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The main problem is that certain guarantees about behavior are fundamentally incompatible with certain attributes of transactions; you can have meaningful asser

The main problem is that certain guarantees about behavior are fundamentally incompatible with certain attributes of transactions; you can have meaningful assertions that hold only if all transactions meet some criteria and there is no optionality, because the intentional abuse will simply choose the set of options that circumvent whatever conditions you want to enforce. Using your own example, if your "world" supports a perfect invisibility device, then your world can't provide any guarantees that under certain conditions specific things will be seen - you can't have your cake and eat it too, if you want or need such guarantees, then you need to design a world where a perfect invisibility device is impossible. Stability of any financial system needs an ability to protect against malicious, resourceful actors. Just as a proof-of-work coin needs to protect against double-spending and miner collusion, a Taler-like system needs to protect against malicious exchanges (so, the requirements foor auditability) and against malicious fraudulent merchants (so, the requirements to ensure that there's no option that a malicious merchant might use to cash out anonymously after receiving a payment). Perhaps there is some way to satisfy all needs, but I personally doubt that, there are too many fundamentally opposite requirements (anonymity vs AML; circumventing gov't control vs ability to take legal action; irreversibility vs reversibility of fraud, etc) - and a system has to choose! If 99% of your transactions use a reversible mode and 1% are irreversible and untraceable, well, you can't have fraud protection for hacked wallets since those will use the irreversible and untraceable option; if you want feature A, you have to ensure that feature B is impossible.

matthewdgreen 6y ago
> and a system has to choose! A system does not have to choose. The society that deploys it has to choose which systems they will use, how those systems will be configured and so on. That society also needs to decide whether they will (or even can) ban alternative systems. The technology itself should not force the designers' favored technical balance onto society. An ideal technology should allow the broadest possible range of configurations, and let users and society make the remaining decisions wherever it's technically possible. (Many real-world systems are not ideal, and cannot technically admit the broadest possible range of solutions. But we know that centralized e-cash systems can make different choices than Taler.)
- PeterisP 6y ago
  My argument is that a broad range of constraints is inherently impossible to satisfy within a single fungible, fully interoperable money system - I agree that "ideal technology should allow the broadest possible range of configurations", however, even with such an ideal technology designed by $perfect_deity the "environments" with certain incompatible configurations need to be kept distinct and separate enough so they de facto form separate payment systems; and the users and society can choose to use system A for purpose X and system B (perhaps sharing all of the technology except a configuration flag) for purpose Y, but the society can't have a single system for both these purpuses, because if they are substantially different, then money can't be allowed to flow freely between the systems as that option would break one or the other use case. The society can freely choose between different systems and properties/configurations of systems; but certain emergent properties of a payment system that a society might want to choose require that some other options are closed off, that the configuration is set to ensure that no transactions in that system can use that option. For example, if some uses need an strictly anonymous system and others need an strictly unanonymous system, then these systems can interact only through some gateway that enforces breaking anonymity in the latter; if some uses need a reversible system and others need an irreversible system, then interaction needs to happen through some gateway that will reverse a transaction even if the other leg can't be reversed, taking on financial risk to cover the costs of such a scenario. And, crucially, it seems plausible that in many cases such gateways on the boundary between different configurations are socially impractical to operate as they would have to take on risks they can't protect from, and there would be financial motivation to target them to abuse that configuration difference. For example, we're seeing a bunch of barriers between physical cash USD and USD in bank accounts; and we're seeing a bunch of barriers between USD payments via cheques and USD Fedwire transfers. They are almost interchangeable, but the boundary between different "configurations" requires treating them as distinct and anyone offering a service for unrestricted exchange of one of those into the other is in for a world of hurt.
  - matthewdgreen 6y ago
    We are having two different discussions here. I am having a technical discussion about how we should design privacy-preserving payment systems. I think we should design them to be as powerful as possible, since it is vastly harder to "strengthen" a weak system than it is to "selectively weaken" a powerful system if society decides to do that. Using this approach means that society gets the largest range of technology to choose from. You are having a discussion about what solutions society should adopt, and whether multiple systems should be allowed. I think that's interesting but a very different conversation. The only place where these two discussions interact is when technology developers proactively decide to make some kind of specific privacy/security compromise that they think is the right one. This means that societies who want privacy don't get it. It means that societies who want a different tradeoff don't get it. And the most likely outcome is nobody ever adopts the new system, and we get PayPal.

matthewdgreen 6y ago

> and a system has to choose! A system does not have to choose. The society that deploys it has to choose which systems they will use, how those systems will be configured and so on. That society also needs to decide whether they will (or even can) ban alternative systems. The technology itself should not force the designers' favored technical balance onto society. An ideal technology should allow the broadest possible range of configurations, and let users and society make the remaining decisions wherever it's technically possible. (Many real-world systems are not ideal, and cannot technically admit the broadest possible range of solutions. But we know that centralized e-cash systems can make different choices than Taler.)

PeterisP 6y ago
My argument is that a broad range of constraints is inherently impossible to satisfy within a single fungible, fully interoperable money system - I agree that "ideal technology should allow the broadest possible range of configurations", however, even with such an ideal technology designed by $perfect_deity the "environments" with certain incompatible configurations need to be kept distinct and separate enough so they de facto form separate payment systems; and the users and society can choose to use system A for purpose X and system B (perhaps sharing all of the technology except a configuration flag) for purpose Y, but the society can't have a single system for both these purpuses, because if they are substantially different, then money can't be allowed to flow freely between the systems as that option would break one or the other use case. The society can freely choose between different systems and properties/configurations of systems; but certain emergent properties of a payment system that a society might want to choose require that some other options are closed off, that the configuration is set to ensure that no transactions in that system can use that option. For example, if some uses need an strictly anonymous system and others need an strictly unanonymous system, then these systems can interact only through some gateway that enforces breaking anonymity in the latter; if some uses need a reversible system and others need an irreversible system, then interaction needs to happen through some gateway that will reverse a transaction even if the other leg can't be reversed, taking on financial risk to cover the costs of such a scenario. And, crucially, it seems plausible that in many cases such gateways on the boundary between different configurations are socially impractical to operate as they would have to take on risks they can't protect from, and there would be financial motivation to target them to abuse that configuration difference. For example, we're seeing a bunch of barriers between physical cash USD and USD in bank accounts; and we're seeing a bunch of barriers between USD payments via cheques and USD Fedwire transfers. They are almost interchangeable, but the boundary between different "configurations" requires treating them as distinct and anyone offering a service for unrestricted exchange of one of those into the other is in for a world of hurt.
- matthewdgreen 6y ago
  We are having two different discussions here. I am having a technical discussion about how we should design privacy-preserving payment systems. I think we should design them to be as powerful as possible, since it is vastly harder to "strengthen" a weak system than it is to "selectively weaken" a powerful system if society decides to do that. Using this approach means that society gets the largest range of technology to choose from. You are having a discussion about what solutions society should adopt, and whether multiple systems should be allowed. I think that's interesting but a very different conversation. The only place where these two discussions interact is when technology developers proactively decide to make some kind of specific privacy/security compromise that they think is the right one. This means that societies who want privacy don't get it. It means that societies who want a different tradeoff don't get it. And the most likely outcome is nobody ever adopts the new system, and we get PayPal.