-----BEGIN PGP SIGNED MESSAGE----- Subj: Why Digital Cash is Not Being Used

Hal Finney asks us to think about and comment on the important issue of why digital cash, in its myriad forms, is not in wider use. Especially on this list, where the Magic Money/Tacky Tokens experiment has not (yet at least) produced widespread use.

I believe these things will come into use fairly quickly - perhaps not as fast as Tim, Hal, others, myself included, want, but. Especially if the new momentum here in Cypherpunks keeps up. Allow me to inject some of my own momentum here. I was going to make a suggestion that this discussion move from Cypherpunks to IMP-Interest, which seems to be a dead list. Cypherpunks who object to the non-crypto aspect of the Money_Threads could just not bother with IMP-Interest, and Cypherpunks could take over IMP-Interest and work at actually establishing an IMP. (Internet Mercantile Protocol). [I might have more to say about protocols later - but already I sense a long post coming up...] [[ I don't know if I should apologize in advance for verbosity, since there is soooo much mail to read and tend to...but I have been holding back for various reasons much related to the answer to the Subject: Why Digital Cash is not being used.]] Or is there something official about the name "IMP" - I notice the host is on bellcore, do they own the name? Can anyone own a name such as IMP ? Anything else that needs to be said, in case of newbies re IMP? Nick Szabo was the one who originally recommended it, Nick - are you still there? However, I could be satisfied leaving it on Cypherpunks...actually, I bet a poll of active C'punk posters and interested lurkers would approve of the digital cash conversations and the value of money threads. We'll just have to get Hawk's Ray's ExI Mailing List new software purchased or donated to Cypherpunks...tax decuctable... Meanwhile, back to replying to Tim's message and Hal's rallying of the troops and answering This Question :

This question also goes to the heart of several related questions:

1. Why aren't crypto protocols other than simple encryption, digital signatures (both implemented in PGP as the de facto standard in our community), and remailings (implemented in Julf's anon.penet.fi remailer and in the various Cypherpunks remailers) being *used*? Why no DC-Nets, no data havens, no digital timestamping, etc.?

