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).
By Tim May, see README
HTML by Jonathan Rochkind