[cap-talk] Capability accounting

[Norman Hardy]

On Jun 23, 2006, at 5:14 AM, Ian G wrote:

> Hi Norman,
>
> Norman Hardy wrote:
>
>> I am extremely enthusiastic about introducing money into the system.
>> DSR <http://cap-lore.com/Economics/DSR/> even includes a 32 bit
>> money amount in most network packets.
>
> DSR, that's a blast from the old days :)
>
> Warning - all the below is quite "negative, cynical,
> critical."

Thanks for your thoughtful comments.

>
> DSR almost certainly will not work.  I'd have to
> read it in full to be clear, but here are a few
> issues I spotted.
>
> 1. It has no security built in.  So it is in
> effect an accounting system where everyone has
> to participate and rely on everyone else.

Yes, it has no security, except  for the ability to observe
the fidelity of participants and share those observations.
This, being tedious, must evolve into a service.
Also critical is the ability to choose those with whom
you do business.
Coins evolved amid much counterfeiting.
Today's banks are indeed quite reliable, but
they evolved to that state.
Crypto helps vastly for it helps those who want to know,
who cheated, whether or not there are police to call.

> 2. Reputation doesn't cut it when it comes to
> money, the defrauders are way smarter than that,
> and can basically game any system.

There is fraud in the real world yet it works.
DSR is not proposed for buying a car.
Passing such a sum thru DSR would indeed tempt
those without a long term business plan.
Buying a book is marginal.
Buying packet delivery or an article seems just fine
for those who pass the money have much more to gain
by playing by the rules.
Frequent cheating leads to quickly to bad reputation
and no business, just like the real world.

> 3. there is no mechanism whereby DSR "arises";
> it is a description of "there" without the route
> map of how to get from "here" to "there".

There is indeed no map provided in the foundation architecture,
just as DNS is outside the IP addressed infrastructure of Internet.
There is actually competition to DNS roots, but the main player
happens go be good enough that the alternatives have little traffic.
Routing in DSR is more complex for a path must be chosen
on the basis not only of distance but fidelity of players.
Also location is not built into the IP address structure.
When road systems evolved, no central routing system was necessary
to tell travelers how to choose the roads; they asked around.
That is how markets work.

> 4. It relies on everyone, but offers little
> until everyone is on board - so it cannot grow.

This is alas largely true.
Of course internet began to grow before everyone was on it.

> 5. it is only useful for a tiny area of transactions
> (small amounts, ones of a special type).  This
> assumes a supply before a supply, see 3. above.

Mechanisms for larger amounts are indeed already in place,
and would be presumably used to settle DSR accounts.
(I don't know what you mean by "special type".)

> 6. no mechanism by which the money's value is
> independently established.

Why need that be centralized?
Who establishes exchange rates between currencies?
The market.
Some governments try but can do so only by entering the
market themselves.

> Etc etc.
>
> ...

There is an admitted libertarian bias here. (no central authority)
There is also an embracing of chaos of unreliable components,
something that was perhaps introduced to the computing world
most forcefully by the noise and lost circuits of telecommunications.
This taught many computer people the reliable systems could
emerge upon unreliable foundations.
vonNeumann and Hamming showed this earlier, of course.
DSR is not a "computer science" solution.
I put it in the "economics" section of my site.
DSR includes dishonest people as obstacles to be routed around.
There was much trade before there were police.
In DSR you are at risk from only those who you choose to do business  
with.
Admittedly some tasks can be done only by risking your business with
shady characters.
Computer science won't change that.

>
>
>>> Money makes all those things come to the fore.  The accounting
>>> people will say "oh, we don't need those costs, we'll just
>>> run an accounting system," but the accounting system *hides*
>>> the costs somewhere, rather than eliminates them.  So this
>>> only works if you can find a place to hide them.
>>
>>
>> Agreed!
>> Trouble with most accounting systems is that they spend more on
>> accounting transactions than on service.
>> For quite some while some telcos spent more money remembering
>> and providing you with a printed itemized listing of your calls, than
>> they
>> spent to switch and carry the bits in the phone calls.
>
>
> Yup.  The problem was they wanted to charge on time,
> because this takes them closer -- in theory -- to the
> consumer surplus.
>
> But the consumer hated that, and the consumer wanted
> to see why it was costing so much, and why the bill
> was killing them at the end of the month.  So telcos
> were forced into this "itemised billing" stuff which
> added more complications, as it went from simple
> digital to complicated auditing ... what happens
> when the user didn't make that call ... support
> problems ...
>
> What the user wanted was a very easy management of
> costs.  So when the pre-paid thing started (for another
> market segment), lots and lots of "account users" switched
> across.  Boom.  In one fell swoop, their mental costs --
> cf Nick -- were converted from the end-of-month billing
> nightmare into the pre-paid loadup.  Bliss.
>
>
>
> iang
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