Re: How do we trust bits?
At 07:29 PM 4/10/2002 -0700, Tim May wrote: How do we trust bits to represent money? I argue that the question is, as stated, not well-grounded at this time. I agree. It is interesting to be back on cypherpunks after a five or more year vacation, only to find most of the same discussions we had ten years ago. Trust. Trust is a misleading concept. I think this is key. Trust was used in the early crypto papers as a handy word that had very little of the emotional baggage that people place on it now. The whole mangling of Certification Authorities and whether trust is transitive is missing the point. Alice trusts money because she can get ice cream cones. Banks exchange bits thru the ACH networks based on a belief that their exchange is valid. Bits are bits, there is no way to know that the bits are special; yet there is a cultural contract that allows money to move. Recent discussions talk about money in consumer terms. Banks move millions on faith alone. Large banks, mortgage houses, etc. move billions of dollars (with a B) with far less real security than many cypherpunks would use to secure a Tim May rant. Furthermore, the entire is-a object model, where is-a bank and has-an account balance of can and SHOULD (IMO) be replaced with a more realistic and more interesting model of believes. All of digital money is recastable in terms of Alice believes, Bob believes, Charles believes, etc. All of finance is about belief. Yes, Bank A believes that the bits coming down the Fedwire belong to Bank B. That is how money moves today. And there is a risk that this is not true, which is one of the things banks are paid to do: assess the probability of getting paid back for a transaction, and charging accordingly. We need to ask better questions if we expect to stop talking about the same real and imagined problems ten years from now. Pat Pat Farrell [EMAIL PROTECTED] http://www.pfarrell.com
Re: How do we trust bits?
On Wed, 10 Apr 2002, Pat Farrell wrote: Alice trusts money because she can get ice cream cones. Incorrect, she trusts money because she knows the vendor trusts the money. Why? Because they are members in a large (reasonably) stable environment with (relatively) low threat percentages. If it's too hairy the ice cream man moves on down the road, and the price of bread is so high that nobody worries about ice cream. Try to buy ice cream in a combat zone. Banks exchange bits thru the ACH networks based on a belief that their exchange is valid. No, they exchange bits based on a very expensive and complicated protocol that has a variety of safe guards built into it. Bits are bits, there is no way to know that the bits are special; yet there is a cultural contract that allows money to move. The medium is -not- the message. There -is- context. What message does a telegraph send if the key isn't struck? Cleary the medium in and of itself can't be the message. What does the message Billy arrived mean, if context isn't important? Does it mean that the killer arrived on time, that your a grandparent, or that your dog just got to the vet? This means that yes, -some- bits -are- more special than others. You and Tim are incorrect in your view. And yes, the question of whether trust (is) -not- transitive is -especially- critical. It is an -emotional- measure of the social stability of the populace at large. If people don't trust they don't -cooperate- and this adds 'friction' to the system. It's sort of like the PVT gas law coupled with materials science (in particular failure mode analysis) with respect to when or if the society will 'pop'. It maps (at least parametrically) to temperature (trust that is). -- The law is applied philosophy and a philosphical system is only as valid as its first principles. James Patrick Kelly - Wildlife [EMAIL PROTECTED] www.ssz.com [EMAIL PROTECTED] www.open-forge.org
Re: How do we trust bits?
On Thu, 11 Apr 2002, Nomen Nescio wrote: Changing trust to believe advances the discussion not one whit. Alice trusts Bob to sign keys accurately; Alice believes that Bob signs keys accurately. The change doesn't add anything. In fact if anything it's a step backwards. Trust is a specific form of belief; it is a belief on which the holder is placing some reliance. By substituting belief for trust you lose information. You go from a more specific term to a more generic one, a sign of sloppy thinking. It's a sad commentary on the intellectual level around here that a fatuous old windbag can propose such a counterproductive change in terminology and get his spineless lackeys to salute him for his wisdom. Meanwhile those who know better are intimidated into silence. While I thought the same thing about it being a more general term, it seemed like it was pointless to discuss. Rather than complain about the intellectual level, it's better to ignore noise and simply discuss the signal you feel is interesting. Ignoring noise is not a sign of intimidation :-) Patience, persistence, truth, Dr. mike
Re: How do we trust bits?
At 01:43 AM 4/11/2002 -0500, Jim Choate wrote: On Wed, 10 Apr 2002, Pat Farrell wrote: Banks exchange bits thru the ACH networks based on a belief that their exchange is valid. No, they exchange bits based on a very expensive and complicated protocol that has a variety of safe guards built into it. You are, of course, entitled to your own opinion. I don't see it that way. And I think the difference is important. My work at CyberCash, where we did the exchanges over ACH and Vital and other networks shows that the protocols were not actually very expensive or strongly complicated. Baroque, yes, overly complex to imply security by obscurity, yes. and to serve as a barrier to entry to keep out the unwashed and untrusted, of course yes. CyberCash was allowed to plug in and use the networks not because of some cryptographic wizardry. Rather it was because the founder (Bill Melton) and several of the VPs had years of experience working with the banks. The trust was with the people, not with the bits. Pat Pat Farrell [EMAIL PROTECTED] http://www.pfarrell.com
Re: How do we trust bits?
