Bitcoin Forum

Now, I want to say first that Bitcoin is a great invention.

But obviously it's not the perfect tool for commerce.  I mean, it's an excellent electronic commodidty, perfectly suitable for use as a money.  But still, with a money you have to deal with the problem of the "exchange".

Bitcoin allows you to perform money transfer, in an irrevokable way.   Therefore it is perfect for donations, but unfortunately not for commercial transaction, for a commercial exchange is a bit more than just "two symetric transfers".

Say Alice want to buy Bob some service or good, let's say a nice cake for Xmas.

Alice sends her order to Bob and Bob accepts and tell her to send him the money.

Alice does it, and now she waits for her cake, that she is supposed to get delivered before Xmas.

At Xmas eve, if Alice did receive her cake, she's happy and can tell everyone that Bob is an honnest marchand.

If she didn't, she's unhappy and tell everyone that "Bob is a thief".

She might also say "Bob is a thief" even if she DID receive the cake.  In that case, Bob will say "Alice is a liar".

Now, in the market, reputation of people will be defined by three characteristics :  honnest, thief, and liar.   People will call each other by those names, and somehow one has to find a way to make sure everyone has been correctly qualified for what he is.

Such a situation reminds me of the famous game theory example of "doves" and "falcons".

Somehow I wonder if game theory could be of any help in order to design a rating system that would be efficient.

Don't think its a big problem, people have a pretty good trust meter already.

When I go to buy gas, I give the clerk $50 and say "$50 on pump #6". No receipt. He could easily just pocket it, or only give me $30 worth. I wouldn't know until I'm out of the store and pumping my gas.

That guy is in one known physical location with lots of relationships at risk economic and otherwise. I'm not saying internet trust is imposable, only that it is a different situation.

Ebay has a pretty good system in place for reputation ratings. 

This too can be handled by the repuation system. There doesn't need to be a top-down one-account rule. Alice can claim she is Alice all she likes, but if Jose, Sabrina, Anna, Colin, Peter, Jasmin, and Michael all claim that Alice is Bob, then nobody is likely to believe Alice/Bob.

It is easy to open a Facebook account claiming you are somebody that you are not. But it is almost impossible to make that account *well connected* and uphold the lie. The person you are impersonating is more likely to find out the more connections you have, and they will tell those connections.

Poorly connected identities should thus always be viewed with suspicion, and remember, connectedness is not only a function of the number of connections but of the topological distance from the center of mass of the network, and the latter is extremely hard to forge.

I haven't seen it yet but I'd really like to see a reputation site where people's opinions can be ranked.  So, for instance, Alice can say that Bob is a good guy, and that she value's Bob's judgement highly.  Giving him a 10 out of 10 on both.  Bob feels that Carl is a good guy, giving him a 10 as well.  if Bob is the only opinion that Alice has placed any trust in then she'll also give  Carl a 10.  Meanwhile if she has ranked Donna as a 5 on her judgement scale, and Donna gives Carl a 0 (calling him a thief) then Alice's ranking of Carl is going to be 6.6 (since she values Donna's judgement half as much as she does Bob's) This would weed out people ranking themselves, since none of their many accounts would be highly valued by anyone else. 

Combine with public key encryption to verify that you are who you are across bitcoin sites would be great?

Maybe it could be even more complicated  :P

Since Bob having a positive encounter or several with Carl only means that Bob doesn't know he's a thief, not that he knows that he isn't, maybe positive and negative ratings shouldn't be simply averaged. You could rank each of your trusted friends ranking abilities according to how likely they are to give false negatives (think they were stolen from, but weren't) and false positives (actually believing that the laptop got water damage in the mail). This way if a very trusting/optimistic friend made an accusation it could be given a lot of weight.

It works the other way too. When I buy gas I fill up first and go inside and pay afterwards. I could just drive off, but I don't. It warms my heart.

Definitely could be a useful twist.

Sure, but it's a centralized system.  So it's easy to make a rating system.

The question is :  how would work a rating system in a decentralized network ?
Is it even possible ?

This can be implemented as a separate project. It can be a kind of social network, maybe even similar to facebook, but decentralized. Having a trust system is not the only thing it could provide...

Well, this would be Diaspora.

But before it is implemented as a software, I'd like to see some theoretical, almost mathematical/game-theory-oriented approach to this, in order to determin whether or not it is possible, and how efficient it would be.

I think, that every person in that network should have it's own small trust list, which is filled manually. And a large trust list, which is loaded from other people, that are present in that small list. This can be done recursively to make a full list.

