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Of course, in both cases, that is a bug of the particular reputation system, not of reputation systems in general: 1) In the Ebay case, reputation can be condi

Of course, in both cases, that is a bug of the particular reputation system, not of reputation systems in general: 1) In the Ebay case, reputation can be conditioned on the type of items and the flow of money being processed by the merchant. Someone who is highly reputable for $50 transactions, isn't necessarily so for $5,000 ones. You could also always have "anomaly detection" built into the system, which kicks off whenever the seller moves too quickly from $50 items to $5,000 and either warns users or pro-rates their reputation (if nothing else, radical behavior change could mean the seller's account got compromised...). 2) In the Bitcoin exchange case, there is currently no real reputation score for Bitcoin exchanges as far as I know. But you could have a proof of stake system that requires exchanges to hold X% of their funds available, similar to the requirements for banks. You could also operate the exchange in a reduced risk way if say, to convert $1000 USD to BTC you sequentially post 1000 $1 USD transactions and don't send them the next dollar until the corresponding BTC amount clears on the network and is safely stored in your hardware or multi-server wallet. Not saying that there aren't fundamental issues with reputation economies, but lets give the dystopia a fair trial and assume that the non-essential problems will be solved.

kough 11y ago
In response to (1), plenty of exit scams involve exactly the same product that the company previously sold with 5-star ratings. Either an expensive product from the beginning, or long fulfillment times that allow a large backlog of orders before anyone takes notice, or both. (No, that $100 ounce never came, and I lost my money just like fifty other fools on Agora.) EDIT: oh yeah, this is also how I got scammed out of $200 trying to purchase a fake ID. Kids, friends make friends use an escrow service.
jsprogrammer 11y ago
Why should an exchange have any less than 100% of the funds available? The exchange should be holding all customer funds in segregation, not mingling and floating them.
- gboudrias 11y ago
  It's strange to think about, but realistically the exchange does not need 100% of the funds available, since they will never all be withdrawn at once, even in the event of a massive crash. The actual proportion an exchange needs to keep to be able to pay everyone (who asks for it) at all times is about as predictable as the bitcoin market itself. Would we trust "100% funds available" exchanges more? Possibly, but the "cost" would be very high so I would actually be a little wary of an exchange which does this, as to me it would be "trying too hard" to look nice (in reality there's always some trust involved, and so some risk that the owners run off with your coins/money).
  - venomsnake 11y ago
    Congratulations. You just invented fractional reserve banking.
    - gboudrias 11y ago
      Not sure I follow? This is standard in the banking world, yes, so why wouldn't it be standard in the much less regulated bitcoin world?
      - venomsnake 11y ago
        Because then you get all the "features" of the current banking system that bitcoin wanted to avoid. Bitcoin is by design deflationary currency. Fractional reserve banking is by design inflationary. No matter where you sit on how much inflation and what monetary policy is best - it is obvious that it is against the intentions of the original adopters and creators of the BTC network.
        fucking_tragedy 11y ago
        Sounds like you're mixing ideology with technology.
    - feebale 11y ago
olalonde 11y ago
> But you could have a proof of stake system that requires exchanges to hold X% of their funds available, similar to the requirements for banks In Bitcoin's case you can even do that provably and without trusted third parties: https://github.com/olalonde/proof-of-liabilities https://github.com/olalonde/proof-of-liabilities. I haven't worked on this in a while so there might be more recent proposals.
Retric 11y ago
#2 is pointless. People want to keep bitcoins on an exchange because every bitcoin > bitcoin transaction has overhead. So, now the exchange has account X with Y money in it. Once Y get's to 100,000,000$ (or whatever) they defect. PS: The bitcoin network only handles ~7 transactions a second, 1,000 1$ transactions would take over 16 minutes if your willing to pay more money than anyone else to do those transactions. However, if you wait for a transaction to clear that's ~10 minutes per transaction. So, 1000 1$ transactions would take 1 week.
kolinko 11y ago
The problem with 2) is that the USD transactions would be too hard to do with the current banking system. While in many cases you can already do instant and free wire transfers, virtually no banks offer APIs good enough to program such scenario. Also, I'd be afraid of triggering some kind of banking system warnings if I sent a hundred transactions within one day. With crypto to crypto exchanges a better solution would be to do it as a DAO/smart contract.

kough 11y ago

In response to (1), plenty of exit scams involve exactly the same product that the company previously sold with 5-star ratings. Either an expensive product from the beginning, or long fulfillment times that allow a large backlog of orders before anyone takes notice, or both. (No, that $100 ounce never came, and I lost my money just like fifty other fools on Agora.) EDIT: oh yeah, this is also how I got scammed out of $200 trying to purchase a fake ID. Kids, friends make friends use an escrow service.

jsprogrammer 11y ago

Why should an exchange have any less than 100% of the funds available? The exchange should be holding all customer funds in segregation, not mingling and floating them.

gboudrias 11y ago
It's strange to think about, but realistically the exchange does not need 100% of the funds available, since they will never all be withdrawn at once, even in the event of a massive crash. The actual proportion an exchange needs to keep to be able to pay everyone (who asks for it) at all times is about as predictable as the bitcoin market itself. Would we trust "100% funds available" exchanges more? Possibly, but the "cost" would be very high so I would actually be a little wary of an exchange which does this, as to me it would be "trying too hard" to look nice (in reality there's always some trust involved, and so some risk that the owners run off with your coins/money).
- venomsnake 11y ago
  Congratulations. You just invented fractional reserve banking.
  - gboudrias 11y ago
    Not sure I follow? This is standard in the banking world, yes, so why wouldn't it be standard in the much less regulated bitcoin world?
    - venomsnake 11y ago
      Because then you get all the "features" of the current banking system that bitcoin wanted to avoid. Bitcoin is by design deflationary currency. Fractional reserve banking is by design inflationary. No matter where you sit on how much inflation and what monetary policy is best - it is obvious that it is against the intentions of the original adopters and creators of the BTC network.
      - fucking_tragedy 11y ago
        Sounds like you're mixing ideology with technology.
  - feebale 11y ago

olalonde 11y ago

> But you could have a proof of stake system that requires exchanges to hold X% of their funds available, similar to the requirements for banks In Bitcoin's case you can even do that provably and without trusted third parties: https://github.com/olalonde/proof-of-liabilities https://github.com/olalonde/proof-of-liabilities. I haven't worked on this in a while so there might be more recent proposals.

Retric 11y ago

#2 is pointless. People want to keep bitcoins on an exchange because every bitcoin > bitcoin transaction has overhead. So, now the exchange has account X with Y money in it. Once Y get's to 100,000,000$ (or whatever) they defect. PS: The bitcoin network only handles ~7 transactions a second, 1,000 1$ transactions would take over 16 minutes if your willing to pay more money than anyone else to do those transactions. However, if you wait for a transaction to clear that's ~10 minutes per transaction. So, 1000 1$ transactions would take 1 week.

kolinko 11y ago

The problem with 2) is that the USD transactions would be too hard to do with the current banking system. While in many cases you can already do instant and free wire transfers, virtually no banks offer APIs good enough to program such scenario. Also, I'd be afraid of triggering some kind of banking system warnings if I sent a hundred transactions within one day. With crypto to crypto exchanges a better solution would be to do it as a DAO/smart contract.