Answer Number One to 1. HOMEWORK. Sorry for shouting. There is sooo much homework to do. We've got code to write, borrow, use... Personally, I have had PGP for many months, almost a year, I suppose, and am only now just getting a round tuit. This Cypherpunks "posting" will be my first public use of PGP to sign a message. I did send a private PGP message to one friend, just for practice. I don't have time to read alt.security.pgp enough to not have some messages expire on me, so I couldn't answer the simple question of Why does PGP stick an extra "- " in front of the "-----Begin Public Key Block -----" when you include the ascii public key block in the text of your letter. Must be a recursion type of thing, PGP rejecting this particular insance of text as anything significant to do with PGP signing with cleartxt=on. Anyway, that is perhaps a faq so I'll recheck that later, .... So, I've finally got my PGP homework done, at least enough to get past the basics. But now to get into the PGP Tools and really start writing code...more homework. Fortunately for you, Tim, you don't have a Boss to worry about - your dues are all paid in this regard. Anyway, I'll stick my virgin public key in here, but beware it has not been signed. I have already volunteered to spring for a phone call to Stuart Card to check public key sigs, and I'll volunteer to phone one or two others who reply directly to me to get my key signed by Known Cypherpunks and/or Extropians. Anyway, later on that. I'll probably even PAY someone in digital cash to sign my key... - -----BEGIN PGP PUBLIC KEY BLOCK----- Version: 2.3a mQCNAiynHCkAAAEEANbd5hw0IR+keK2U2DoGnAPdcctWxipdXbJ2Qr83ScX7d7K1 uP1bkRkGOCYJpQTksgtHf/ulUsZwq4TEFb7QUyvHnoRJcO4q0RX7CnH9fhXQ1F+k LeuU4NSCYIzrvI6kdoMR1nTN3N8zm793CafB/SI0ZoJs2b5p1UqYjDfdkCPxAAUR tCxCaWxsIEdhcmxhbmQgKFdtLlIuKSAgPGJpbGxAa2Vhbi51Y3MubXVuLmNhPg== =Z9Sb - -----END PGP PUBLIC KEY BLOCK----- Now, I hope I used the right key! Something else to check. So what else is on the homework list? 1. Read Chaum papers. Re-read all Hal Finney articles in Extropy. Really understand Alice to Bob to me and back again. Straighforward study, but a few time units involved. Reread Mark Ringuette mail. 2. Read Schneier. Heavy into the technical cryptography stuff, to be sure, but definitely required reading. Many time units. 2. a. Buy the book. Not in our library. I am broke and cannot afford hefty tome right now. However, I have entered a contest which pays $150 first prize and $75 second in credits at my favourite bookstore. Unfortunately they will not issue digital cash certificates with which to redeem said prize at the Internet Bookstore, which doesn't yet take digital cash, because there is not yet a true internet bank - wait - what's that I hear about INFO_Banque ??? Anyway, Win contest, order book. Will take at least two weeks for contest, then a week to get the money, then two weeks order from bookstore. With luck, I'll have a copy within six weeks. And if I don't win the writing contest, with The Great Newfoundland Novel, Page 1, then it's off to a farther payday...probably September at current rate of progress. 2. b. Do the Errata list. 2. c. Get the Diskette. Pay BS in digital cash for diskette. Get licence from BS to resell software to my Customers. 2. d. Get a box of the books and sell them to my Customers. 3. Get my own machine to do all this on. Certain perqs apply to my use of my employer's facilities, to be sure, but they do not extend indefinitely and in all directions. More code to write. More paydays down the road... Send me real cash money. 4. Start a BBS. Well, maybe I can make some money at it, once I get a machine and some phone lines...but I'm way out in the boonies here. I'll need a satellite dish internet feed, because I can't get a commercial one except through academic routes, and I don't want to go through academic routes and would not be allowed, anyway. 5. Get a Netcom account? Is this possible for a Canadian? I'd still have to telnet from some supplier here. I'll go for my own service with my own satellite dish. Investors, anyone? Ripe market! Send for Prospect-Us. 6. Learn Unix. Maybe I'll get a shell account on Sameer's machine. I've been a DEC RSTS/VMS Basic-Plus/VAX BASIC V2 programmer for too long, and I've not yet become unixificated. I don't even know if I could read a C++ program. I'm obsolete...again. 7. Reactive HEx - opps, premature - see below for rest of this point. 8. Become a security expert. Definitely need SecureDrive/Dev/Other. More ftp'ing to do. I really appreciate all the Cyperpunks keeping ourselves posted on the latest and greatest and the news regarding these products, as well as the pearls of wisdom from DCF. I expect most of us could, after homework, become successful security consultants. And there are a lot of anarchists about! But, isn't Unix full of security holes? When I set up my own Netcom company, won't I be hacked? Ray? HELP? Oh yes, I've got to get into Pr0duct Cypher's product. What's a firewall? 9. Start up INFO_Banque. I am almost ready to do this, but not quite. Something I said about homework... so Cypherpunks, Extropians, (no, please do not forward this post to Extropians. I am refering to Extropians who are Cypherpunks...), friends, go easy on my new .sig. However, there ain't no time like the present, neither, hey! Speaking of time...

2. What *incentives* are there for creative programmers to devise and/or implement new crypto protocols if essentially everything for the past year and a half (since the fall of 1992, which is when PGP 2.0 and remailers became widely available) has languished?

There's gold in them thar hills. I will be willing to put money into it, when I get some money. This process of emerging from bankruptcy and becoming judgement proof is interesting, but it takes time, and money. Also, discipline. Having proven myself incompetent at my financial affairs, how dare I speculate upon starting a bank? Well, there it is. Fuck 'em. Feed em fishheads. I'm going to do it anyway. I'll even go out on a limb and say that I'm going to tell you all how I'm going to do it, except don't expect an answer Real Soon Now. I've still got to figure out the solution to the duplicate spending problem.

3. What are the "killer apps" of crypto?

Cypherpunks want to know. Cypherpunks are writing them... And please, Tim, We Really Do Need The FAQ. I have heard you toss out tidbits about the Cyperpunks FAQ. More, please. We really do value your postings and ideas and caveats and reputation - nobody else could do it...Tim...