For example:
A trusts both B and C
B and C trusts D
So A should see that, there two of his trusted parties, that trust D

I'm not not familiar to game theory, but I think it should work.

Trust is never binary.

A trusts B 99% of the time
A trusts C 99% of the time
B trusts D 99% of the time
C trusts D 99% of the time
Do we know if B trusts C and vice versa?
If not then

A trusts D = min(AB*BD,AC*CD) = 0.99 * 0.99 = 0.9801

I simplified it a bit. Trust can also be negative for those, who is not trusted. A trusts D = average(AB*BD,AC*CD)

There are at least two independent metrics

1) how much A trusts B's honesty
2) how much A trusts B's trust in C's honesty

There are two options:
1. Use same values for trust, and trust in honesty(and absence of stupidity in choice of trusted parties).
2. Use separate values.

I think, that it should be optional to end-user.

Basically the idea I outlined.  Except that in mine it was not a binary rating system but a scaled one.

Perhaps now is the time to discuss actual implementation of a reputation system. As it stand, a German scammer probably got away with some bitcoins.

I thik we might just make it simple :  a database of evaluations of market participants.  It doesn't have to be decentralised.  Google will do the job.  Here is how I see it.

All participants should be identified by a GPG public key.  Once a trade is successful, both participants should sign and publish a message such as :

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

On October, 23th 2010, I made a commercial transaction with a person whose public GPG key was IDXXXXXX.
The transaction was done without any problem.
-----BEGIN PGP SIGNATURE-----
Version: GnuPG v1.4.10 (GNU/Linux)

iEYEARECAAYFAkywLWsACgkQq17371C4DmjLUgCgvBAPXJg/mdv4PemxBRgHZ+iw
qnUAoI+bt6Nt7FG+3H/lDe9qEb4wWN0H
=rop/
-----END PGP SIGNATURE-----

I'll do this kind of things on my site (http://grondilu.freeshell.org/bitXmetal.html)


Google robots would collect all those informations, so that one could have a fairly large amount of report from any GPG ID key.

It wouldn't be perfect, but it would do the job not so bad I think.

99% of the population don't have the skills or understanding to generate and use a GPG key.

Used to be the case. And there is going to be much higher than 1% competence in the current bitcoin community. And this solution doesn't have to be the ultimate one anyway.

What prevents me from generating 10 GPG keys, publish a message with the first 9 that there was a successful trade with number 10 (and in the opposite direction) and then scam people with my 10th account which now has a fake reputation ?

Nothing,,but it might look suspicious if the 9 GPG key are referenced by only one source.

I can cross-reference all 10 of the accounts.
Your approach seems like a good idea but I think it isnt the last word on the subject.

Google peer-to-peer or p2p reputation systems and you'll see it's an active area of research, with all kinds of sophisticated schemes in development.

I don't think there's any need for the bitcoin project to get directly involved, any more than the Fed is involved in credit bureaus or the FTC. It's pretty interesting stuff though...

Bitcoiners, however, have an interest in reputation system because it is directly applicable to the bitcoin economy. We have no court and police, but the reputation of men.

True. Mainly what I'm saying is, make it a separate project, and get up to speed first on the literature, which is a lot more advanced than anything being discussed in this thread. (I'm not up to speed either, I've just skimmed.)

I understand the concept of Bitcoin but please tell me how to make use of it and what are its  applications ?

Bitcoin will have many uses when it gains a little age. Unlimited free (or close to it) electronic transactions worldwide. No third party to simply take a chunk for themselves.

A WORLDWIDE currency system. No US Dollar or British Pound. No exchange fee for currencies. The securities of a bank with much better privacy to go along with it.

You'll be able to use it to buy things just like paypal. Subscriptions, services, electronics. Anything you want from gold to paper plates. Pay friends with a click of a button, no fee and the utmost security.  When bitcoin gains more portability, you'll be able to "bump" phones or similar to exchange contact info and trade bitcoins through your phone (which you can already do anyways with mybitcoin.com).

The possibilities are endless. Anything you use real money for, you will be able to use bitcoins for.



I would recommend getting involved as soon as possible to get as much benefits as possible. Give it more time to blossom before you see the overall benefits.

Well, you can buy some stuffs with it.  Go to http://grondilu.freeshell.org/bitXmetal.html for instance.  You can buy gold and silver there ;)

Harley4noble is a spam bot...

I recommend that you take a little more care about protecting your identity.  I would suggest removing the photo and your real life address, at a minimum.

Kids these days....