Moving beyond "Reputation"--the Market View of Reality

[Adam Shostack]

On Sat, Dec 01, 2001 at 03:30:09PM -0500, R. A. Hettinga wrote:
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| 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.

In which case, you might be better off transferring the asset, rather 
than the nym. 
 
| 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. 
 
Yeah, mature markets solve problems.  How to create a mature market is
a question that apparently can't be solved for all the tea in China,
or all the oil in Russia.
 
Not that I think the solution is all that hard; reading Smith, Hayek,
Friedman, Nozick and some other smart people gives you a very clear
map, but the folks with the guns over there still haven't read Olsen's
last book (thanks), where he explains that thugs do better to let the
economy grow than to take all the money at once.
 
Something about the first hundred names in the Cambridge phone book
springs to mind.

| 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.
[...]
| 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.

A nym is none of these.

| 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.

Or these.

| 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 here's the rub.  A nym (as I'm using the term) is control over a
private key thats associated with some reputation, which Alice is
trying to sell to Bob.  Alice can not provide direct assurance that
she won't keep copies of the thing she's selling.

Through intermediaries, Bob can buy some insurance that the revocation 
games Alice can play are limited.  How valuable that insurance is
depends on the trustworthiness of the intermediaries, how likely the
reliant parties are to properly check signatures, and the value of
social engineering in a field where process issues are not yet well
understood.  (See also
http://www.seifried.org/security/articles/20011023-devil-in-details.html
)

There might be a relationship here to the sale of music bits; the RIAA 
is all worked up over issues of how do they sell the same bits over
and over.  If you can answer the question of "How to sell a set of
bits exactly once?" you may be able to answer the question "How to
ensure that I don't keep a copy of those bits?" or "How do I sell a
million people copies of the same bits without them transferring them
around."

The problems are not identical, but some of the same sorts of
solutions may help.

Adam

-- 
"It is seldom that liberty of any kind is lost all at once."
					               -Hume