WIDE Technical-Report in 2008

Local Production, Local
Consumption Storage Economics
for Peer-to-Peer Systems
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Local Production, Local Consumption Storage
Economics for Peer-to-Peer Systems1
Kenji Saito2 and Eiichi Morino3

1

This study is in part carried out as part of “Research Institute for Digital Media and Content” promoted by Special Coordination Fund for Promoting Science andTechnology, funded by Ministry of Education, Culture, Sports, Science and Technology, Japan.
2
Research Institute for Digital Media and Content, Keio University
3
Gesell Research Society JapanAbstract
Autonomy of peer-to-peer (P2P) systems requires some form of economies. Forwardable storage claims of Samsara[4] can define a common value in computer
networks, and possibly be a commodity money in P2P systems. However, without managing how far the claims can be forwarded, they would not form anefficient, dependable and sustainable economic chain.
We propose to use i-WAT[15] tickets to represent storage claims to form
drafts in real terms so that a claim can be dynamically replaced by its equivalent
in the vicinity, allowing the accesses to the storage to be fast and robust.
An incentive analysis and a simulation are made to discover the extent towhich the proposed methodology is effective.

1

Introduction

1.1

Needs for peer-to-peer economies

Designs of P2P systems are characterized by their usage of overlay networks
such that participants can potentially take symmetrical roles. This implies
distribution of authorities, not only preventing introduction of single points offailure, but also possibly assuring the level of autonomy for self-organization,
where any subsystem can spontaneously start, maintain itself, or recover fromits failures.
To make use of under-utilized computing resources in such an environment,
since the resources are distributed over autonomous entities, exchanging needs
to be performed in an incentive-compatible way: the coordination must be
accomplished by collection of selfish behaviors.

1.2

Challenges

There are following challenges:
1. We need an economy to avoid the tragedy of the commons[7], in which
the shared resources are depleted through over-exploitation because participants are motivated to maximize their own benefits while the costsof exploitation are equally distributed among them; we need an economy
that does not tolerate those participants who do not pay appropriate costs
in return for their benefits.
2. This economy needs to be autonomous, efficient and tolerant of failures;the economy should not interfere with the benefits of P2P designs.
3. This requires an exchange medium conforming to the principle of local
production, local consumption (LPLC)[19] – what consumed locally are
to be produced locally, and only when they are unavailable, they are to
be conveyed from the nearest producers.

1.3

Contributions of this work

Recent studies in P2P economics have shown that a decentralized digital medium
of exchange is possible by representing debts: Samsara[4] and i-WAT[15] are two
examples. However, Samsara alone cannot implement LPLC, and i-WAT does
not have a credible way to bind debts with resources.
This work is an attempt to design a new medium of exchange for P2P systems, called Storage-Standard Currency (SSC), based on the concept of storage
claims (incompressible placeholders) adopted from Samsara, and representing
them in the form of digital tickets adopted from i-WAT. The medium conforms
to the principle of LPLC.
Possible applications of this work include any P2P activities, such as file sharing, data aggregation, data dissemination, bandwidth sharing and distributed
computing.

1

1.4

Organization of this report

The rest of this report is organized as follows. Section 2 describes some historical
media of exchange to help readers understand the core concepts of this work,and gives overviews of Samsara and i-WAT on which the proposed economy isbased. Section 3 describes the commodity money realizable by Samsara, anddrafts in real terms realizable by i-WAT with the storage claim as the guaranteeof the debt. Section 4 gives an incentive analysis and simulation results of the
proposed designs. Section 5 describes other existing designs of P2P economic
systems. Section 6 describes some future work. Finally, section 7 reviews theoutcome of this work in relations to the original challenges, and assesses the
success of the designs.

