Excerpts from mail.nonpersonal: 8-Dec-95 Re: Geodesic Payment Systems? Duncan Frissell@panix.co (912*)
I seem to remember from my favorite Law School class -- Commercial Paper -- that banks weren't liable if they paid out an account from cleared funds under the terms of the account. A bank is responsible for payments made on a forged drawer's signature and anyone who accepts an instrument from a forged endorser eats the loss. But online clearing with digital signatures makes it hard to forge the drawer's signature and digital cash doesn't have the sort of endorsement system used on paper checks.
I think you're drawing a misleading analogy. When I present e-cash to the institution the underwrites the conversion from e-cash to "real money", they have to decide if it's real or not. If the e-cash is anonymous, they are the *only* people on the line -- anonymous e-cash doesn't carry history or say "this money is coming out of so-and-so's account". It is anonymous e-cash being converted to real money, and the converting bank carries essentially all of the risk. As far as the guarantees offered by digital signatures are concerned, the whole point of my comments was to analyze the risks involved when secret keys are compromised. In this case, by definition, the digital signatures are not very useful any more. -------- Nathaniel Borenstein <nsb@fv.com> | (Tense Hot Alien In Barn) Chief Scientist, First Virtual Holdings | VIRTUAL YELLOW RIBBON: FAQ & PGP key: nsb+faq@nsb.fv.com | http://www.netresponse.com/zldf