The demo has four players negotiating for stock swaps through a broker using the BEDM method. The sequence is roughly as follows. Each player prepares a series of negotiation positions. Any position may be customized for the opposite party in the negotiation. Thus a player may have one negotiation position for everybody or different positions that favor good trading partners and penalize risky partners.

Each party guards its negotiation position. It never shows it to anyone in clear text form. Each negotiation position is encrypted using a key that is specific to each negotiation step. (A negotiation step is a negotiation between two parties.)  After this encryption step, the key and the encrypted negotiation position are never again found in the same place. This separation prevents anyone from reading the negotiation position. Moreover, we don’t do anything foolish like posting the encrypted document on the Internet. Leaving the document open to examination exposes it to very sophisticated third parties who may find something of value through complex code breaking measures.

In the BEDM method, the encrypted document is sent through a secure communication channel to the broker. The broker does not have the encryption key. The encryption key is shared with the opposite party in the negotiation step. However, the opposite party does not receive the encrypted negotiation position; therefore, no party can read or examine the opposite party’s negotiation position.

The broker cannot read anybody’s negotiation position but the broker can successfully compare and analyze two positions that were encrypted with the same key. The broker performs the comparison for every pair of players. If there are matching statements in any two encrypted negotiation positions, the broker identifies these matching statements and sends the match - still encrypted - back to the parties. The parties can then decrypt the matching statements and discover the terms that they can agree upon.

As a result, the two parties are brought into agreement without exposing the full negotiation position to anyone. The broker never learns anything specific about the agreement. That is roughly how BEDM works. Here is a list of the sequential, step-by-step procedure. We will provide more detail on the steps in the following pages. The following pages also have links to the documents exchanged during the demonstration.

1. 1.Each of the 4 players writes negotiation positions intended for other players. [Go]
   

2. 2.The broker tells players to begin negotiation by establishing a unique key for one-way encryption. There is a different, unique key for each pair of players. [Go]
   

3. 3.Each player encrypts its negotiation position statements. [Go]
   

4. 4.Each player must now send the encrypted negotiation positions to the broker. [Go]
   

5. 5.Next, the broker compares the negotiation positions [Go]
   

6. 6.The broker sends the encrypted basis for agreement statements back to the players. [Go]
   

7. 7.The players must decrypt the agreements. [Go]
   

8. 8.The buyer owes a fee to the broker. Both the buyer and seller can easily calculate the fee based on the terms of the unencrypted agreement. However, the broker did not receive a copy of the unencrypted agreement. Therefore, the seller will notify the broker of the correct fee which is then invoiced to the buyer. This step is not included in the Demonstration.
   

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