2

Background

2.1

Historical media of exchange

2.1.1

Commodity money

Autonomous economy, in which participants can generate exchange media themselves, is not a new concept.
For example, in old Japan, rice was a common value being used as a medium
of exchange (commodity money), whose value comes from the commodity itself.
Anyone (any farmer) with facilities to produce rice could generate a medium of
exchange themselves.
Implication to P2P designs A core concept of this work is that a remotestorage space can be seen as a common value in a P2P system, which can become
a medium of exchange as a commodity money. A storage claim similar to theone proposed by Samsara is used as a secure representation of an amount of aremote storage space.
2.1.2

Drafts in real terms

When rice was a common value, promise of a specific amount of rice of a specificgrade could become a guarantee believable enough to work as money. This is
the concept of drafts in real terms, or drafts exchangeable with a common value
other than money, which was an exchange medium used in Japan in around12th∼13th centuries. If we are to receive rice of the same grade in exchange forsuch a medium, the nearer the producer is, the cheaper the transactional cost
is. Therefore this medium implies the concept of LPLC. A draft represented
a common value as a medium of exchange, so that it contained the concept ofcommodity money as its subset.
Implication to P2P designs Another core concept of this work is that aninterchangeable promise of providing a remote storage space can be seen as adraft in real terms in a P2P system. An i-WAT ticket is used as a representationof a draft whose promise is expressed in the form of a storage claim.

2

B

a

B

(a)

(b)

(a)

a) Storing a claim

B
(a)

C
(b)

a

a

C
(b)

(c)

b) Forwarding the claim

a

B
(a)

(c)

C
(b)

A
(c)

c) Finding a cycle
X

Data owned by xx Storage claim by xa) Data B is stored in (a) for (b). Peers (a) and (b) create symmetry in their transactional
relation by placing a storage claim a on (b).
b) Instead of doubling the required storage, the claim a is forwarded to (c) in return forstoring its data C in (b).
c) The claim a disappears when forwarded to the original claimer (a).

Figure 1: Overview of Samsara

2.2

SamsaraSamsara is a fair P2P storage infrastructure proposed by Cox and Noble in 2003.
Design of Samsara (Fig. 1) is based on an observation that symmetry is rarely
found in P2P exchanges, and that symmetry can be manufactured. In Samsara,each peer that requests storage of another must agree to hold a storage claim,
or an incompressible placeholder, in proportion to their consumption. Claims
can be forwarded along the chain of nodes that requests storage of another,eliminating themselves when cycles are found.
Queries are occasionally made by claimers based on the claim seed that wasused for generating the claim. To respond to the queries, a node needs to bephysically storing the claim, thus guaranteeing that the space is reserved.
2.2.1

Storage claims

In Samsara, the claimer can compute the claim from the following information:a secret passphrase P , a private, symmetric key K, and a location L in theclaimer’s storage space (for every claim to be unique). The triple "P, K, L# iscalled a claim seed henceforth.
A claim is generated from consecutive 20-byte SHA1 hash values of thepassphrase P concatenated with an offset calculated from location L, encryptedby the symmetric key K.
For example, let hi = SHA1(P, i) and a claim is 512-byte long. Then theith claim Ci is computed by concatenating the first 25 hash values from theoffset from L and the first 12 bytes of the 26th hash value as follows:
Ci = {hj , hj+1 , . . . , hj+24 , hj+25 [0], . . . , hj+25 [11]}K
where j = i × 26.
3

The current holder of a claim cannot compute it without knowing the claim
seed, and can present it only when it is physically stored in their storage.
The claimer infrequently queries for the claim to verify that the space isreserved for them. The response to the query can be a single SHA1 hash value
by the query algorithm described in [4].
2.2.2Characteristics

Some characteristics of Samsara are as follows.
Autonomy Any peer can spontaneously create claims to be stored by others,or participate in a claim forwarding chain.
Compatibility Storage is a common computing resource so that this scheme
works in any part of the world with any computers with sufficient computing
capabilities.
Security Upon forwarding a claim, a peer may want to strategically withholda copy of the claim, because the peer is responsible for answering queries, and thenode to which it has forwarded the claim may fail at any time. This means that
consumption of storage is duplicated as the claim forwarding chain is lengthened.