4. What platforms and user environments should would-be developers target? What machines? What networks? What languages? (An ongoing interest of mine. Objects, scripts, Visual Basic (!) VBX tools, TCL, perl, many platforms, etc. A tower of Babel of confusion is upon us.)

Yes, I cannot even attempt an answer here yet. It matters, of course, but I would speculate that it will be done, perhaps in EACH of these ways on all the platforms that there are for sale to our Customers. However, we've got to nail down the protocol. Maybe the Magic Money Model will take off. Pr0duct Cypher, do I need to become anonymous?

Here is my first-cut analysis of the digital cash situation.

I. Why is Magic Money/Tack Tokens, in particular, not being more widely used?

- Nothing of significance on the List to buy, hence no incentive to learn how MM works. (Just because someone announces that their new article is available for 10 Tacky Tokens doesn't a demand make!)

Yeah, I've noticed this, too. But I want to buy books, and I want to sell stuff to my Customers, and I want them to use my cash from my bank to pay for this stuff. And I want cooperating banks all using the same INFO_Banque Protocol (TM WmRG right now) to use my cash and I'll use theirs, and we'll have 700 Cypherpunks and 300 Extropians start up 1000 new banks all using our own developed and pgp-like-available software, for a small fee. Within a little while, I am going to offer my own INFO_Banque digital cash for sale to Cypherpunks and Extropians, and eventually everyone in the world, and keep a US Dollar Trust account in a secret "real" offshore bank somewhere in the Cayman Islands or El Salvador. But before I can do that, well, you know...homework... Still, if you want to get the ball rolling, send me $10 and I'll deposit it in trust, sticking my own reputation on the line ... Actually, I don't know if there are any legal implications to that, because my private company Macronic Systems, Inc. is incorporated specifically NOT as a bank, because different rules apply to a bank, but my INFO_Banque is not incorporated anywhere. It is a virtual entity of mine that nobody can get at just yet. Hell, Tim, I'll give you all the Thornes you want for $10 - if you still want them! Be the first one on your block. Just to keep myself honest, my home address is 28 Warren Place, St. John's, Nfld. Canada A1A 2A1. Now, wouldn't you trust someone with a postal code like that! I hesitated at putting that here in a Cypherpunks message, but what the hell... just tell Detweiller I am armed and dangerous...

- Semantic gap. I confess to not having the foggiest ideas of how to go about acquiring Tacky Tokens, how to send them to other people, how to redeem them (and for what), etc. Having nothing to buy (no need), and plenty of things to occupy my time, I've had no interest in looking at MM.

This will change. Maybe you don't need stuff and can always buy it conventionally anyway. But with the rapidity with which Mosaic and WWW applications are growing around the world, there will soon be many on-line stores. I want to open one myself...just get me my new alpha-sun-mips-cray box with a few gigs raid cryptofied... and a satellite dish network feed and notebook and four wheel drive with a cellular phone and ... Any comments on the newly announced secure mosaic?

When I buy items like t-shirts from people on this list, I simply write them a check and send it. Very simple. The banks handle the complexities. And writing a check is a "prototype" (or script) that is learned early by most of us. Not so with any of the various digital cash schemes. In 10 or 20 years, sure, but not now.

Yes, this is fine. But we are talking anonymous money, untraceable transactions, cryptoanarchy, stuff like that. We know about cheques. (I wish you yanks could get your spelling right!)

This is not to take away from the excellent work--I gather from comments by others--that ProductCypher put into MM. His greatest achievement may turn out to bring this issue to the fore, to wit, what will cause people to bridge this semantic gap (understanding) and actually begin to *use* these new constructs?

Yes, I gotta add this to my homework list.

- as others have noted recently (and this is a well-known issue), alternative currencies must offer some advantage over existing currencies, or at least be roughly on a par with them.

Agreed - of course. We've got to beat VISA/MC/AMEX/Travellers Cheques in transaction costs, and we've got to pay with Digital Postage. I love that term! It explains it all. Quote from the upcoming INFO_Banque Catechism (R) : Digital Cash pays for itself. - --- "frequent flier miles," ---- elided.

(The proposal recently that vendors of products, like t-shirts, give a discount for MM payments is of course unworkable. This is asking real people to give up real dollars for an ideological cause of marginally little significance to them. The advantages of MM must be real, not phony.)

