

The Argument for Digital Signatures

From: Manu Sporny <msporny@digitalbazaar.com>
Date: Wed, 02 Nov 2011 12:02:24 -0400
Message-ID: <4EB16990.3080204@digitalbazaar.com>
Hi all,

We've had a number of teleconferences where the thought of using digital
signatures in the solution has been brought into question. That is, the
proposal has been put forward that a complete subset of the system be
implemented such that no digital signatures are necessary. The primary
thrust of the argument against digital signatures is that they're
difficult to implement and the requirement of digital signatures may
reduce the likelihood of adoption of the payment standard.

I agree that digital signatures are more difficult to implement than not
having them and I also agree that it may decrease the likelihood of
adoption. That said, there are a number of reasons that we would like to
propose the use of digital signatures:

* Decentralized Design
* Independent Verifiability
* Legally Enforceable via Legislation
* Secrecy
* Data Portability

Decentralized Design

Let's start from an ideal scenario - ideally, PaySwarm would be
completely decentralized. That is, a single person could play the part
bank, transaction processor, and account holder. That is, you are
beholden to no-one when it comes to managing your money. Additionally,
all assets that can be transacted on the network can be expressed
/anywhere/ on the web and the ownership claim of that asset can be
traced back to the person making the claim. So, centralization in both
of these cases is a bad thing. But how does one make claims on the Web,
across multiple websites, in a way that is secure and resistant to

Typically, one leans on digital signatures to do this. I know of no
other way, other than centralizing the asset listing service and/or
centralizing the banking service, to accomplish this. So, if we are
going to hope for a decentralized design, we must depend on digital
signatures or come up with an alternate technology to achieve this goal.

Independent Verifiability

Digital signatures allow for independent verifiability of claims. That
is, how do you know if a particular set of claims were actually made by
the person that the message says it is from? Keep in mind that using a
centralized service could achieve this goal, but then you have to hand
over the ability to understand a lie from the truth to a 3rd party.
That's not necessarily bad, if you trust the 3rd party, but that 3rd
party will probably end up using digital signatures anyway.

So, in order to verify the sender of messages - you need some sort of
digital signature.

Legally Enforceable via Legislation

Contracts bearing digital signatures are legally enforceable in many
industrialized nations. The argument has been made that courts don't
care about this detail, rather focusing on the intent behind the
transaction. While that is true to a certain degree, having a legally
binding contract isn't a terrible thing to start out from, especially if
the system needs digital signatures anyway as a part of it's standard
operating protocol.

Also, if we hope for this system to be usable by business, being able to
say "This contract is legally enforceable in the USA via the ESIGN act
of 2000" is better than not being able to say that. The knowledge that a
contract has signatures on it that can be traced back to a business or
individual is a strong incentive for people to behave and not get to the
point where they're in a court of law disputing a contract. That is,
without a digital signature on a contract - I can always claim that the
contract was forged and I never agreed to the transaction.


If we implement Public/Private Key digital signatures, we get encryption
for free, and we need that anyway to ensure the protection of messages
as they travel across the system.

To come at it from the other direction, we certainly need to protect
messages flying across the network while also ensuring that site owners
don't have to spend $30/year for an SSL certificate. That is, we need to
have the ability to send encrypted data over regular HTTP connections.
So, if we need that and we implement that... we have all of the tooling
required for digital signatures.

Data Portability

Being able to move all of your money, account information, receipts,
etc. from one place to the next requires that each digital contract,
receipt, account information, etc. is portable from one system to the
next. That is, you don't necessarily want to trust the person holding on
to your data to verify that the data is valid. You want your financial
history to look the same regardless of where it is stored. The validity
of a digital contract / receipt should be asserted by the people that
took part the transaction, not purely a 3rd party. Additionally, if
digital signatures are not provided, and you port your data across more
than 1 system, you lose the history of who made the claim.

There are more reasons to support digital signatures, but I'll stop here
and see what the feedback is on the arguments above. Keep in mind that a
response with "we don't need digital signatures" will still need to
address the issues above or define a subset of the system that those on
the list feel is appropriate to implement without digital signatures.

-- manu

Manu Sporny (skype: msporny, twitter: manusporny)
Founder/CEO - Digital Bazaar, Inc.
blog: Standardizing Payment Links - Why Online Tipping has Failed
Received on Wednesday, 2 November 2011 16:03:04 GMT

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