2.3

i-WAT

i-WAT is a P2P currency system proposed by the authors in 2003.
Design of i-WAT (Fig. 2) is seen as electronization of the WAT System[22],a real-life barter currency using a physical sheet of paper resembling a bill of
exchange (WAT ticket).
In i-WAT, messages signed in OpenPGP are used for implementing transfersof an electronic version of WAT ticket (i-WAT ticket). An i-WAT ticket contains a unique number, amount of debt and public key user IDs of the drawer,
users and recipients. Endorsements are realized by nesting PGP signatures overcanonical XML expressions.
Upon electronization, the following changes have been made from the statemachine of a WAT ticket:
1. Trades need to be asynchronously performed. Intermediate states, suchas waiting for acceptance or approval, are introduced, and
2. Double-spending needs to be prohibited. The drawer is made responsible
for guaranteeing that the circulating ticket is not a fraud. This meansthat every trade has to be approved by the drawer of the involved ticket.
The semantics of this design and the trust model of i-WAT are discussed indetail in [14].
A life cycle of an i-WAT ticket involves three stages of trading:
Issuing A drawer issues an i-WAT ticket by clarifying the public key user IDof the provider (lender) of the goods or service, the amount of debt, the present
date, and the drawer’s signature. The drawer sends the ticket to the lender, andin return obtains some goods or service.
4

(1)(1) Use(2) Accept Drawera(3) Approve

Drawera

Receiver = Drawer
a
(3)

(3)

(2)

(3)

Ticketappears

(2)

(2)

(1)

b
Lender (1) Draw
(2) Accept(3) Approve

Ticketdisappears

b
User

c
(2) Receiver
Ticket(1)c
User(1) Use(2) Approve

movesa) Issuingb) Circulationc) Redemptiona) Drawer (a) issues a ticket in return for a service from (b).
b) When the ticket is transferred to a third party (c), the transaction needs to be approvedby the issuer (a) to detect double-spending.
c) The ticket disappears when it returns to the original issuer (a).

Figure 2: Overview of i-WAT

Circulation The peer to whom the i-WAT ticket was sent can become a user,
and use it for another trading. To do so, the user clarifies the public key user
ID of the recipient. The recipient will become a new user, repeating which thei-WAT ticket circulates among people.
Redemption
2.3.1

The i-WAT ticket is invalidated when it returns to the drawer.

Tickets

The value of an i-WAT ticket is expressed as a tetrad "V0 , Vm , Vx , f # presented
by the drawer, where V0 is the face value (initial value) of the ticket, Vm isthe minimum value, Vx is the maximum value, and f (t) is the differentiation(derivative) of a function of time F (t). Vm /Vx are set to be ⊥/& respectively if
those values are not applicable.
The effective value Vt of a ticket at time t is given by the following equation:! t
Vt = min(max(f (t)dt + V0 , Vm ), Vx )0This allows the value of a ticket to vary over time, limited by some minimum/maximum values. Typically, it holds that either f (t) = 0 for all t (regularticket), f (t) < 0 for all t (reduction ticket) or f (t) > 0 for all t (multiplication
ticket).
The incentive mechanism for reduction and multiplication tickets have been
discussed in [18] and [16], respectively.
2.3.2

Characteristics

Some characteristics of i-WAT are as follows.
Autonomy Anyone can spontaneously become a member of i-WAT if they
follow the above protocol.
5Compatibility An i-WAT ticket is compatible with any other i-WAT tickets
in the world, so that the currency system is operable globally, as long as thedrawer can be credited.
Extensibility The protocol illustrated in Fig. 2 defines the i-WAT versionof the WAT Core, the essence of the WAT System. An extended part can be
defined for a new currency based on the WAT/i-WAT, stating, for example, theregion, group and duration in which the tickets are usable, as well as the unit
in which the debt is quantified.
Security In case the drawer fails to meet their promise on the ticket, thelender assumes the responsibility for the debt. If the lender fails, the next user
takes over. The responsibility follows the chain of endorsements (security rule).
The longer the chain is, the more firmly backed up the ticket is.

3

Design3.1

Preconditions

The following preconditions are assumed:
1. Every storage claim expires at a certain time, defined upon its creation.
The reserved storage space can store data until the specified time.
This is to balance the value of storage with other values being exchanged ina P2P system, such as bandwidth, which can be provided only temporarily.
2. The system is built upon a proximity-based overlay network with embedded rendezvous and reputation systems.
A peer can determine what to purchase or exchange, by searching nearby
entities satisfying required specifications (rendezvous). For such searches
to work, grading entities in a distributed manner and guaranteeing its
correctness are required (reputation).

