Cryptology ePrint Archive: Report 2017/156

Trust Is Risk: A Decentralized Financial Trust Platform

Orfeas Stefanos Thyfronitis Litos and Dionysis Zindros

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.

Category / Keywords: cryptographic protocols / decentralized, trust, web-of-trust, bitcoin, multisig, lines-of-credit, trust-as-risk, flow, reputation

Original Publication (with minor differences): Financial Cryptography 2017

Date: received 17 Feb 2017

Contact author: dionyziz at gmail com

Available format(s): PDF | BibTeX Citation

Version: 20170222:154234 (All versions of this report)

Short URL:

[ Cryptology ePrint archive ]