At 04:51 PM 12/19/2001 -0800, Len Sassaman wrote: <snip>

"Digital cash" in the traditional sense isn't necessary for a pay-per-use remailer system. Like MojoNation, I am going to refer to the digital cash coins as something that has no monetary value in the traditional sense. Tim pointed out at the last meeting that what we think of as "money" has no inherent value. If you think of the remailer digital cash coins as tokens with a very specific purpose, a lot of the objections to using digital cash disappear.

Additionally, I am assuming that there would be a suitable digital cash algorithm that could be used for these purposes. I am aware that there are algorithms similar to Chaum's in existence, but my level of knowledge isn't sufficient to know if they would work for these purposes. In any event, the Chaum patents expire soon enough. In this scheme, while the anonymity of the token buyer is essential, neither the bank nor the seller will have their anonymity protected.

The system would work as follows, from the point of view of the user:

The user would purchase remailer tokens (digital cash) from a token vendor (the bank). This is an exchange similar to car wash tokens or TicketMaster[tm], where the seller receives "real cash" and the buyer receives a tangible promise of a future service. The tokens could be purchased online using PayPal, credit cards, etc. (Yes, this means the number of paying remailer customers must be large enough to constitute a crowd.)

The user than fires up his remailer client, and each remailer has pricing and token service information associated with its key and reliability stats. (In this system, multiple token vendors could exist, and remailers could be their own vendors. For simplicity's sake, I am going to assume that all remailers in this user's client accept the same ticket vendor's tokens.)

Each remailer sets a price (i.e., number of tokens) for its use. Remailers could even charge a different amount depending on where in the chain it fell, with exit hop services costing more than beginning/middle chain positions. The user would select his chain based on the reliability stats and the pricing information for each remailer. The client would tally the cost, and when the user approved, it would remove tokens from the user's "purse" and attach them to the outgoing message, interwoven in the various layers of encryption in the message.

Now, from the remailer's point of view:

A message is received, and the encryption stripped off. Inside is a remailer token, which the remailer redeems with the token vendor after ensuring that the token covered the price of the message (accumulating a balance in his account, which can then be exchanged for cash by the remop.) The message is then delivered to the next hop, and so forth.

I came up with this idea after an interesting conversation with Bram Cohen one night, and then after researching it realized that others had said basically the same thing. I'm interested in hearing problems with the above proposal, but for now I am going to assume it is sound. I have a further enhancement to this system that I just now realized might be possible, and this is what I'm really interested in discussing.

One of the big problems with remailers currently is reliability. We can attempt to make remailer software more stable, place remailers on better, faster systems, add message redundancy to the protocol, etc., and we still don't eliminate the major flaw receipt verification. There is no way to report back to a message sender that a message did not make delivery, so when something does go wrong, the end user rarely has any idea why. Hal Finney discussed this, and a possible solution to the problem, here: http://nymip.velvet.com/pipermail/nymip-res-group/2001-August/000146.html

If one assumes that delivery failures between remailers are the exception rather than the rule then remailers could publish delivery failure notifications in message pools (e.g., Usenet alt.anon.messages) encrypted with a sender provided key and subject line. The user's remailer client could then scan the group for the subject line to detect problems.

If a system as I have described above were to be implemented, we could solve this problem (as well as the inevitable problems of remailers cheating and collecting payment without delivering mail, and the problem of double-spending) without having to reveal any useful information to an attacker who doesn't already have ability to observe the entire mix network.

If the remailer client were to keep track of which tokens were paid to which remailer, the user could determine where in a chain message delivery failed, or if the message exited the last hop (not exactly the same as if it was delivered, but close. The last remailer could cheat, or the recipient's mail server could fail. There's ways to improve this, though.)

After the remailer redeems the token with the token vendor, the token vendor publishes the token. No one but the user and the remailer know which message a given token was linked to, so information leakage is minimized. The user can query the token vendor for the most recent token redemptions, and will be able to determine where his message either is currently waiting in the chain, or where it died.

(This isn't exact either. Failure, in this case, is pinpointed at the link between two remailers, rather than at a given remailer. If a user queried the bank and discovered that, out of a 5 remailer chain, remailers A, B, and C redeemed the tokens but D did not, this either means C is cheating, C is broken on sending, or D is broken on receiving. Further tests would be necessary to determine the exact nature of the failure.)

Does anyone have any thoughts on this? Reasons why the payment system would not work? Reasons why the verification system would not work? Improvements to either system? Thoughts on the specifics of the digital cash algorithms needed?

One important aspect of preserving the efficacy of a bearer token based value system is fraud prevention. If the tokens are to be exchangeable for outside value (e.g., dollars) then there must be effective way to prevent the purchaser from defrauding the mint. There has been considerable debate on the "e-gold Discussion" <e-gold-list@talk.e-gold.com> list on the risks of accepting other payment forms for e-gold (which generally cannot be repudiated). One e-gold market maker, particularly stung by cheats, made some recommendations http://www.gold-age.net/ldf/ThemeStreamArticle-01-2001.html 'May Scale' of monetary hardness Hardness Item 1 Street cash, US dollars (Hard) 2 Street cash, euro currencies, japan 3 e-gold 4 Street cash, other regions 5 Interbank transfers of various sorts (wires etc), bank checks 6 personal checks 7 Consumer-level electronic account transfers (eg bPay) 8 Business-account-level retail transfer systems (Soft) 9 Paypal and similar 'new money' entities, beenz 10 Credit cards (Ridiculously soft) Observe that say stock brokerages definitely do not accept credit cards or paypal to fund an account. They will only accept instruments that are very hard, such as wire transfers or certified bank checks. When hard money is required, only money-types with a hardness of about 5 or better will do the job. Observe though that even money order and bank wires can and have been reversed.