3.2

Storage-Commodity Money (SCM)

3.2.1

Overview

Samsara’s storage claims can be forwarded in exchange with services other thanstorage, making them commodity money in the context of P2P (Fig. 3).
This commodity money has a unique property of service and the medium
moving in the same direction. This has an interesting consequence; doublespending is naturally avoided because the medium of exchange is held by the
producer of a service instead of a consumer when exchanging is taking place.
The consumer cannot double-receive the medium to receive the service without
paying the cost.
3.2.2

Drawbacks

Despite the benefit, this commodity money does not satisfy the principle of
LPLC, as illustrated in case a) of Fig. 3. The available remote storage is likely
6Service

a
(a)

a
(b)

Claim / Query

a
(c)

(d)

a
(x)

a) Normal case(c) needs toanswer queriesServicea(a)... ...

a
(b)

a
(c)

... ...

(d)

a
(x)

b) With node failurea) The remote storage is likely to be departed from the vicinity of the original claimer (a)as the claim a keeps getting forwarded.
b) The strategy for the peers (b)∼(x) is to keep a copy of the claim a in their storage incase some node in the chain fails.

Figure 3: Storage-Commodity Money (SCM)

to be departed from the vicinity of the original claimer as the claim keeps getting
forwarded.
Efficiency of the storage space is also a problem, as illustrated in case b) ofFig. 3. Because the node to which the claim has been forwarded may disappear
from the system at any time, a peer needs to strategically withhold a copy ofthe claim it has forwarded; unused space is replicated as the claim forwarding
chain is lengthened, unless a cycle is formed.
Another problem is how we induce formation of a cycle. A cycle is formed
when a claim holder provides some service to the original claimer (typicallythe storage space it has been reserving), but the claimer should only want toreceive the service if it is beneficial for itself. We have already seen that as theclaim forwarding chain is lengthened, the storage space is likely to be further
away from the claimer; there are contradicting demands (to be analyzed in
section 4.1.1).

3.3

Storage-Standard Currency (SSC)

3.3.1

Overview

i-WAT can implement drafts in real terms in combination with storage claims,
as illustrated in Fig. 4.
By issuing an i-WAT ticket guaranteed by a storage claim, a peer in a P2P
system can purchase a service from another. Those tickets can be forwarded
along the chain of nodes in exchange with services, eliminating themselves when
they return to their issuers.
Upon circulation, the claim seed "P, K, L# corresponding to the storage claim
needs to be forwarded along with the ticket (the seed must not be disclosed tothe drawer unless the ticket is going to be redeemed) as illustrated in case a) ofFig. 4. Otherwise, there will be two inter-related problems:
1. If the drawer and lender collude, it will be possible for them to create an7x(1) IssuingaDrawerEx

Lender
Claim
b

x'
a
Drawerseedb Lender(3) Redemption(e) discovers that(a) no longer exists(2) Circulation

e

e

c

c
Service

Service
d

New
claim

Ticketda) Normal case

Ticketb) Security rule applieda) Upon (a) issuing a ticket, the lender (b) requests the drawer (a) to store a storage claim
x. Circulation of the ticket involves circulation of the claim seed for x so that receiversof the ticket can query the drawer (a) for the claim x. Upon redemption, the user (e)can have the drawer (a) store its data E.
b) If the drawer (a) fails, the current owner (e) of the ticket requests the lender (b) tostore a new storage claim x! compatible with x in place of the drawer (a).

Figure 4: Storage-Standard Currency (SSC)

empty claim and make a ticket out of it.
2. Later participants will not be able to verify that the storage space isreserved by the claim.
The security rule of i-WAT allows the storage claim to be backed up, as
illustrated in case b) of Fig. 4. If the drawer has been found disappeared, thelender must take over the claim. The lender does not need to have a copy of theclaim prior to the take over. It must not, because the lender knows the claim
seed for the original claim, and it can compute the claim on the fly without
physically holding it in its storage. Upon the take over, a new claim must be
generated from another claim seed.
3.3.2

