John Kelsey wrote:

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From: cyphrpunk 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.

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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.

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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