12.8.1. "There seem to be many variants....what's the story?" - Lots of confusion. Lots of systems that are not at all anonymous, that are just extensions of existing systems. The cachet of digital cash is such that many people are claiming their systems are "digital cash," when of course they are not (at least not in the Chaum/Cypherpunk sense). - So, be careful. Caveat emptor. 12.8.2. Crypto and Credit Cards (and on-line clearing) + Cryptographically secure digital cash may find a major use in effectively extending the modality of credit cards to low-level, person-to-person transactions. - That is, the convenience of credit cards is one of their main uses (others being the advancing of actual credit, ignored here). In fact, secured credit cards and debit cards don't offer this advancement of credit, but are mainly used to accrue the "order by phone" and "avoid carrying cash" advantages. - Checks offer the "don't carry cash" advantage, but take time to clear. Traveller's checks are a more pure form of this. - But individuals (like Alice and Bob) cannot presently use the credit card system for mutual transactions. I'm not sure of all the reasons. How might this change? - Crypto can allow unforgeable systems, via some variant of digital signatures. That is, Alice can accept a phoned payment from Bob without ever being able to sign Bob's electronic signature herself. - "Crypto Credit Cards" could allow end users (customers, in today's system) to handle transactions like this, without having merchants as intermediaries. - I'm sure the existing credit card outfits would have something to say about this, and there may be various roadblocks in the way. It might be best to buy off the VISA and MasterCard folks by working through them. (And they probably have studied this issue; what may change their positions is strong crypto, locally available to users.) - (On-line clearing--to prevent double-spending and copying of cash--is an important aspect of many digital cash protocols, and of VISA-type protocols. Fortunately, networks are becoming ubiquitous and fast. Home use is still a can of worms, though, with competing standards based on video cable, fiber optics, ISDN, ATM, etc.) 12.8.3. Many systems being floated. Here's a sampling: + Mondex - "Unlike most other electronic purse systems, Mondex, like cash, is anonymous. The banks that issue Mondex cards will not be able to keep track of who gets the payments. Indeed, it is the only system in which two card holders can transfer money to each other. ""If you want to have a product that replaces cash, you have to do everything that cash does, only better," Mondex's senior executive, Michael Keegan said. "You can give money to your brother who gives it to the chap that sells newspapers, who gives it to charity, who puts it in the bank, which has no idea where it's been. That's what money is."" [New York Times, 1994-09-06, provided by John Young] + CommerceNet - allows Internet users to buy and sell goods. - "I read in yesterday's L.A. Times about something called CommerceNet, where sellers and buyers of workstation level equipment can meet and conduct busniess....Near the end of the article, they talked about a proposed method for exchanging "digital signatures" via Moasic (so that buyers and sellers could _know_ that they were who they said they were) and that they were going to "submit it to the Internet Standards body"" [Cypher1@aol.com, 1994-06- 23] + NetCash - paper published at 1st ACM Conference on Computer and Communications Security, Nov. 93, available via anonymous ftp from PROSPERO.ISI.EDU as /pub/papers/security/netcash- cccs93.ps.Z - "NetCash: A design for practical electronic currency on the Internet ... Gennady Medvinsky and Clifford Neuman "NetCash is a framework that supports realtime electronic payments with provision of anonymity over an unsecure network. It is designed to enable new types of services on the Internet which have not been practical to date because of the absence of a secure, scalable, potentially anonymous payment method. "NetCash strikes a balance between unconditionally anonymous electronic currency, and signed instruments analogous to checks that are more scalable but identify the principals in a transaction. It does this by providing the framework within which proposed electronic currency protocols can be integrated with the scalable, but non-anonymous, electronic banking infrastructure that has been proposed for routine transactions." + Hal Finney had a negative reaction to their system: - "I didn't think it was any good. They have an incredibly simplistic model, and their "protocols" are of the order, A sends the bank some paper money, and B sends A some electronic cash in return.....They don't even do blinding of the cash. Each piece of cash has a unique serial number which is known to the currency provider. This would of course allow matching of withdrawn and deposited coins....These guys seem to have read the work in the field (they reference it) but they don't appear to have understood it." [Hal Finney, 1993-08-17] + VISA Electronic Purse - (A lot of stuff appeared on this, including listings of the alliance partners (like Verifone), the technology, the plans for deployment, etc. I regret that I can't include more here. Maybe when this FAQ is a Web doc, more can be