Any such 'dynamic trust system' seems vulnerable to the iterated prisoners dilemma by design. The goal of any blockchain based currency is fully trustless transactions. That's the entire killer app of bitcoin and bitcoin like systems. 'Dynamic trust models' represent a clear problem that has been *long* known about in the literature.
People should not keep deferring to somebodies resume to assume infallibility. Just because someone is obviously very smart does not mean they are not prone to attempting to 're-invent the wheel' without reference to fields they are not perhaps as familiar with.
http://en.wikipedia.org/wiki/Prisoner's_dilemma#The_iterated_prisoners.27_dilemmaGreat to see some argumentation given. Nothing more refreshing after the trollriver. I'm very keen to hear you out.
For clarity in conversation, can you state exactly how the prisoners' dilemma plays out here? I'm aware of the nature of the scenario, but it's seldom applied in the purely standard way.