Re: [fc-discuss] Financial Cryptography Update: On Digital Cash-like Payment Systems
From: cyphrpunk <cyphrpunk@gmail.com> Sent: Oct 24, 2005 5:58 PM To: John Kelsey <kelsey.j@ix.netcom.com> Subject: Re: [fc-discuss] Financial Cryptography Update: On Digital Cash-like Payment Systems
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Digital wallets will require real security in user PCs. Still I don't see why we don't already have this problem with online banking and similar financial services. Couldn't a virus today steal people's passwords and command their banks to transfer funds, just as easily as the fraud described above? To the extent that this is not happening, the threat against ecash may not happen either.
Well, one difference is that those transactions can often be undone, if imperfectly at times. The whole set of transactions is logged in many different places, and if there's an attack, there's some reasonable hope of getting the money back. And that said, there have been reports of spyware stealing passwords for online banking systems, and of course, there are tons of phishing and pharming schemes to get the account passwords in a more straightforward way. The point is, if you're ripped off in this way, there's a reasonable chance you can get your money back, because the bank has a complete record of the transactions that were done. There's no chance of this happening when there's no record of the transaction anywhere.
The payment system operators will surely be sued for this, because they're the only ones who will be reachable. They will go broke, and the users will be out their money, and nobody will be silly enough to make their mistake again.
They might be sued but they won't necessarily go broke. It depends on how deep the pockets are suing them compared to their own, and most especially it depends on whether they win or lose the lawsuit.
I don't think so. Suppose there's a widespread attack that steals money from tens of thousands of users of this payment technology. There seem to be two choices: a. The payment system somehow makes good on their losses. b. Everyone who isn't dead or insane pulls every dime left in that system out, knowing that they could be next. It's not even clear that these are mutually exclusive, but if (a) doesn't happen, (b) surely will. Nobody wants their money stolen, and I don't think many people are so confident of their computer security that they're willing to bet huge amounts of money on it. If you have to be that confident in your computer security to use the payment system, it's not going to have many clients.
CP
--John
If you have to be that confident in your computer security to use the payment system, it's not going to have many clients.
Maybe the trusted computing platform (palladium) may have something to offer after all, namely enabling naive users to use services that require confidence in their own security. One could argue it's like going to a Vegas casino; software vendors (MS *cough* MS) probably won't cheat you in such a system because they don't have to; the odds are in their favor already. The whole system is designed to assure they get paid, and they have a lot to lose (confidence in the platform) by cheating you (at least in ways that can be detected). And since you won't be able to do anything to compromise the security, you can't screw it up. While I wouldn't see an advantage in that, I might recommend it for my grandmother. More on topic, I recently heard about a scam involving differential reversibility between two remote payment systems. The fraudster sends you an email asking you to make a Western Union payment to a third party, and deposits the requested amount plus a bonus for you using paypal. The victim makes the irreversible payment using Western Union, and later finds out the credit card used to make the paypal payment was stolen when paypal reverses the transaction, leaving the victim short. -- http://www.lightconsulting.com/~travis/ -><- "We already have enough fast, insecure systems." -- Schneier & Ferguson GPG fingerprint: 50A1 15C5 A9DE 23B9 ED98 C93E 38E9 204A 94C2 641B
John Kelsey wrote:
From: cyphrpunk <cyphrpunk@gmail.com> Digital wallets will require real security in user PCs. Still I don't see why we don't already have this problem with online banking and similar financial services. Couldn't a virus today steal people's passwords and command their banks to transfer funds, just as easily as the fraud described above? To the extent that this is not happening, the threat against ecash may not happen either.
Well, one difference is that those transactions can often be undone, if imperfectly at times. The whole set of transactions is logged in many different places, and if there's an attack, there's some reasonable hope of getting the money back. And that said, there have been reports of spyware stealing passwords for online banking systems, and of course, there are tons of phishing and pharming schemes to get the account passwords in a more straightforward way.
Right, the Microsoft operating system as host for virus / malware attack for stealing bank and payment systems value has been going on for a couple of years or so in a serious (industrial) way.
The payment system operators will surely be sued for this, because they're the only ones who will be reachable. They will go broke, and the users will be out their money, and nobody will be silly enough to make their mistake again.
They might be sued but they won't necessarily go broke. It depends on how deep the pockets are suing them compared to their own, and most especially it depends on whether they win or lose the lawsuit.
I don't think so. Suppose there's a widespread attack that steals money from tens of thousands of users of this payment technology.
That sounds like a version of phishing, 'cept for being 2 orders of magnitude too small.
There seem to be two choices:
a. The payment system somehow makes good on their losses.
b. Everyone who isn't dead or insane pulls every dime left in that system out, knowing that they could be next.
Er, no, that doesn't sound like any finance system I know. See that post to the Register which I think RAH forwarded, with 2000 in the class. That's just this week's news. As per my observations, all FC systems bubble along with something about 1% fraud plus/minus an order of magnitude. The credit card people currently report about 0.1-0.2 % although I think that might be under- reporting on their part. Out of that, some people might get recovered, but enough do not that we wouldn't be able to push proposition b. with any strength. We know for example that even though the banks might recover any direct losses, they won't accept liability for any other costs including where their fault caused problems elsewhere. iang
On 10/25/05, Travis H. <solinym@gmail.com> wrote:
More on topic, I recently heard about a scam involving differential reversibility between two remote payment systems. The fraudster sends you an email asking you to make a Western Union payment to a third party, and deposits the requested amount plus a bonus for you using paypal. The victim makes the irreversible payment using Western Union, and later finds out the credit card used to make the paypal payment was stolen when paypal reverses the transaction, leaving the victim short.
This is why you can't buy ecash with your credit card. Too easy to reverse the transaction, and by then the ecash has been blinded away. If paypal can be reversed just as easily that won't work either. This illustrates a general problem with these irreversible payment schemes, it is very hard to simply acquire the currency. Any time you go from a reversible payment system (as all the popular ones are) to an irreversible one you have an impedence mismatch and the transfer reflects rather than going through (so to speak). CP
participants (4)
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cyphrpunk -
Ian G -
John Kelsey -
Travis H.