included.) - "PERSONAL FINANCE - Seeking the Card That Would Create A Cashless World. The Washington Post, April 03, 1994, FINAL Edition By: Albert B. Crenshaw, Washington Post ... "Now that credit cards are in the hands of virtually every living, breathing adult in the country-not to mention a lot of children and the occasional family pet- and now that almost as many people have ATM cards, card companies are wondering where future growth will come from. "At *Visa* International, the answer is: Replace cash with plastic. "Last month, the giant association of card issuers announced it had formed a coalition of banking and technology companies to develop technical standards for a product it dubbed the "Electronic Purse," a plastic card meant to replace coins and bills in small transactions." [provided by Duncan Frissell, 1994-04-05] - The talk of "clearinghouses" and the involvement of VISA International and the Usual Suspects suggest identity-blinding protocols are not in use. I also see no mention of DigiCash, or even RSA (but maybe I missed that- -and the presence of RSA would not necessairly mean identity-blinding protocols were being planned). Likely Scenario: This is *not* digital cash as we think of it. Rather, this is a future evolution of the cash ATM card and credit card, optimized for faster and cheaper clearing. Scary Scenario: This could be the vehicle for the long- rumored "banning of cash." (Just because conspiracy theorists and Number of the Beast Xtian fundamentalists belive it doesn't render it implausible.) - Almost nothing of interest for us. No methods for anonymity. Make no mistake, this is not the digital cash that Cypherpunks espouse. This gives the credit agencies and the government (the two work hand in hand) complete traceability of all purchases, automatic reporting of spending patterns, target lists for those who frequent about-to-be-outlawed businesses, and invasive surveillance of all inter-personal economic transactions. This is the AntiCash. Beware the Number of the AntiCash. 12.8.4. Nick Szabo: - "Internet commercialization in itself is a _huge_ issue full of pitfall and opportunity: Mom & Pop BBS's, commercial MUDs, data banks, for-profit pirate and porn boards, etc. are springing up everywhere like weeds, opening a vast array of both needs of privacy and ways to abuse privacy. Remailers, digital cash, etc. won't become part of this Internet commerce way of life unless they are deployed soon, theoretical flaws and all, instead of waiting until The Perfect System comes along. Crypto- anarchy in the real world will be messy, "nature red in tooth and claw", not all nice and clean like it says in the math books. Most of thedebugging will be done not in any ivory tower, but by the bankruptcy of businesses who violate their customer's privacy, the confiscation of BBS operators who stray outside the laws of some jurisdication and screw up their privacy arrangements, etc. Anybody who thinks they can flesh out a protocol in secret and then deploy it, full-blown and working, is in for a world of hurt. For those who get their Pretty Good systems out there and used, there is vast potential for business growth -- think of the $trillions confiscated every year by governments around the world, for example." [Nick Szabo, 1993-8-23] 12.8.5. "What about _non-anonymous_ digital cash?" - a la the various extensions of existing credit and debit cards, traveller's checks, etc. + There's still a use for this, with several motivations" - for users, it may be _cheaper_ (lower transaction costs) than fully anonymous digital cash - for banks, it may also be cheaper - users may wish audit trails, proof, etc. + and of course governments have various reasons for wanting traceable cash systems - law enforcement - taxes, surfacing the underground economy 12.8.6. Microsoft plans to enter the home banking business - "PORTLAND, Ore. (AP) -- Microsoft Corp. wants to replace your checkbook with a home computer that lets the bank do all the work of recording checks, tallying up credit card charges and paying bills.... The service also tracks credit card accounts, withdrawals from automated teller machines, transfers from savings or other accounts, credit lines, debit cards, stocks and other investments, and bill payments." [Associated Press, 1994-07-04] - Planned links with a consortium of banks, led by U.S. Bancorp, using its "Money" software package. - Comment: Such moves as this--and don't forget the cable companies--could result in a rapid transition to a form of home banking and "digital money." Obviously this kind of digital money, as it is being planned today, is very from the kind of digital cash that interests us. In fact, it is the polar opposite of what we want. 12.8.7. Credit card clearing...individuals can't use the system - if something nonanonymous like credit cards cannot be used by end users (Alice and Bob), why would we expect an anonymous version of this would be either easier to use or more possible? - (And giving users encrypted links to credit agencies would at least stop the security problems with giving credit card numbers out over links that can be observed.) - Mondex claims their system will allow this kind of person- to-person transfer of anonymous digital cash (I'll believe it when I see it).
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