<div dir="ltr"><div><div><div><br></div>The reputation capital can also be audited, so the calculation for whether it makes sense for the TTP to cash in is open.<br><br></div>Thus there might be times when the TTP cannot be trusted, like in fractional banking if the fraction is too small.<br><br></div>Of course in reality, the TTP will be entrenched like in banking, so it wouldn't work. But in theory..<br></div><div class="gmail_extra"><br><div class="gmail_quote">On Sun, Jan 15, 2017 at 11:46 PM, Bill Frantz <span dir="ltr"><<a href="mailto:frantz@pwpconsult.com" target="_blank">frantz@pwpconsult.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><span class="">On 1/15/17 at 1:37 PM, <a href="mailto:ron@flownet.com" target="_blank">ron@flownet.com</a> (Ron Garret) wrote:<br>
<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
OK, I agree with all of that. However: it seems to me that there is another solution to the problem that a TTP can screw you over (which I acknowledge as a very real problem): make the TTP *auditable*, that is, design your TTP protocol in such a way that *if* the TTP defects that defection will be immediately discoverable to anyone who bothers to check. Now the TTP can only defect successfully if no one bothers to check. The odds of that are small enough that no rational TTP will take the risk *even if no one is actively auditing them*. The net result (I claim) will be a system that is as reliable in practice as a blockchain, but a lot more efficient.<br>
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What’s wrong with that argument?<br>
</blockquote>
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The TTP could decide to cash in its reputation capital and disappear. This has occurred in real life. One story:<br>
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Back in the 1960s, Japanese cameras were very expensive in the US as there was only one importer and it could and did charge monopoly prices. A company in Hong Kong addressed this situation by mail ordering cameras from Hong Kong. I actually ordered a camera from then. It came without the name plate -- trademark law was used to enforce the one importer policy. I also receive a letter which contained the name plate and the two screws to attach it. I was happy.<br>
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This company became quite popular and received many orders. There came a time where it was cashing checks/money orders etc., but not shipping. After about 9 months people realized that it was never going to ship and checked the address in Hong Kong. It had flown the coop with all the cash. It had cashed in its reputation capitol.<br>
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Cheers - Bill<br>
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