Wei Dei's "b-money" protocol

[x]

there must be something here that I'm missing.  At the core of this
protocol seems to be the establishment not of crypto anarchy but of a
crypto elite. in this scheme only the processors of computing power  have
economic power.  Now I realize that our current economic system is based on
economic power being invested in a closed community of powerful elites, and
is by no means egalitarian, but this looks to be like simply substituting
one group of "haves" for a different group of "haves"

I have to admit not being familiar with the Orthodoxy of crypto anarchy,
but if the premise is a centerless self organizing system of free agents
this protocol seems to miss the mark. or what is it that I am missing here?

At 07:37 PM 12/5/98 GMT, you wrote:
>
>
>Wei Dei recently announced (on cypherpunks) his "b-money, a new
>protocol for monetary exchange and contract enforcement for
>pseudonyms".
>
>Below is the text of his proposal.
>
>Comments to follow.
>
>Adam
>
>======================================================================
>http://www.eskimo.com/~weidai/bmoney.txt
>======================================================================
>
>I am fascinated by Tim May's crypto-anarchy. Unlike the communities
>traditionally associated with the word "anarchy", in a crypto-anarchy the
>government is not temporarily destroyed but permanently forbidden and
>permanently unnecessary. It's a community where the threat of violence is
>impotent because violence is impossible, and violence is impossible
>because its participants cannot be linked to their true names or physical
>locations.
>
>Until now it's not clear, even theoretically, how such a community could
>operate. A community is defined by the cooperation of its participants,
>and efficient cooperation requires a medium of exchange (money) and a way
>to enforce contracts. Traditionally these services have been provided by
>the government or government sponsored institutions and only to legal
>entities. In this article I describe a protocol by which these services
>can be provided to and by untraceable entities.
>
>I will actually describe two protocols. The first one is impractical,
>because it makes heavy use of a synchronous and unjammable anonymous
>broadcast channel. However it will motivate the second, more practical
>protocol. In both cases I will assume the existence of an untraceable
>network, where senders and receivers are identified only by digital
>pseudonyms (i.e. public keys) and every messages is signed by its sender
>and encrypted to its receiver.
>
>In the first protocol, every participant maintains a (seperate) database
>of how much money belongs to each pseudonym. These accounts collectively
>define the ownership of money, and how these accounts are updated is the
>subject of this protocol.
>
>1. The creation of money. Anyone can create money by broadcasting the
>solution to a previously unsolved computational problem. The only
>conditions are that it must be easy to determine how much computing effort
>it took to solve the problem and the solution must otherwise have no
>value, either practical or intellectual. The number of monetary units
>created is equal to the cost of the computing effort in terms of a
>standard basket of commodities. For example if a problem takes 100 hours
>to solve on the computer that solves it most economically, and it takes 3
>standard baskets to purchase 100 hours of computing time on that computer
>on the open market, then upon the broadcast of the solution to that
>problem everyone credits the broadcaster's account by 3 units.
>
>2. The transfer of money. If Alice (owner of pseudonym K_A) wishes to
>transfer X units of money to Bob (owner of pseudonym K_B), she broadcasts
>the message "I give X units of money to K_B" signed by K_A. Upon the
>broadcast of this message, everyone debits K_A's account by X units and
>credits K_B's account by X units, unless this would create a negative
>balance in K_A's account in which case the message is ignored.
>
>3. The effecting of contracts. A valid contract must include a maximum
>reparation in case of default for each participant party to it. It should
>also include a party who will perform arbitration should there be a
>dispute. All parties to a contract including the arbitrator must broadcast
>their signatures of it before it becomes effective. Upon the broadcast of
>the contract and all signatures, every participant debits the account of
>each party by the amount of his maximum reparation and credits a special
>account identified by a secure hash of the contract by the sum the maximum
>reparations. The contract becomes effective if the debits succeed for
>every party without producing a negative balance, otherwise the contract
>is ignored and the accounts are rolled back. A sample contract might look
>like this:
>
>K_A agrees to send K_B the solution to problem P before 0:0:0 1/1/2000.
>K_B agrees to pay K_A 100 MU (monetary units) before 0:0:0 1/1/2000. K_C
>agrees to perform arbitration in case of dispute. K_A agrees to pay a
>maximum of 1000 MU in case of default. K_B agrees to pay a maximum of 200
>MU in case of default. K_C agrees to pay a maximum of 500 MU in case of
>default.
>
>4. The conclusion of contracts. If a contract concludes without dispute,
>each party broadcasts a signed message "The contract with SHA-1 hash H
>concludes without reparations." or possibly "The contract with SHA-1 hash
>H concludes with the following reparations: ..." Upon the broadcast of all
>signatures, every participant credits the account of each party by the
>amount of his maximum reparation, removes the contract account, then
>credits or debits the account of each party according to the reparation
>schedule if there is one.
>
>5. The enforcement of contracts. If the parties to a contract cannot agree
>on an appropriate conclusion even with the help of the arbitrator, each
>party broadcasts a suggested reparation/fine schedule and any arguments or
>evidence in his favor. Each participant makes a determination as to the
>actual reparations and/or fines, and modifies his accounts accordingly.
>
>In the second protocol, the accounts of who has how much money are kept by
>a subset of the participants (called servers from now on) instead of
>everyone. These servers are linked by a Usenet-style broadcast channel.
>The format of transaction messages broadcasted on this channel remain the
>same as in the first protocol, but the affected participants of each
>transaction should verify that the message has been received and
>successfully processed by a randomly selected subset of the servers.
>
>Since the servers must be trusted to a degree, some mechanism is needed to
>keep them honest. Each server is required to deposit a certain amount of
>money in a special account to be used as potential fines or rewards for
>proof of misconduct. Also, each server must periodically publish and
>commit to its current money creation and money ownership databases. Each
>participant should verify that his own account balances are correct and
>that the sum of the account balances is not greater than the total amount
>of money created. This prevents the servers, even in total collusion, from
>permanently and costlessly expanding the money supply. New servers can
>also use the published databases to synchronize with existing servers.
>
>The protocol proposed in this article allows untraceable pseudonymous
>entities to cooperate with each other more efficiently, by providing them
>with a medium of exchange and a method of enforcing contracts. The
>protocol can probably be made more efficient and secure, but I hope this
>is a step toward making crypto-anarchy a practical as well as theoretical
>possibility.
>
>======================================================================
>
>
>