Is this not the killer app that would get ecash off and running?
The problem is not a need for a killer app -- there are dozens. The obstacle is regulatory problems, and finding a large and reputable sponsoring organization (like a big bank). And these two issues are related. Bank regulations in this country are kept deliberately somewhat vague. The regulator's word is the deciding principle, not a detailed interpretation of statute. The lines are fuzzy, and because they are fuzzy, the banks don't press on them nearly as hard as when there's clear statutory language available to be interpreted in a court. The uncertainty in the regulatory environment _increases_ the hold the regulators have over the banks. And the regulators are known for being decidedly finicky. Their decisions are largely not subject to appeal (except for the flagrant stuff, which the regulators are smart enough not to do too often), and there's no protection against cross-linking issues. If a bank does something untoward in, say, mortgage banking, they may find, say, their interstate branching possibilities seem suddenly much dimmer. The Dept. of Treasury doesn't want untraceable transactions. Need I say more? Probably. It's very unlikely that a USA bank will be the one to deploy anonymous digital dollars first. It's much more likely that the first dollar digital cash will be issued overseas, possibly London. By the same token, the non-dollar regulation on banks in this country is not the same as the dollar regulation, so it's quite possible that the New York banks may be the first issuers of digital cash, in pounds sterling, say. There will be two stages in actually deploying digital cash. By digital cash, here, I mean a retail phenomenon, available anybody. The first will be to digitize money, and the second will be to anonymize it. Efforts are already well underway to make more-or-less secure digital funds transfers with reasonably low transaction fees (not transaction costs, which are much more than just fees). These efforts, as long as they retain some traceability, will almost certainly succeed first in the marketplace, because (and this is vital) the regulatory environment against anonymity is not compromised. Once, however, money has been digitized, one of the services available for purchase can be the anonymous transfer of funds. I expect that the first digitization of money won't be fully fungible. For example, if you allow me to take money out of your checking account by automatic debit, there is risk that the money won't be there when I ask for it. Therefore that kind of money won't be completely fungible, because money authorized from one person won't be completely identical with money from another. It may be a risk issue, it may be a timeliness issue, it may be a fee issue; I don't know, but it's unlikely to be perfect. Now, as the characteristic size of a business decreases, the relative costs of dealing with whatever imperfection there is will be greater. To wit, the small player will still have some problem getting paid, although certainly less than now. Digital cash solves many of these problems. The clearing is immediate and final (no transaction reversals). The number of entities to deal with is greatly reduced, hopefully to one. The need and risk and cost of accounts receivables is eliminated. It's anonymous. There will be services which will desire these advantages, enough to support a digital cash infrastructure. Eric