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Trust Is Risk: A Decentralized Financial Trust Platform

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Financial Cryptography and Data Security (FC 2017)

Part of the book series: Lecture Notes in Computer Science ((LNSC,volume 10322))

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Abstract

Centralized reputation systems use stars and reviews and thus require algorithm secrecy to avoid manipulation. In autonomous open source decentralized systems this luxury is not available. We create a reputation network for decentralized marketplaces where the trust each user gives to the other users is quantifiable and expressed in monetary terms. We introduce a new model for bitcoin wallets in which user coins are split among trusted associates. Direct trust is defined using shared bitcoin accounts via bitcoin’s 1-of-2 multisig. Indirect trust is subsequently defined transitively. This enables formal game theoretic arguments pertaining to risk analysis. We prove that risk and maximum flows are equivalent in our model and that our system is Sybil-resilient. Our system allows for concrete financial decisions on the subjective monetary amount a pseudonymous party can be trusted with. Risk remains invariant under a direct trust redistribution operation followed by a purchase.

D. Zindros—Research supported by ERC project CODAMODA, project #259152.

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Author information

Authors and Affiliations

  1. National Technical University of Athens, Athens, Greece

    Orfeas Stefanos Thyfronitis Litos

  2. National and Kapodistrian University of Athens, Athens, Greece

    Dionysis Zindros

Authors
  1. Orfeas Stefanos Thyfronitis Litos
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  2. Dionysis Zindros
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Correspondence to Orfeas Stefanos Thyfronitis Litos .

Editor information

Editors and Affiliations

  1. University of Edinburgh, Edinburgh, UK

    Aggelos Kiayias

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© 2017 International Financial Cryptography Association

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Thyfronitis Litos, O.S., Zindros, D. (2017). Trust Is Risk: A Decentralized Financial Trust Platform. In: Kiayias, A. (eds) Financial Cryptography and Data Security. FC 2017. Lecture Notes in Computer Science(), vol 10322. Springer, Cham. https://doi.org/10.1007/978-3-319-70972-7_19

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  • DOI: https://doi.org/10.1007/978-3-319-70972-7_19

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-70971-0

  • Online ISBN: 978-3-319-70972-7

  • eBook Packages: Computer ScienceComputer Science (R0)

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