When one combines the transactional economic advantages of DBC: no customer accounts, statement generation, little or no need for dispute resolution and the economies of using the Net for settlement, with the still considerable marketing costs, the likely differential between DBC and CC/ACH is closer to one order of magnitude at best.
Again, I still hold out for three or four.
This is still considerable, however, and if properly branded and marketed could significantly displace current competition, for lower value transactions. The overhead of CC discounts is keenly watched by merchants. If a trusted DBC issuer/agent offered 1.0% fees (especially to on-line merchants) it would get noticed quickly.
Agreed. However, when it happens, it'll probably be more significant than that. I think removing 3 or 4 extra zeroes from the status quo is probably what people should try to do when developing this stuff. I think that the technology offers us at least that much slack, and probably more.
Remember, it *is* supposed to change the world. :-).
If I grant that you're right that DBCs will be 3-4 orders of magnitude cheaper than the book-entry approaches, and I'm ready yet, there is still the issue of whether such savings can be quickly passed on to the merchant and consumer, and thus spark this revoltion. Consider this, if a DBC-based system were to garner 3% (about what it might take to get noticed by the consumer, retail and business markets) of the GDP's $4 trillion in transactions, or about $120 billion, and the transaction fees were $0.0025, this would generate about $300 million in fees. This is about what Western Union International generates in fees, a very respectable sized business. But how much marketing and branding expenditures would it take to get there? All financial products which attempted to reach a broad market and have a significant impact have required, in the past, significant up-front marketing expenses (VISA succeeded because BankAmericard spent in the $10s million per year range). Unless the Net will enable a 3-4 orders of magnitude reduction in such expenses, amounting to an historic bootstrap, it is difficult to see how this will occur without a white knight. A similar situation is occuring in cellular. Prices are plummeting because many new companies are building out competitive PCS networks and forward pricing their services to gain market share and economies of scale. These new players have deep pockets (or are backed by those with deep pockets). To wrench away the bank and credit card francshise from the established players may require similar sized investments. --Steve PGP mail preferred Fingerprint: FE 90 1A 95 9D EA 8D 61 81 2E CC A9 A4 4A FB A9 Key available on BAL server, http://www-swiss.ai.mit.edu/~bal/pks-toplev.html --------------------------------------------------------------------- Steve Schear | tel: (702) 658-2654 CEO | fax: (702) 658-2673 First ECache Corporation | 7075 West Gowan Road | Suite 2148 | Las Vegas, NV 89129 | Internet: azur@netcom.com --------------------------------------------------------------------- "I know not what instruments others may use, but as for me, give me Ecache or give me debt."