From: hfinney@shell.portal.com
Date: Mon, 16 Aug 93 23:20:25 PDT
To: cypherpunks@toad.com
Subject: PROTOCOL: Encrypted Open Books
Message-ID: <9308170525.AA22568@jobe.shell.portal.com>
MIME-Version: 1.0
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Eric had some good ideas in his protocol for verifying anonymous bank
deposits.  One thing wasn't clear to me: what if the bank creates
a fake account?

It would seem that the bank could explain away a sudden decrease in its
asset reserves (money that the bank officers actually spent on mistresses
and drugs) by creating a fake anonymous account which made a large with-
drawal.  The books would still balance.

It wasn't clear to me in Eric's protocol whether it would be expected that
the identity of accounts which made such withdrawals would be revealed.
Doing so would seem to go against the purpose of the digital bank.  But
without that ability it would seem that fake accounts could cover up any
amount of mismanagement.

Hal