Satisfaction of LPLC

Every drawer (therefore the claim holder) advertises their storage capability
that they can lend to others to induce redemption of their debts. The peers inneed for a remote storage space listen to the advertisements. When they find
one in the vicinity of their location in the logistical network, and if the space iscompatible with what is claimable by the ticket they have, they try to rent the
space by the ticket.
Fig. 5 shows how the principle of LPLC is satisfied with this implementationof drafts in real terms.
In the figure, the ticket is received by the storage provider (a), who transacts
with (a’) for redemption of the ticket. Then (a) forwards the claim x it holds
to (a’), which replaces the claim x! with x. When this is complete, (a) starts toadvertise the forwarded storage claim in (a’).
Because the claim is now backed up by the security rule until the lease
expires, (a) may be able to safely discard the copy of the claim, depending on
the i-WAT chain length and the participants’ reputations.
8

x'
d

(d') finds storage
advertised by (a)compatible withticket of (a')

a' Drawerxc

Lenderd'Drawer aService

Lenderb'Service
Ticket of (a)bc'Ticket of (a')a) Discoverying nearby storagex(a) stores D' for (d'),
andd forwards claim
X to (a') to replace X'

a' Drawer
Ticket of (a')
being redeemed

x
c

D'

Service

Lenderb

Lenderd'Drawer ab'Service
Ticket of (a)c'Ticket of (a')b) Switching strage claimsa) Drawers of tickets, (a) and (a’), advertise their remote storage services to induce redemption of their debts. A holder (d’) of the ticket of (a’) discovers a provider (a) of
a remote storage service compatible with the promise on the ticket in its vicinity.
b) Data D ! is stored in (a) for (d’) in return for the ticket of (a’). The ticket and theclaim x are forwarded to the drawer (a’), and (a) now advertises the storage claim x in(a’). Note that even if this is repeated, the length of the claim forwarding chain is at
most one, because the claim x will just be redirected to another peer.

Figure 5: Assuring LPLC

If, for example, there is a new node (c”) with a ticket of (a”) finding theadvertisement of x attractive, and wants to rent the space, (a) would request(a’) to hold data C” and receive regenerated claim from (d) (the current ownerof the ticket of (a)), and forward it to (a”) in return for the ticket (a) has
obtained.
Through repeating this kind of operations, the length of the claim forwarding
chain remains at most one, avoiding to inherit the problems of the commodity
money previously described.
3.3.3

Improvement of storage claims

The design of a storage claim as proposed by Samsara has two problems: 1)
passing the claim seed to a receiver of a ticket can become a vulnerability as itmeans that secret information is passed to others (a problem specific to SSC),
and 2) the query algorithm can be used for verification of stored claims only
and not for verification of the stored data (a problem applied generally to applications of the storage claim).
9

These problems can be solved by making a more lightweight protocol for
generating and verifying claims, so that a new claim can be generated every
time the claimer changes, and making the protocol generally applicable for verification of remote data.
We have devised the following protocol:
1. A storage claim c is a random sequence of data.
2. The claimer calculates secure hash values of n number of randomly chosen
blocks of size s in c. The claimer keeps the triplets "hi , Li , s# where 0 ≤i < n, hi is the ith calculated hash value and Li is the corresponding
location in c, and discards c after sending its copy to the claim holder.
3. The claimer occasionally queries the claim holder for the hash value hx
for randomly chosen x where 0 ≤ x < n by providing Lx and s. The claim
holder can answer the query only if it physically stores c.
This protocol is also applicable for verifying any remotely stored data, if we
replace c with the data.

4

Analysis

4.1

Safety and risks

4.1.1

Safety and risks of SCM

We assess the risk with respect to participating in the creation and circulationof commodity money by storage claims. The risk takes the form of failing toforward the storage claim after providing a service. This happens when the peer
to which one has forwarded a claim disappears after a successful transaction.
This risk for a claim is expressed as an expected cost Cn for the nth receiverof the claim, where the probability of the ith receiver disappearing is pi , thecost of regaining trust after disappearance is CTi , and the value of the claim in
concern is V :Cn = (V × (1 − pn ) + CTn × pn ) × pn+1
Assuming every peer has roughly the same tendency to disappear, this risk
can be seen as a constant value, unless (n + 1)th receiver is the claimer, in whichcase the claim disappears, and there will not be a risk.
Therefore, the risk is unrelated with the length of the claim forwarding chainn + 1 if n > 0, but the utility of the claim tend to decrease for the claimer as
the chain grows, because the available storage is likely to be further away. This
contradiction is a source of problems described in section 3.2.2.
To minimize the risk, n needs to remain 0, meaning that claim forwarding
should be avoided whenever possible. This is the same conclusion drawn in [4]as a way for optimization.
4.1.2

