From: Mats Bergstrom <matsb@sos.sll.se>
Date: Sat, 3 Sep 94 17:35:58 PDT
To: cypherpunks@toad.com
Subject: Credentials, Reputations, and Anonymity
In-Reply-To: <199409031850.LAA02876@netcom16.netcom.com>
Message-ID: <Pine.3.85.9409032249.A11054-0100000@cor.sos.sll.se>
MIME-Version: 1.0
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Just some thoughts (I haven't done much reading or thinking on these 
issues so possibly this is just to show how little I understand): 

> One doesn't pay $20,000 for a new car, not get the car because the
> dealer welched, and simply say: "Boy, his reputation is mud now."

No, one gets a receipt and keys to the car when paying (in whatever way) 
and drives away in the purchase. The receipt can be one-way anonymous 
and the car can be paid for in paper cash. (Then there are problems of
registration and insurance interfering with anonymity, not relevant to
what is discussed here). If necessary I can prove in court that I bought
the car, showing the receipt (in theory still anonymously).
 
Now, if I want to pay for the car in on-line cash I guess I could
connect to my anonymous bank account with my private key, transfer
the money to a bank account of the seller's choice, his bank giving my
bank a receipt, and drive away in my new car.

So, when buying hardware I only have to trust the digital banking system,
not the seller? Well, if the seller is anonymous to his bank also, what
can be proved is only that anonX paid anonY the sum Z (or possibly
what the purchase was about - a description of the merchandise - if the
seller instructed his bank to sign this into the receipt). What if the
seller reveales his identity to a court, shows a paper receipt to prove
that he has bought the merchandise and claims never to have sold it to
me? No one can force him to produce the private key connecting him to the
account that received on-line payment. It doesn't help to 'outlaw' paper
receipts - still, he can prove that he bought the car by producing the
key (password) to an account that paid for it but deny connection to
the account that received payment from me. By revealing my connection to
my paying bank account I can prove that I 'paid for' the car (possibly
time-stamped at a later date) but who is to say that I am not the owner
of the receiving account also?

Thus, if the seller is identifying himself, an anonymous buyer can use
on-line cash to pay for a car and still be 'safe' with a receipt (paper
or on-line have similar value in preserving the buyer's pseudonymity).
But if both seller and buyer are anonymous, then receipts mean nothing
(like in criminal business) but reputations everything.

Mats