We also assume that the overlay network is capable of safely distribut-
ing a blacklist of banned users. Whenever a user detects fraud and has a
proof of that, he can submit it to the overlay network which makes this
information available to every user. How to implement the distribution of
blacklist securely is beyond the scope of this paper.
Ah. That seems rather the nub of the problem for a decentralized system that relies on punishing or shunning fraudulent members.
They don't seem to be aware of BitCoin. Otherwise they would have mentioned it at the start. The key difference is they focus on the offline case whereas Satoshi really does not.
Their scheme for handling double spends is to compare multiple competing histories of the coin from time to time and then simply blacklist whoever caused the fork (eg the coin owner themselves). So this is not an anonymous scheme as you need some robust way to blacklist people. More problematically by the time the double spending is found, it cannot be corrected. It's not like BitCoin where one of the spends wins and the other loses. Both merchants potentially lose.
BitCoin seems like a better design to me. But they may disagree. Perhaps somebody should point them to Satoshis paper and this forum, it'd be interesting to see their thoughts.
