undefined | Better HN

0 pointsAnthonyMouse5y ago0 comments

> If your identity is not transparent to me, I won't enter a relationship with you that requries me to know who you are, which in practice is almost every one.

There are two things about this that don't require centralized identity.

The first is that it's very commonly not true at all. If you want to sign up for an account for an online service (e.g. email, YouTube, gaming), they don't need the name on your driver's license for anything. They don't need to know anything about you. You create an account, set up authentication to prove you're the account holder in the future, and that's it. The identity you use can be created along with the account; it doesn't have to exist beforehand or be associated with anything else.

Second, even where reputation is important, you still don't need a single identity, it's just that an identity without any history would be untrusted.

Suppose you go to the bank to take out a loan. If you tell them your name is Barrin92 and you have no financial history, they're not going to give you one unless you get some more trusted party to cosign it or you post enough collateral that they can be assured to recover their principal if you default.

But then you start off with a small loan with a large amount of collateral, or a cosigner, and build a credit history as "Barrin92" with financial institutions. Now you can get a bigger loan, or one without a cosigner or as much collateral. Until you default. Then "Barrin92" would no longer be creditworthy and you'd be back to square one.

This works fine even if you have a thousand separate identities, because identities with no credit or bad credit aren't trusted and good credit is valuable so that you lose something significant (the creditworthiness of that identity) if you default.

People having multiple identities is effectively just equivalent to the ability to declare bankruptcy. It doesn't really break any good important thing and it does break some important mechanisms of oppression that we should want to break.

0 comments

overdrivetg5y ago

But again, in practice banks will loan more money more easily to those with a verified identity that has recourse beyond simple "loss of creditworthiness", so those loans will always be more appealing to those who can get them, and so nonrecourse loans never become a thing for normal citizens who can avoid them.

And those who can't get shunted down into the "Payday Loan" tier of finance and they have to dig themselves back out with the equivalent of deposit-backed credit cards.

But few people will choose a deposit-backed card when they have the option of trading identity for better pricing / convenience. If the online ad industry has taught us anything it is that mainstream consumers will trade their data for even the smallest of considerations.

Even if decentralized financial identity would be an improvement (and it is not clear that it would be), a vision with no practical incentive to get there from here is just the basis for another startup destined for whatever is the spiritual successor to f*ckedcompany.com.

AnthonyMouseOP5y ago

> But again, in practice banks will loan more money more easily to those with a verified identity that has recourse beyond simple "loss of creditworthiness"

The normal recourse is foreclosure of the asset (e.g. house) that the loan was made to purchase, which they don't need your name to do at all, only a way to identify the property they're taking as collateral.

> And those who can't get shunted down into the "Payday Loan" tier of finance and they have to dig themselves back out with the equivalent of deposit-backed credit cards.

That's where everybody starts anyway. You make a hundred bucks mowing lawns in high school or whatever and get a credit card like that. By the time you have the down payment for a house you have a credit history to go with it. Or you start out getting cosigned with your parents' credit history.

> But few people will choose a deposit-backed card when they have the option of trading identity for better pricing / convenience.

You're ignoring the benefit -- it's the equivalent of corporate limited liability. If you get a car loan and then some idiot totals your new car, that's the bank's problem now and they're the ones who have to deal with the insurance company instead of you. If you lose your job and your life gets messed up temporarily then you don't have to wait 7 years to start over.

And that's not even counting the privacy benefit.

Also, the best version is for centralized identity to cease to exist whatsoever (e.g. stop issuing people social security numbers or prohibit their use for anything but social security) and then people can't give up their centralized identity in exchange for magic beans because they haven't got one.

gremlinsinc5y ago

I wish getting bank credit was that easy (made bad choices in my twenties, paid well into my thirties for that)...

I could easily just buy up some account that has good credit since it's all anonymous, no way to know if the original 'good credit' actor is the same person now applying for the loan.

AnthonyMouseOP5y ago

Having "good credit" would imply doing something like having paid off six figures in student loans or the mortgage on a house, which requires paying many thousands of dollars in interest, so that credit history would have a high market value and defaulting on a loan taken against it would destroy that value. So that system would work fine -- it might cost the bank money to go through the inconvenience of foreclosing on a house, but it would cost you just as much for the good credit you destroyed in doing it, so it's symmetric and people would have an adequate disincentive to do that.

j / k navigate · click thread line to collapse

0 pointsAnthonyMouse5y ago0 comments

> If your identity is not transparent to me, I won't enter a relationship with you that requries me to know who you are, which in practice is almost every one.

There are two things about this that don't require centralized identity.

Second, even where reputation is important, you still don't need a single identity, it's just that an identity without any history would be untrusted.

0 comments

overdrivetg5y ago

And those who can't get shunted down into the "Payday Loan" tier of finance and they have to dig themselves back out with the equivalent of deposit-backed credit cards.

AnthonyMouseOP5y ago

> But again, in practice banks will loan more money more easily to those with a verified identity that has recourse beyond simple "loss of creditworthiness"

> And those who can't get shunted down into the "Payday Loan" tier of finance and they have to dig themselves back out with the equivalent of deposit-backed credit cards.

> But few people will choose a deposit-backed card when they have the option of trading identity for better pricing / convenience.

And that's not even counting the privacy benefit.

gremlinsinc5y ago

I wish getting bank credit was that easy (made bad choices in my twenties, paid well into my thirties for that)...

I could easily just buy up some account that has good credit since it's all anonymous, no way to know if the original 'good credit' actor is the same person now applying for the loan.

AnthonyMouseOP5y ago

j / k navigate · click thread line to collapse