Of course.

II. Other Experiences with Digital Cash in Some Form

- On the Extropians list a while back (I've since left that list), there was an interesting experiment involving reputations of posters and "shares" in their reputations. Brian Hawthorne introduced is "Hawthorne Exchange," HeX, with eventually a few hundred or so reputations trading. The unit of exchange was the "Thorne," with each new list member given 10,000 Thornes to trade with.

Trading was very sparse,

... elide ...

But I think the system was ultimately a failure. Nothing interesting was for sale, and Thornes had a ridiculously low value (reflecting of course their "toy" nature...my $20 bought 20,000 Thornes, as I recall). By "low value" I mean that the number of Thornes given to each participant (Hint: "given" is the important word) was worth nominally $100 (by Brian's sales price--probably none were ever sold at this price), worth $10 to me and others (by my offer of $1 per 1000 Thornes), and probably worth much _less_ as the HeX market languished and, probably, ultimately folded. (Does anybody on the Extropians list know if it is still operating? And what happened to by shares when I left the list?)

Well, yes I know, sort of. Brian Hawthorne couldn't handle the Extropians volume because of work commitments. I don't know if he was on Cypherpunks or not. So he auctioned off HEx, and I bought it for a small fee. It was announced, but, of course, you missed it... HEx is now dormant and will be for a little while yet. I am expecting to be able to find a place from which to run it real soon now. Meanwhile, it is in limbo. There has been no crying demand from Extropians to get it back on line. When I do get some of my homework done, I will take the purchased software system, complete with all the current state of reputations, accounts, and so on, and figure out what to do with it. The reason I bought it was not so much to run a market for the reputations of Extropians, but because reputation markets are going to be valuable commodities in the near future, as internet commerce ramps up. I want to expand upon the concepts and write some code and start marketing HEx in a way that can make me and my Business Partners some money. My INFO_Banque will register reputations for digital postage fees, and receive and arbitrate contributed information about reputations, from other reputation holders, for some small transaction fees. I have been wanting for months to expound upon these ideas and seek feedback from Extropians and Cypherpunks regarding what to do with this reputation market. I will accept any ideas any of you want to donate... if they are earthshattering and they make some money for me and my Business Partners/Investors in the long run, I may even repay with digital cash royalties. Other uses include digital timestamping - when I can get a machine and ups and raid box and backup site and security and all that other stuff I want - I will start offering services like this. What with all the other ambitions I have mentioned here in this Mein Beinkpff message/posting, I could easily spend a few hundred grand getting this together - if I didn't have a full-time job to do to feed my family, etc etc.... It's funny, too, because despite ponderings on these matters over the past year or more, I never asked myself the question that came up in the digital cash/value of money threads today - Who is going to Trust Me? I know I can trust me, and in theory a mix chain will be reliable if you can trust one of the links, so if I become one of these mix chain links through _my_ INFO_Banque, then _I_ know the chain will be reliable. Similarly, _you_ will trust yourself, and soon there will be 700 Cypherpunks and 300 Extropians and all 4 IMP-Interest people all having anonymous remailers and mixes operating, so any sub-chain of eight INFO_Banque Protocol banks will virtually HAVE to be reliable for our commerce... But nobody can trust me not to run off with the cash - good point. How do we solve this one? I guess I'll have to start from the beginning and build a reputation for it... When I _do_ get my homework done, and start offering services for real, when etc etc happens, then you can be sure that if you send me real US Dollars to deposit on account for INFO_Banque digital cash transactions, they will be deposited in a Trust account. Maybe it will at first turn out to be merely digital cheques, but maybe if Perry lets me in on his secrets and some of the stuff he has learned from these six-figure guys at Citibank who are out trying to figure out how to capture this market, well maybe then we can get somewhere... ====== I've gone on too long now...to wrap this up...snip ======

III. What Markets Might Make Use of Digital Cash

I repeat, there's gold in them thar hills.

- illegal markets, for transferring wealth in fairly large amounts. Not at all clear how this will happen, and it sure won't happen with some fly-by-night hackers and/or students offering a new service.

