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Cyphernomicon 12.17

Digital Cash and Net Commerce:
Loose Ends

  12.17.1. Reasons to have no government involvement in commerce
           - Even a small involvement, through special regulations,
              granted frachises, etc., produces vested interests. For
              example, those in a community who had to wait to get
              building permits want _others_ to wait just as long, or
              longer. Or, businesses that had to meet certain standard,
              even if unreasonable, will demand that new businesses do so
              also. The effect is an ever-widening tar pit of rules,
              restrictions, and delays. Distortions of the market result.
           + Look at how hard it is for the former U.S.S.R. to
              disentangle itself from 75 years of central planning. They
              are now an almost totally Mafia-controlled state (by this I
              mean that "privatization" of formerly non-private
              enterprises benefitted those who had amassed money and
              influence, and that these were mainly the Russian Mafia and
              former or current politicians...the repercussions of this
              "corrupt giveaway" will be felt for decades to come).
             - An encouraging sign: The thriving black market in Russia-
                -which all Cypherpunks of course cheer--will gradually
                displace the old business systems with new ones, as in
                all economies. Eventually the corruptly-bought businesses
                will sink or swim based on merit, and newly-created
                enterprises will compete with them.
  12.17.2. "Purist" Approach to Keys, Cash, Responsibility
           + There are two main approaches to the issue:
             - Key owner is responsible for uses of his key
             - or, Others are responsible
           + There may be mixed situations, such as when a key is
              stolen...but this needs also to be planned-for by the key
              owner, by use of protocols that limit exposure. For
              example, few people will use a single key that accesses
              immediately their net worth...most people will partition
              their holding and their keyed access in such a way as to
              naturally limit exposure if any particular key is lost or
              compromised. Or forgotten.
             - could involve their bank holding keys, or escrow agents
             - or n-out-of-m voting systems
           - Contracts are the essence...what contracts do people
              voluntarily enter into?
           - And locality--who better to keep keys secure than the
              owner? Anything that transfers blame to "the banks" or to
              "society" breaks the feedback loop of responsibility,
              provides an "out" for the lazy, and encourages fraud
              (people who disavow contracts by claiming their key was

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