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Peer-to-Peer by Andy Oram

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Reputations

While micropayments provide an excellent mechanism for anonymous exchange, a number of systems call for more long-term pseudonymous or even public relationships. For instance, in the case of transactions in which one party promises a service over a long period of time (such as storing a document for three years), a simple one-time payment generally makes one party in the transaction vulnerable to being cheated. A whistleblower or political dissident who publishes a document may not wish to monitor the availability of this document and make a number of incremental micropayments over the course of several years, since this requires periodic network access and since continued micropayments might compromise anonymity. (While third-party escrow monitoring services or third-party document sponsors might help to solve this issue, they introduce their own problems.) In addition, some systems might want to base decisions on the observed behavior of entities—how well they actually perform—rather than simply how many resources they can provide.

In the real world, we make use of information about users to help distribute resources and avoid poor results. Back before the days of ubiquitous communication and fast travel, doing business over long distances was a major problem. Massive amounts of risk were involved in, say, sending a ship from Europe to Asia for trade. Reputations helped make this risk bearable; large banks could issue letters of credit that could draw on the bank’s ...

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