Safety and risks of SSC

We assess the risk with respect to participating in the creation and circulationof drafts in real terms by storage claims.
10

The safety property of WAT/i-WAT is that the debt does not disappear
without redemption.
There are apparent risks for a participant that the drawers of the acquired
tickets disappear, and by the security rule of the system, the debts are transferred down to the participant in question. This risk for a ticket is expressed as
an expected cost Cn for the nth receiver of the ticket, where the probability ofthe drawer disappearing is p0 , that for the ith receiver is pi , the cost of regaining
trust after disappearance is CTi , and the value of the ticket in concern is V :Cn = (V × (1 − pn ) + CTn × pn ) ×

n−1
"

pi

i=0

The risk is dependent on the length of the chain of endorsements, whichbecomes zero when the ticket is eliminated (redeemed).
To minimize this cost, nodes are expected to take the following evasive actions as described in [15]:1. They always try to use a ticket the partner has drawn if there is one, thus
making sure that a ticket is eliminated whenever there is a chance.
2. They always try to receive a ticket whose chain of endorsements is longer
than those of others, thus making sure that n is reasonably large.
3. They prefer selecting a partner from the drawers of acquired tickets, thusincreasing the chance of eliminating a ticket.

4.2

Simulation

A simulation is made under the following premises:
1. A proximity-based overlay network is formed.
2. The underlying network has alternative routes, and a node is unreachable
only when it is offline.
3. There is a way to authenticate the identity of a node
The last premise is introduced to provide a relaxed trust condition so that
SCM nodes do not need to duplicate storage claims or forward storing data along
the chain of nodes, and the simulation results can be comparable with those of
SSC, making a pure comparison of claim-forwarding vs. currency approaches.
4.2.1

Conditions

The conditions of the simulation are as follows:
1. The world consists of population P of one of the node types (SCM, Simple
SSC or LPLC SSC nodes) described below, where time elapses from 1 tor rounds.
2. Each node needs to rent maximal k storage units from others. A rent ofjust one unit can start in one round, and the rent can last for n rounds.

113. Each node has k storage units to provide to others because the exchange
relation needs to be fair.
4. Each node is offline in a round by probability p (failure rate). Since there
assumed to be an alternative route, availability of the remote storage issimply 1 − p.
The behaviors of nodes are defined as follows:
SCM: A node tries to rent the storage unit for which it has a storage claim.
If it does not have a claim, it tries to rent a unit from a node in vicinity,
and stores the claim specified by the remote node.
The remote node tries to avoid forwarding claims, and creates a new claim
whenever there is a space in local storage whose size equals to k (as analyzed in section 4.1.1).
A shortcut path from the claimer to the new claim holder is made whenevera claim is forwarded so that storage spaces for claims do not need to be
duplicated. As a consequence, though, a claim cannot be forwarded if theclaimer is offline.
Simple SSC: A node tries to rent the storage unit for which it has a ticket.
If it does not have a ticket, it tries to rent a unit from a node in vicinity,
and issues a new ticket (and therefore stores a new storage claim) for the
remote node.
At the level of this abstract simulation, the behavior of a simple SSC nodeequals to that of a SCM node without claim-forwarding.
LPLC SSC: A node tries to rent the nearest remote storage unit that is equivalent to the promise (always 1 storage unit in this simulation) on a ticket
it has, and transfers the ticket in return to the remote node. The remotenode can lend the unit in which it holds a storage claim; in which casethe claim is forwarded to the drawer of the received ticket as a form ofredemption.
Among the candidates of nearest providers of remote storage units, thenode tries to select one being the drawer of an acquired ticket (as describedin section 4.1.2).
A transaction involving a ticket is possible only when the drawer of theticket is online.
We have made a simulation with P = 250, r = 500, k = 5, n = 5, and pvarying over 0.01, 0.02, 0.04, 0.08, 0.16, 0.32, 0.48 and 0.64. We have found thatlarger P or r does not affect the results much, but affects the simulation timevery much. By making n larger, we can simulate the situation of more depletedresources, but the effect should be similar to that of increased p.
4.2.2