Changing trust to believe advances the discussion not one whit. Alice trusts Bob to sign keys accurately; Alice believes that Bob signs keys accurately. The change doesn't add anything. Belief is a physiological phenomenon that makes one accept otherwise silly concepts in order to be unison with a group. It is essential for the development of civilisation as we know it. The belief center is located in the left cortical hemisphere close to the center for unrelated ranting. Trust is an estimate of the future behaviour, extrapolation based on known facts and past performances. The two are completely unrelated. = end (of original message) Y-a*h*o-o (yes, they scan for this) spam follows: Yahoo! Tax Center - online filing with TurboTax http://taxes.yahoo.com/
How do we trust bits?
How do we trust bits to represent money? Someone asked this (Mike Rosing, I think it was). I argue that the question is, as stated, not well-grounded at this time. No one is asking for bits to be trusted, from first principles, absent real products and a real embedding in a financial system. Perhaps in N years, when Chaum/Brands kinds of digital money are actually being used, such a question will be more meaningful. Then we can ask Mary Jones why she trusts that the numbers being sent between her smart card or computer to her bank or moneychanger are really trustable. Until then, asking Mary why she should trust bits as money is inappropriate. However, even then, in N years, the question will be problematic. Consider this: we 'trust bits flowing between credit card verifiers, banks, and vendors. And we trust the welter of bits flowing in and amongst computers handling bank accounts, checks, traveller's checks, international clearing houses, SWIFT, etc. None of these systems are handling money in anything but a bookkeeping or accounting sense. Money is marks. Trust. Trust is a misleading concept. I recommend (and have done so for a long time...this is not new) doing a coordinate shift and recasting discussions about trust into discussions about belief. * At a very early age most children learn that the coins given to them by their parents may be exchanged for ice cream cones and rides on ponies. (Or for vials of crack, translating this experience into the inner cities.) Do they trust that a quarter is really a quarter, or is really money? No, they merely have an _expectation_, a _belief_, that the future will continue to look very much like the past and that the quarters in their pocket will very likely, almost with certainty, be accepted by store owners. * At a somewhat later age, most children are introduced to the ideas of bank accounts. Often through school-sponsored Savings Bond programs or passbook savings accounts. (These fell into disfavor during the inflationary 70s.). In any case, children learn to _expect_, to _believe_, that the markings in their passbooks mean that a bank will let them take dollars and quarters out with the appropriate incantations to the bank teller. Whether the money in the bank is real or imaginary is not at issue, only the expectation of a future. * And so on. Nearly all forms of money we encounter in the modern world are based on this pattern that the future will, in most cases, look a lot like the future. When there are exceptions, as with bank failures or frauds, this modifies the belief function. (Children learn, most of them, that lending money to other children and expecting to get it back is much different than depositing/lending money to the Big Bank and expecting to get it back. Children of the 1930s or of Weimar Germany may have suitable tweaks to this model, but the larger point is the same.) Bayesian reasoning, in other words. Experiential learning, with actors/institutions embedded in a larger matrix. The Big Bank is _expected_ to be more reputable, more trustable, because of a bunch of connections it has to other actors, to the past, and to its future. Some of these things we call reputation (or reputation capital), some we call trust. But belief is the ultimate fabric, the ultimate currency. We place _bets_ on whether loans will be repaid (risk, loansharking, vigorish, etc.). We _discount_ certain financial instruments based on our expectations or beliefs about the future. Furthermore, the entire is-a object model, where is-a bank and has-an account balance of can and SHOULD (IMO) be replaced with a more realistic and more interesting model of believes. All of digital money is recastable in terms of Alice believes, Bob believes, Charles believes, etc. All of finance is about belief. (And there are very intriguing semantics of these models. Saul Kripke is one place to look, as he pioneered the possible worlds semantics approach. All of human and animal behavior is largely based on building internal models of how the world works, what other people and animals will be doing (will be doing in a possible worlds sense), and what the implications of various courses of action will likely be.) We don't trust that the sun will rise tomorrow: we _believe_ it will rise, because it has for every day for the past several billion years and we see no causal reason to doubt that 0.947365 of all possible worlds involve the sun coming up. Operationally, we will lay heavy odds with anyone that the sun will come up. Likewise, we don't trust that Bank of America will give us our money back when we ask for it (modulor the right incantations and such): we _believe_ very strongly that it will. When people gain experience with a complex protocol, for example, and they start to see the same behavior, then they start to trust (= believe, = make bets) the protocol. Such was it when we were children
