At 11:50 AM 7/5/94 -0700, Timothy C. May wrote:

But all but a very few of them are polar opposites of what we as Cypherpunks want. Microsoft wants home banking, VISA wants it, and various cryptographically-incompetent schemes are being proposed.

I've been talking off line with people about business models for e$. We have to deal with the fact that for most people privacy is not as big an issue as it is for us. There was a quote in MacWeek today to the effect that 80% of the people are satisfied with 70% of the Mac's functionality, and so they buy Windows. With that in mind, here are three business models for discussion. The Redmond Scenario: Here's a business model (not a new one either) which has 70% of the functionality of DigiCash(tm), and that 80% of the people will buy into. It works like those ATM terminals you see at grocery store checkout counters now. But I think there's also way to hack into it a DigiCash(tm) option later... Attach a card-swiping peripheral to a PC. Use secure Mosaic or equivalent as the transaction protocol. When someone buys something from a vendor, the HTML form asks for a swipe in the reader and the customer's PIN. The latest version of "Debbie Does Ft. Meade, LXIX" is then downloaded to the customer. The customer has just made a trusted-third-party "cash" transaction. Obviously, this for credit card transactions, too. For a "cash" transaction, the vendor's software sends a secure (vendor can't tamper, either) message including card swipes and PINs for both the customer and the vendor, crediting the vendor's account and debiting the customer's account to an ATM gateway (probably sold to a bank as a "drive-up window on the information superhighway"<gak!>) . Instant transaction settlement. Not private. The Cupertino Scenario: This one of many right ways to do DigiCash(tm). It achieves the same result (DDFM LXIX is sold) as the Redmond Scenario with the same technology. In this case, the ATM gateway sells (for some combination of a spread and float interest on outstanding cash) Digicash(tm) directly to the purchasers, just like physical ATM does with paper cash at a shopping mall. The transaction is done with a card swipe and the cash is put on the customer's hard drive to be spent. Consumer uses digital cash to buy DDFM LXIX. Vendor either keeps e$, or deposits with own bank, or cashes it out with DigiCash(tm) issuer. The Houdini (more lives than a cat, that Houdini...) Scenario. Just like Redmond scenario but, in every transaction, the option is there to use DigiCash(tm). The reason the option is kept alive is that the bank (the owner of the "drive up window"<gak!>) gets a *commission* on DigiCash(tm), just like they do with Travelers' Checks. If the customer pays with DigiCash(tm), the swipe/PIN doesn't touch the vendor, it goes to the ATM gate. e$ is issued to the customer and used to pay off the vendor, who doesn't even have to have a bank account at this point, which "suitably incentivizes" the vendor to maybe offer a discount, 'cause his costs are lower. (Eric has killed me on this already, but I stand ready to be killed for it again. Sigh) Customers are "incentivized" by privacy, of course...

What we can do to head them off or to deploy the right kinds of systems is the challenge ahead of us.

As I said to somebody offline a while ago. The thing we don't want to do is provoke an immune response from the banking system before we get started. I believe that there are all sorts of real good reasons the banking community would like to do e$. I think that we may have evolution on our side here. It seems to me that strong crypto transaction settlement and e$ are the necessary and *sufficient* conditions for the kind of global information economy that most people on this group believe is coming. One of the things I thought about was the idea of a conference on internet commerce, geared toward educating a smallish (100-150) business, regulatory, and finance people about the technology and the potential of e$. I wrote up a bunch of dog-and-pony slides outlining an agenda and potential speakers, and then the ritalin wore off. ;-). Nonetheless, I have been doing a bunch of work for the World Trade Center in Boston lately (where the air-conditioned part of MacWorld is held ;-)), and my client referred me to a good conference planner. If anyone wants to egg me on about this, (I'm *not* asking for free work from *anyone*, I swear) e-mail me. I could use some moral support, at the least.

But it will be a tough struggle, as things are moving fast behind the scenes.

Would you like to share something, Tim? (jeez, I sound like I'm in a CR group...)

(My greatest fear: legislation to support home/cable banking, with restriction on competitors.)

Remember that Citicorp has been plugging home/telephone banking for years. I also think that any regulatory response at this point will only cause the kinds of "regulatory arbitrage" Eric has been talking about. ----------------- Robert Hettinga (rah@shipwright.com) "There is no difference between someone Shipwright Development Corporation who eats too little and sees Heaven and 44 Farquhar Street someone who drinks too much and sees Boston, MA 02331 USA snakes." -- Bertrand Russell (617) 323-7923