Evaluation metrics

We have measured the following metrics:
Storage Utility: The number of storage units provided to others (excluding
those for claims) is counted for every round, divided by the whole capacity.
12Figure 6: Simulation result - storage utility

Distance: The distance to the remote storage (excluding those for claims) is
counted for every round.
The distance is measured in overlay hops, but it is expected to be proportional to the distance in the underlying network as the overlay network is
assumed to be proximity-based.
Cost: One unit of cost is counted for every occasion of forwarding a storage
claim.
Cost of messaging (multiples of tens of bytes) should be negligible compared to that of claim-forwarding (multiples of megabytes).
4.2.3

Results

Fig. 6, Fig. 7 and Fig. 8 shows the results of the simulation.
Storage Utility As Fig. 6 shows, SCM and Simple SSC nodes can maintainabove 90% of storage utility when the failure rate is negligibly low. LPLC SSC
nodes provide slightly less storage utility, but are less affected by the rate of
failures, and in fact provide slightly higher storage utility than others when
the failure rate is above 0.4 (the condition is not unrealistic considering the
dynamism of P2P systems).
This must be due to the fact that there are more factors that can disable
LPLC SSC transactions than those can disable other types (such as that drawers
need to be online), but the difference is reduced as the failure rate grows.
Distance per utilized unit Fig. 7 shows that LPLC SSC nodes always provide storage with shorter network distance.
The distance decreases steeply for SCM as the failure rate grows. This must
be because forming claim-forward chains gets difficult in the first place, resulting
in that successful transactions tend to happen in the vicinity of claimers.

13

Figure 7: Simulation result - distance per utilized unit

Cost per utilized unit Fig. 8 shows that LPLC SSC nodes always provide
storage with smaller transfer cost, regardless of the failure rates.
Since the improved storage claim protocol described in section 3.3.3 is assumed in the simulation, this difference does not come from the effect of exchanging drafts instead of storage claims themselves; claims are transferred every timea ticket is passed to a third party. Instead, the difference must be due to thefrequency of redemption, because a claim is not forwarded upon redemption,and redemption is induced by the design of LPLC SSC.
Effects of claim-forwarding The differences between SCM and simple SSC
isolate the effects of claim-forwarding. It seems that claim-forwarding does notaffect storage utility at all, positively affects network distance (looks paradoxical, but it must slightly increase the chance of exchanging storage units withneighbor nodes than not forwarding claims at all), and negatively affects thetransfer cost.

5

Related work

5.1

Centralized currencies

MojoNation[1] was1 a system of file sharing, which is perhaps the most wellknown in the context of P2P currencies. Every transaction in the system required payment of Mojo, which was controlled by a single token server. MojoNation’s economy was a form of of MCS[20] (Mutual Credit System).
Karma[21] is a distributed payment system based on bank-sets. It is designed
to work on DHTs (Distributed Hash Tables) such as Pastry[13]. Its trust modelis based on the secure routing discussed in [2] which relies on a set of trusted
certificate authorities. Since the whole concern is consistent management of an
1 MojoNation does not exist anymore, although development has been continued as a free
software project called Mnet[10].

14Figure 8: Simulation result - cost per utilized unit

accounting system in a distributed environment, Karma can be also seen as aform of MCS.
Ripple[6] is a distributed payment system. It finds a chain of credit connections between parties to make payments. If A and B are mutually trusted,
and B and C are mutually trusted, and if A wants to make a payment to C,
then A pays (owes) to B so that B pays (owes) to C. The account information
is made private among trusted parties. Ripple is a form of multiple MCS, inwhich several MCS’s mutually have accounts for one another.
All of the payment systems above are distributed, but their models of economies
are centralized. They may be subject to the inherent problem of MCS describedin [17]; growing the number of free-riders in MCS has a paradoxical effect ofincreasing welfare of the community. Since there is no pressure among participants to stop the growth of the bad users, it is difficult to sustain the soundnessof the system without strong interventions from the operators of the system.
This problem implies that MCS is insufficient as a solution to either the first or
the second challenge described in section 1.2.

