-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 At 10:30 PM +0200 4/28/03, Nomen Nescio waxed all Fermi on us and popped his bulb with the following bit of incandescence:
Well, here's a clue, folks: information goods are free today. You can't build a digital money system on paying for information goods, in a world where people expect to get their information goods for free.
Who here actually believes that digital goods and services are actually free to produce? Hands? Anybody? No? I thought so. Right now, the way things are going, according to the popular wisdom, there is *one* way to have auction markets for digital goods and services on a public network. You can have digital rights management and book-entry is-a-person transaction execution, clearing, and settlement all the way through I/O: *through* the processor, *through* the display device, *through* the keyboard. Sniffers and bugs everywhere, biometrics everywhere. Internet property as perpetual proctology. I say that that's too expensive, no matter how you count the cost. So, yes, using *1992* era ideas, you can have digital bearer cash settled auction markets in the internet for anything you can digitize - -- the only stuff that matters in an information society where the price of raw materials is fast approaching 1% of GDP, where the cost of manufacturing is falling through 15% of GDP, and where, frankly, the cost of even *software*, stuff you can copy, by definition, heck, even digital financial assets, the assets that matter, even now, all of that, is going to fall in the same direction, because copying and distribution costs are almost perfectly efficient across a, say it again, class: ubiquitous geodesic internetwork. So, how do you do this? Easy. For software, the first copy is auctioned for cash. Then the second copy, wherever it is on the network, is auctioned for cash, and so on, until nobody's buying any more copies, across the whole network. This is the oldest model of trade there ever was. It's how red ochre from Maine ended up in Neolithic tombs in Ireland. It's how Homo Habilis traded raw rocks for finished hand axes across hundreds of miles of African savanna. The Agorics guys called it the "digital silk road" for obvious reasons. For most digital goods, you just need to digitally sign the copies, and you're done. Look Ma, no lawyers. Okay, no legislators and regulators. No intellectual property attorneys. No "is a person", or "know your customer", or other mystifications of identity. Funny thing about this is, you'll notice the people who make the most new stuff the most often get the most money in a single product's value chain. Which is, oddly enough, exactly what we do now -- ask a movie star -- only we'll be doing it cheaper. For financial assets, you use the same kinds of financial cryptography protocols that you used to do the cash, only you trade some other asset using another, or even the same, protocol, depending what kind of asset you want. Actual bits that can only exist on the net in a single place at a time and keep their value accordingly. Just like we used to do before the dominance of the telegraph and the Hollerith card, only cheaper than we do Master Card, SWIFT, or DTC -- or PayPal. Only cheaper. For digital services, discrete (single opinions) or continuous (streaming telepresence or -operation), the person whose key has the best reputation in the market gets the most money. Just like now. Only cheaper. So, like Fermi said, why isn't it here, already? Easy. We haven't *really* built it yet. For any of a number of reasons, including what I think is the most important, the book-entry networks hadn't grown themselves into the internet well enough yet. Maybe, by now, they have. I think so, personally, but like the proverbial orifice, everyone's got an opinion, and most people don't want to hear them. They want to see code. More to the point, they really don't give a damn about code, really, either. They want to see money on the net, dramatically cheaper than money on the net is now. Money that enables them to buy things they couldn't buy before. Even if they got it for "free". What they "expect" now has nothing to do with what they "expect" in the future. That, boys and girls, is a fundamental fact of financial economics: The price of something today, or in the past, has absolutely *nothing* to do with the price of that same thing in the future. Go run a few scatter plots and figure that out for yourself; though you're too late for the economics Nobel. That's so 1970's. So, let me ask you this, folks: the second there *is* money in what you do, *exactly* what you're doing now for free, do you think you'll do it for free anymore? Show of hands? Anybody? No? I thought not. Cheers, RAH -----BEGIN PGP SIGNATURE----- Version: PGP 8.0 - not licensed for commercial use: www.pgp.com iQA/AwUBPq34vMPxH8jf3ohaEQK0VQCfZDs+l+QuyCpN7QmNMoIsskOKpKgAoNtN nG+OSJd8oecUEMSD9DeJpK9n =2XOl -----END PGP SIGNATURE----- -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'