Yes, it is now the middle of the night. 4:34 am, NST, actually. [Real timestamping update - geez, its now 2 hours 10 minutes later.]

(I didn't mention that one of the persistent concerns about learning new crypto protocols here on this list is the epiphenomenality (transience) of it all...remailers appear and then vanish when the students go away or lose their accounts, features added make past learning useless, and so on. Life is too short to spend it learning crufty details that will go away in a matter of months. I'd hate to buy $300 worth of TackyTokens and then find that their value went away when J.Random User graduated!)

Yes, this stuff has to be professionalized. Capitalized. Done.

- betting markets, the "Internet Casino in Cyberspace," etc. Nick Szabo was once championing this, and I think it could be an interesting, and very real, market. Lots of issues here.

More, please. If a few more Cypherpunks could break that PRNG in Montreal...$600,000 he got! And they paid him! Well, they _had_ to, just for letting them in on the hole...well, if I could just break it _once_ ...

- Digital Postage. This remains my favorite. There's a _need_ for untraceable payments (else why use a remailer?). I've written about this extensively, as have others.

Yup. I like this. Do include your previous writings in the FAQ...

If remailers offered robust (see above point about crufty, flaky, hobby remailers) services that they operated as _businesses_, with reasonable attention to reliability, interconnectivity to other remailers, overall robustness, and carefully articulated policies about logging, privacy, etc., then MM or something similar could have a real value.

MM or whatever, we've got to nail down the protocol. In spite of my "out of the mouths of babes" approach here and now, I do intend to do this stuff as a business, to make profits, once a few problems are ironed out regarding eating, drinking, playing darts, living forever, etc.

IV. Is there Any Hope for Cypherpunks Software Use?

The remailers (of Hughes and Finney, with other contributions) came in the first few _weeks_ of existence of the Cypherpunks group. Julf's system already existed.

I'll run one, too, as part of the integrated INFO_Banque services.

Remailers were the "low-hanging fruit" that got plucked fairly easily (not taking anything away from Eric, but he himself says he learned enough Perl in one day to write the first, crude remailer the _next_ day!).

Well, I guess things are looking up. It can't be all that difficult. If I could master paper tape fortran on a PDP-8/L, what with the RIM loader and the BIN loader and 110 baud, surely I can get into unix in a few days. Sigh. I must be getting old if I can remember flip chip modules that had transistors on them, doing transistor- to-transistor logic, building gates,... Tim, you must have been one of the ones that made this old stuff obsolete! Well done yourself.

Later protocols have not fared as well. Why this is so is of great importance.

That's a topic unto itself, and one which I hope to write about soon. Lots of important questions and interesting issues.

You said it, boy. I think I'll copyright and publish my INFO_Banque Catechism as part of my Ideas for Sale programme. Hey, you did say we needed _something_ for sale on the net, didn't you? But please, sir, can we have more? Please write about Protocol. Soon. Like, forget the line-by-line response you were going to make to _this_ message... heh heh. (Opps, I almost said ... no, I can't repeat it...)

--Tim May

Bill Garland, whose new .sig might become this : /----------------------------------------------------------------------\ | I am an Extropian. | Macronic Systems, Inc. offers Ideas for Sale ! | | BEST: DO_IT_SO ! | Go for it : Pledge a Digital US Dollar now. | | CryptoAnarchist. | Send PGP key for more information. | | Cypherpunk. | Get in on the ground floor. Invest Now. Trust me! | | Owner : MSInc., |---------------------------------------------------| | HEx, INFO_Banque | Day Job : Bill Garland = bill@kean.ucs.mun.ca | \__________________________________o o_________________________________/ -----BEGIN PGP SIGNATURE----- Version: 2.3a iQCVAgUBLcduQkqYjDfdkCPxAQF3tQQAoMiOUrwezCp5vs8odOR2ff2l85JXGj7P q+lb3GwCOAKHuULL4G2hoS9jLHrYj+9WQqT2Gu99Jmc2Ut/iFnG/5lfKQfwJwudm aB7FDaq9n0KExJRmW83sK/pKvK7pcvMbOrjL/oA/bqO6yVCXWNZGTic+o778oITH 5IRenEbtGp8= =ryU1 -----END PGP SIGNATURE-----