Sandy Sandfort: What the Heck is Loom?

[R.A. Hettinga]

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Loom News

What is Loom

By Sandy Sandfort

What the Heck is Loom?

Before we discuss what Loom is, it might be a good idea to explain
what Loom isn't.

Loom isn't

		digital money
		an exchanger
		an exchange provider
		a way to trade physical assets
		a system for tracking the ownership of assets

Digital Money  Though Loom has been optimized to facilitate the
creation of digital assets, it is the user who creates them. Loom is
totally agnostic as to the nature of assets created by the user.

Exchanger  Loom is not a market maker and takes no position in
exchanged assets or other items.

Exchange  Loom does not provide simultaneous exchange services. It
only provides one-way transfers. The other half of an exchange must be
performed in a separate transaction either within or without Loom.

[Editor's note: Actually, the author of Loom has been planning a two-
way internal asset exchange mechanism known as a "Vending Machine" for
some time. It should be rolled out within a few months, probably by
Sep 2009.]

Trading System for Physical Assets  The map is not the territory. To
the degree that Loom facilitates the transfer of assets, the only
assets that can be transferred are digital ones. The trading of
digital assets may or may not result in the exchange of real-world
assets.

Asset Tracking  To the extent that Loom is involved with assets, it
only facilitates their transfer. It keeps track of nothing except
digital locations.

Loom Is

Loom is an infrastructure for privately hiding and revealing secrets.

Sorry, but that's it, that's the whole enchilada. Doesn't sound very
impressive, does it?

The Elegance of Loom

Okay, you can reveal a secret to someone without using Loom. You can
send an encrypted message or just whisper in their ear. With Loom,
however, the secret gains a sort of persistence, transferability and
flexibility not otherwise possible. Of course, it is optimized for
monetization of digital assets and to facilitate their use in digital
commerce. It can also be used, however, for whatever other
interactions users invent. A secondary benefit is that Loom does not
create a useful audit trail for snoopy third-parties.

Now remember all the things we said Loom isn't? Well guess what. Loom
can also assist in performing such functions.

Digital Money  While Loom isn't a form of digital money, it
facilitates the creation of digital money by providing an easy way to
monetize digital assets.

Exchanger  Loom is not a market maker for digital assets. However, it
does provide a way for exchangers to do business with their customers.
Just as important, exchangers can use Loom to lay off transactions
among themselves quickly, easily and privately, thus increasing market
liquidity and efficiency.

Exchange  While not an exchange, per se, Loom is a simple and
discreet way to perform part or all of exchanges of digital assets.

Trading System for Physical Assets  Loom can assist in the direct
trade of digital assets only. However, this does not mean it cannot
play a role in the trade of physical assets. Digital assets such as
the various forms of e-money, usually represent something tangible in
the real world. So too, can it be with digital assets transferred in
the Loom system. As in any use of digital assets, it ultimately
becomes an issue of trust.

Asset Tracking  This is something that Loom really cannot do. In
fact, it is something it should not do. One of the major appeals of
Loom, is that it provides its users with privacy in their transaction
and a large degree of anonymity.
Security

Loom's security is based on three elements, the mathematics of really
large numbers, open source software and server operator honesty.
Math  Loom hides a client's secret in plain sight in one of 2128
(about 3.4x1038) digital locations. If you can guess where someone has
stored his secret, it's yours. So how easy is guessing?

Let's assume we want to hid a secret in a physical space. One cubic
millimeter is pretty small but at least visible. So lets turn the
entire bulk of the earth into one cubic millimeter information
containers. Now imagine the problem trying to guess where a secret is
hidden. Is it in a millimeter cube of iron at the center of the earth?
Is it in a piece of ice at the top of Mount Everest? How about in that
mug of beer in front of you at the restaurant? Finding that one
particular cube isfor all intents and purposesimpossible. But there
are far fewer than 2128 cubic millimeters in the earth. To have that
many cubic millimeters would require about a third of a billion
earths. Get the picture?

Open Source  No software is perfect. Proprietary software is created
and sold on the basis of security through obscurity. If no one can
see the source code, then their will be no security breaches.
Unfortunately, the history of proprietary software has long put the
lie to that belief. Crackers have, do and will crack proprietary
software. If you are running Windows, you are continually being sent
security updates. These are almost never prospective. Each security
update comes after the fact. A malicious cracker has found and
exploited a flaw. Some user paid the price with their money or their
privacy.

Open source software is predicated on the demonstrable fact that there
are more white-hat hackers than black-hat hackers. As a public service
and for bragging rights, the white hatson their own time and dime
pore over the source code of open source software, testing and probing
in search of possible security flaws. When they find something, they
shout if from the rooftops and it gets fixed immediately.

Loom is not Enough

Loom is very useful within in its primary function. However, there are
ancillary services that could improve its usefulnessespecially for e-
commerce. This is not a problem, but an opportunity. The existence and
use of Loom create real opportunities for entrepreneurs to serve niche
markets.

Independent businesses that provide escrow, insurance and guarantor
services immediately come to mind. However, the opportunities are
probably endless. If you can figure out a way to better serve the Loom
community, users will beat a path to your doorstep.

References

Volume of the earth is listed as 1.0832073 * 1012 cubic kilometres at
Wikipedia.