with a
sufficiently granular time stamp, that would probably complete
whatever control loops are needed to make the transaction safe.
If we're doing signed but fungible digital good, we're covered
because we're looking for something that other people have and you're
purchasing based on (probably multiple) published opinion, including
a digital signature of the good in question.
Finally, if you're doing a physical good with a digital title in
bearer form, you can, of course, look at the thing in the warehouse,
or in transit, or whatever.
There.
How's that sound?
Cheers,
RAH
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R. A. Hettinga