10.20.1. (the main discussion of this is under Crypto Anarchy)
10.20.2. Escrow Agents as a way to deal with contract renegging
- On-line clearing has the possible danger implicit in all
trades that Alice will hand over the money, Bob will verify
that it has cleared into hisaccount (in older terms, Bob
would await word that his Swiss bank account has just been
credited), and then Bob will fail to complete his end of
the bargain. If the transaction is truly anonymous, over
computer lines, then of course Bob just hangs up his modem
and the connection is broken. This situation is as old as
time, and has always involved protcols in which trust,
repeat business, etc., are factors. Or escrow agents.
- Long before the "key escrow" of Clipper, true escrow was
planned. Escrow as in escrow agents. Or bonding agents.
- Alice and Bob want to conduct a transaction. Neither trusts
the other;
indeed, they are unknown to each other. In steps "Esther's
Escrow Service." She is _also utraceable_, but has
established a digitally-signed presence and a good
reputation for fairness. Her business is in being an escrow
agent, like a bonding agency, not in "burning" either
party. (The math of this is interesting: as long as the
profits to be gained from any small set of transactions is
less than her "reputation capital," it is in her interest
to forego the profits from burning and be honest. It is
also possible to arrange that Esther cannot profit from
burning either Alice or Bob or both of them, e.g., by
suitably encrypting the escrowed stuff.)
- Alice can put her part of the transaction into escrow with
Esther, Bob can do the same, and then Esther can release
the items to the parties when conditions are met, when both
parties agree, when adjudication of some sort occurs, etc.
(There a dozen issues here, of course, about how disputes
are settled, about how parties satisfy themselves that
Esther has the items she says she has, etc.)
By Tim May, see README
HTML by Jonathan Rochkind