From: Peter Monta <pmonta@qualcomm.com>
Date: Wed, 6 Dec 95 13:53:18 PST
To: cypherpunks@toad.com
Subject: Re: Geodesic Payment Systems? (was Re: Meeting notes from ANSI X.9 Meeting on Electronic Payment)
In-Reply-To: <Pine.SUN.3.91.951206104553.24528A-100000@eskimo.com>
Message-ID: <199512062154.NAA20063@mage.qualcomm.com>
MIME-Version: 1.0
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Wei Dai writes:

> > [ infinite-cost risk ]
>
> ...
> The direct cost of a break-the-bank catastrophic failure is bounded by the 
> amount of capital the bank has.  This is because the market will not 
> accept more liabilities (real or forged) from the bank than its capital.  
> There may be other indirect costs resulting from dislocations, but these 
> should also be proportional to the size of the bank.  Therefore your 
> argument is really against centralization and for diversification and 
> distribution.

Why "the bank", rather than "all banks"?  If there is a single
cryptographic point of failure in a widely used ecash system,
it seems unlikely that diversity would buy you anything.  The
worry would not be the compromised keys of a single bank, but
rather, say, an effective cryptanalysis.  I would put this in
the supernova class; it may be just as unlikely.

Peter Monta