This is similar to real life: if you vouch for someone (in business for example), and they scam them, your own reputation suffers. So vouching carries risk. Similarly, if you going around someone is unreliable, but people find out they actually aren't, your reputation also suffers. If vouching or denouncing become free, it will become too easy to weaponize.
Then again, if this is the case, why would you risk your own reputation to vouch for anyone anyway.
Good reason to be careful. Maybe there's a bit of an upside to: if you vouch for someone who does good work, then you get a little boost too. It's how personal relationships work anyway.
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I'm pretty skeptical of all things cryptocurrency, but I've wondered if something like this would be an actually good use case of blockchain tech…
So the really funny thing here is the first bitcoin exchange had a Web of Trust system, and while it had it's flaws IT WORKED PRETTY WELL. It used GPG and later on bitcoin signatures. Nobody talks about it unless they were there but the system is still online. Keep in mind, this was used before centralized exchanges and regulation. It did not use a blockchain to store ratings.
As a new trader, you basically could not do trades in their OTC channel without going through traders that specialized in new people coming in. Sock accounts could rate each other, but when you checked to see if one of those scammers were trustworthy, they would have no level-2 trust since none of the regular traders had positive ratings of them.
Here's a link to the system: https://bitcoin-otc.com/trust.php (on IRC, you would use a bot called gribble to authenticate)