Steve Schear wrote:
One problem is the holders could collude and play a "shell game".
Suppose that 30% of the holders were going to be asked to reveal their
assets, then the company could back only 30% of the currency, and
redistribute the assets to the selected holders before the auditors come.
How about this method?
1.) Auditors meet at a defined place and time.
2.) Courier arrives and presents a fraction N of M of the backing, once
at a time, to the auditors
3.) Auditors verify the fraction, account for it and enclose it in a
container with a unique hard to forge seal
4.) Courier leaves
5.) Step 2-4 are repeated until the total of M has been presented to the
6.) In the second round, the auditors request the same fractions N of M
again. Not all N have to be presented, but can be
7.) One after another the couriers with the respective fractions present
them again to the auditors
8.) The auditors verify the seals, and remove them
9.) The couriers leave
There are two disadvantages to the process:
1.) It takes quite some time.
2.) It is expensive
The advantages are:
1.) It is secure for the auditors and the operators
2.) It presents the full backing
Although your schema is quite good I think it fails to account
for the underhanded nature of some humans and the benefits to be
gained under some situations.
Think about the counterfeiting of all currency (even US) by the
British during WWII, think about counterfeiting in general,
stocks, bonds, salted mines, and the host of other scams that
have happened over time. One common factor is that as the
protections get better, the skill of the nefarious improves.
The other limitation of your schema is that the fractions without
seals on the second round can not be verified until there is a
third round, and then the unsealed fractions on the third round
can not be verified until the fourth round, etc. Because of this
you have to seal all assets and leave them sealed until the next
audit to prevent the same unsealed package from being presented
Simply put if there are 100 fractions alleged and the auditors
request 30, which are then sealed. On the second round they
request 30, if the math was perfect and no randomness crept in,
the second lot of 30 should contain about 9 sealed packages and
21 unsealed. This could be met by having only 51 fractions total.
So you add a few more for safety and you need maybe 60, quite a
shortfall from 100.
For a quick look at the other schema proposed using cross signed
transactions and other cryptographic methods, there is the human
arrogance factor to consider. Some people, like the Yellow Kid,
are very convincing in their lies and will happily sign any
document alleging that the moon is made of green cheese and that
the Lunar Landing was a fraud foisted off on a gullible public
because they figure the odds of them being caught are so small
and so far in the future that they will have been able to high
themselves off to an untouchable spot like some overthrown tin
pot dictator from South America and live in splendor the rest of
their natural days. It is only a very short step from this to
stock fraud and other financial scandals that we have seen over
the last few years.
As I see it, cryptography is an excellent tool to raise the
barrier to the less skillful, but it is, like all tools,
manipulated by humans. Some are more skillful in their use of
tools than others and find creative ways to solve problems.
A small sample. Do you know what a dent puller is? It's a slide
hammer with a screw on the tip that you screw into the sheet
metal of the dents in your car to render the surface flatter so
it can be treated with Bondo and paint to make it look like it
was never there. Guess what? Some clever person realized that
some common door locks could be broken with the same device so
for a while there was a lot of breaking an entering with this tool.
Another, and more recent, case is the Kryptonite bike and
motorcycle lock. Thick, hardened steel not easily cracked, except
by some 17 year old bike shop kid with a 19 cent Bic pen.
This is a great subject with lots to explore, both technically
and socially. I love it and all the wonderful thinking it brings out.
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