From: "Perry E. Metzger" <pmetzger@lehman.com>
Date: Tue, 10 Aug 93 14:06:53 PDT
To: "Kent Hastings" <kent_hastings@qmail2.aero.org>
Subject: Re: ADICO: Anarchist FDIC
In-Reply-To: <199308102022.AA10924@aerospace.aero.org>
Message-ID: <9308102059.AA22885@snark.shearson.com>
MIME-Version: 1.0
Content-Type: text/plain



"Kent Hastings" says:
>                       ADICO: Anarchist FDIC#000#
> When someone objects to free banking (in gold, for example) on 
> the grounds that unregulated banks will have fractional reserves 
> and have no incentive to stay honest, perhaps describing an 
> Anarchist Deposit Insurance COmpany (ADICO) will ease their fears.
> 
> A new or relatively obscure offshore bank would gain the trust of 
> potential depositors by agreeing to cooperate with surprise 
> inspections of their gold supply. Depositors would pay a small
> premium to cover loss from bank failures due to theft or fraud.
> 
> Cryptographic protocols would need to be developed to allow the 
> ADICO to see a verified total amount on deposit, without revealing
> anything about any particular depositor. The total should match 
> the physical amount of gold in storage, assuming 100% reserves.
> 
> Does anybody know of work on this, or think it is worth researching?

Good job -- you have come up with a very interesting problem indeed.

A cryptographic protocol that permitted an outsider to determine the
amount of (pick your favorite) on deposit without requiring that the
bank reveal who owns what would be a neat trick. I suspect, based on
some of the voting protocols people are coming up with, that it might
in fact be possible, although it might end up involving an outside
auditing agency in many of the transactions. Whether a practical
protocol to permit this to be done would be possible is an extremely
interesting research topic -- many of the voting protocols I've heard
of are quite impractical if you have millions of voters. To my
knowledge, nothing to solve what I will now dub the "Anonymous
Auditing Problem" has yet been done, and this is the first time the
question has been posed.

Perry