Decentralized Networks

A blockchain is a decentralized network. It is also peer-to-peer (p2p) but I roll this up in the word decentralized.

Properties of a decentralized network

• Opt-in. Users can enter the network if they like it and exit the network if they do not.
• Permissionless. Users can enter or exit at will, without any intermediary besides the de-facto rules of the network as embodied in it's code. (compare Code Is Law).

Code Is Law

Whistleblowers

Whistlesblowers are actors in a decentralized network that sound the alarm on wrong-doing.

From Micah in Augur chat:

I had an idea for a whistle blower scheme, which would help with something like a prediction market where there isn't a crypto-graphic proof of wrong-doing.  The concept is that when a new user joins the system, they pay a non-refundable fee (TBD how to convince users this is in their best interest).  When they exit the system, they can either choose to give their fee to the dictator (default option) or give it to a whistle blower.  There is a secondary gossip network among peers that is used solely for whistle blower announcements, and if a whistle blower puts up a bond and blows their whistle, everyone is prompted with the details and to indicate whether the dictator (oracle) lied.
By setting the whistle blowing bond higher than the usage fee, you can ensure that people don't use the whistleblowing mechanism to try to recoup their fee because they'll lose more by incorrectly blowing the whistle.
However, if the whistle is legitimate, then the bond will pay for itself in the form of everyone else giving their fee to the whistleblower.
The takeaway is that as long as the dictator behaves honestly, no whistle will be blown and you have an anonymous centralized system that you can "trust" in the sense that they have provably not exit scammed yet.  Once they do scam, it must be an exit scam.  They cannot do small scams along the way, they can only do a single exit scam.