Decentralized anonymity infrastructures are still not in wide use today. While there are technical barriers to a secure robust design, our lack of understanding of the incentives to participate in such systems remains a major roadblock. Here we present new insights about how to align incentives to create an economically workable system for both users and infrastructure operators. We explore some reasons why anonymity systems are particularly hard to deploy, enumerate the incentives to participate either as senders or also as nodes, and build a general model to describe the effects of these incentives. We then describe and justify some simplifying assumptions to make the model manageable, and compare optimal strategies for participants based on a variety of scenarios. This paper was presented at Financial Cryptography 2003. Authors are from UCB, MIT, and NRL. On the Economics of Anonymity [PDF] |