5.2

Decentralized currencies

BitTorrent[3] is a file distribution system on a tit-for-tat basis. Each peer is
responsible for attempting to maximize its own download rate. If peers do
not cooperate they choke their partners, or temporarily refuse to upload. Thiseconomy is integrated into the system, and cannot be separated for other applications.
Geek Credit[8] is a currency system that is close to i-WAT. It defines Geek
Credit policy, which is similar to the state machine of i-WAT, but the problemof double-spending is handled differently. Geek Credit detects double-spendingat redemption, so that each transaction does not need to be consulted withthe drawer. While this simplifies the protocol, exploiting this system may beeasy. Moreover, since participants do not need to be reachable to the drawer,
induction to redemption may not work too well, possibly imposing higher risks.
15

PPay[23] is another currency system that is close to i-WAT. PPay handles
the problem of double-spending in almost the same way as i-WAT does; it
requires approval (process of reassignment) by the issuer of the coins when
they are transferred to other parties. The difference is that this authority is
duplicated in PPay. It assumes that an external banking facility exists, which
exchanges the governments’ fiat money with digital coins. Such facility may be
given authority to reassign coins.
This makes the currency more available, but it also makes the protocol more
complicated that that of i-WAT. We believe that availability of the issuers canbe increased by applying existing fault-tolerance techniques, independently fromthe currency design. Since it enhances the utility of tickets, it may increase thelevel of their freedom to create the exchange media, therefore some issuers may
find it beneficial to pay the cost of applying such techniques.
The linkage with a fiat money means that PPay cannot form drafts in realterms in its original design.

5.3

Incentive techniques

Fair sharing protocol[12] is a distributed query algorithm which can detect lies
about participant’s debts probabilistically, which we believe is broadly applicable. However, querying the storage claims gives a more accurate view ofparticipant’s debts.
Feldman et al.[5] investigates some incentive techniques to tackle the problem
of free-riding. They found that when penalty is imposed on all newcomers, thesystem performance degrades significantly only when the turnover rate amongusers is high. This observation can be applied to this work in such a way that all
participants should start with relatively small number of trusted acquaintances
when joining the overlay network; they start with small opportunities for trades
as a kind of penalty.
Stamp trading[11] is a generalized protocol for reputation and payment. Thisis a theoretical framework, and no practical issues such as double-spending havebeen addressed.

6

Future work

A work[9] is ongoing to implement SSC over an existing reference platform of
i-WAT. We are also implementing a distributed backup system as an application of SSC. Using those software tools, we will further study the proposed
methodology.
In order for the system to work in actuality, we need to develop mechanisms for rendezvous and reputation, as well as a proximity-based mechanism
for location and routing.
On more theoretical sides, we need to assess the effects of improved storage
claim protocol described in section 3.3.3 in comparison with the original protocol
proposed in Samsara, and compare designs of SCM, SSC and other techniquesin larger variety of metrics.

16

7

Conclusions

This work presented two designs of exchange media based on representation ofdebts to be used in P2P economies. Forwardable storage claims as proposed by
Samsara can form SCM, a commodity money in P2P systems. However, it does
not satisfy the principle of LPLC. On the other hand, in SSC, i-WAT tickets
represent storage claims to form drafts in real terms, so that a claim can be
dynamically replaced by its equivalent in the vicinity, allowing the accesses tothe acquired remote storage to be fast and robust.
A simulation showed that SSC nodes satisfying LPLC can provide remotestorage in more proximity (and thus expected to provide faster accesses to thestorage), which is less affected by the rate of failures, than SCM nodes do.
A work is ongoing to implement SSC over an existing reference platform of
i-WAT, using which we will continue our study of the LPLC storage economicsof P2P systems. An application of SSC is being implemented in the form of a
distributed data backup system, and will be available for general public shortly.

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