Re: In Search of Genuine DigiCash
At 4:24 PM 8/19/94 -0700, Eric Hughes wrote:
The withdrawal transaction posts a debit to a customers demand deposit account (decreasing it) and a credit to the suspension account (increasing it).
NewJargonNotice("suspension account") Is this new nomenclature? It sounds less risque than "float", I must say...
Where digital cash is immediately useful is online as a retail level wire transfer system. [snip] the cost of networking is dropping and the cost of computation is dropping. I personally don't expect that off-line digital cash techniques will ever actually be economically most efficient. Existing alternates (e.g. credit cards) work well enough today, and by the time PDA's work well enough and are cheap enough to be universal, the cost of an online verification will be down in the fractions of a cent.
Immediate and final clearing must save money, somehow, but right now, it's hard to prove whether cash is still king in cyberspace. I have a (somewhat religious, in the sense that it may not be empirically proved in my lifetime) belief that that's the case. That's why I like to agitate for a test. Yes, Tim, I know, you guys aren't bankers... Cheers, Bob Hettinga ----------------- 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
rah@shipwright.com (Robert Hettinga) writes:
At 4:24 PM 8/19/94 -0700, Eric Hughes wrote:
The withdrawal transaction posts a debit to a customers demand deposit account (decreasing it) and a credit to the suspension account (increasing it).
NewJargonNotice("suspension account")
Is this new nomenclature? It sounds less risque than "float", I must say...
I think Eric was referring to simple double-entry bookkeeping. I don't have his original post in front of me, but I believe the suspension account was a liability account which represented the digital cash in circulation. In double-entry bookkeeping, every transaction alters two accounts so that the books stay in balance. It's not unusual to make up specific accounts for the particular assets and liabilities of your business.
Immediate and final clearing must save money, somehow, but right now, it's hard to prove whether cash is still king in cyberspace. I have a (somewhat religious, in the sense that it may not be empirically proved in my lifetime) belief that that's the case. That's why I like to agitate for a test. Yes, Tim, I know, you guys aren't bankers...
There's something I don't understand about this "immediate and final clearing" business. In an on-line cash system, the cash itself is not "cleared" until you send it to the bank and/or have some guarantee from the bank that it has not been spent before. It seems to me that you could get the same benefit from a checking account if you called the bank, verified the funds were available, and electronically cashed the check on-line. In an off-line system, is the cash really cleared immediately? What if it is double-spent? Is the bank going to guarantee to cover all instances of multiple spending, in the hope or expectation that it can sue the customer who did it? What if you're talking about huge sums of money, and the guy doesn't just double-spend but hundredfold-spends it, then vanishes to Rio? Are the banks going to cover that? They don't cover bad checks, and I don't see how they can afford to cover bad cash. So for both on-line and off-line ecash there appear to me to be problems with the notion that cash has a unique advantage in providing immediate clearing of transactions. Hal
Hal writes
So for both on-line and off-line ecash there appear to me to be problems with the notion that cash has a unique advantage in providing immediate clearing of transactions.
Obviously anonymous E Cash can be duplicated with alarming ease. Physical cash is also becoming easier to duplicate. Is identity based cash so bad? The existing grey capitalist system works primarily on foriegn check accounts. If Joe writes a check in dollars on his Swiss bank account, sends it by snail mail in a sealed envelope to Peter, who places it in his BNZ account under his Hong Kong identity, they are both fairly secure. Although the transaction is fully traceable, it is unlikely to be traced without the consent of one of the participants. Suppose each E Cash certificate grows by adding identifying material in each transaction that makes it possible, with the consent of each participant in the chain, to trace it backwards. Or suppose each participant maintains a database that makes such tracing possible and proveable. Then double spending on amounts of moderate size would be very rare, so rare we would not have to worry in normal transactions. In big transactions you have similar problems with physical cash - there is always the worry that the guards may defect, or whatever. That is why big transactions are almost always identity based.. -- --------------------------------------------------------------------- We have the right to defend ourselves and our property, because of the kind of animals that we James A. Donald are. True law derives from this right, not from the arbitrary power of the omnipotent state. jamesd@netcom.com
Bob Hettinga writes:
Immediate and final clearing must save money, somehow, but right now, it's hard to prove whether cash is still king in cyberspace. I have a (somewhat religious, in the sense that it may not be empirically proved in my lifetime) belief that that's the case. That's why I like to agitate for a test. Yes, Tim, I know, you guys aren't bankers...
Don't let me stop you, Bob! My main objection is not to anyone going ahead and trying something (why should I object to that?), but to two themes which often seem to go together: 1. Proselytizing for some kind of group project. Exhorting others to "do something!" 2. An underestimation of the task ahead. A failure to absorb the work already done, and a failure to see the work still needed. An assumption that the task at hand is the _selling_ of digital cash as a concept. Now if Bob or anyone else can pull of digital cash, can convince some bank to do a fairly major launch, fine. He or they will be famous. I adopted this "politely skeptical" stance a year or so ago when I hear about the efforts by Hughes, Abraham, Sandfort, and Frissell to do some version of a digital bank. Ditto for the Austin group's plans to do a new type of credit union. This list has seen many proposals for many systems. Most don't go anywhere, which is hardly surprising, given the lack of funding, the serious technical, regulatory, and market resistance issues. Note to All Readers Tired of this Issue: I think this'll be my last response in a long while on this issue. Those who wish to build RemailNet (tm), First Internet Bank (tm), Digibux Depository (tm), or e$ Savings and Loan (tm) should certainly proceed. But statements of plans, or exhortations that Cypherpunks should all pull together on one of these plans, are less impressive to me--and I suspect to others--than some tangible progress such as we saw with remailers, with PGP, with message pools, and with thoughtful articles on the important protcols (such as we saw tonight with Hal's posting on the Stefan Brands scheme). I don't think any of us on this list is yet ready to present a plan to real bankers. Eric Hughes has told me he agrees. I don't know what Hal or the others think, but the issues surrounding digital cash are still sufficiently murky at this point to make a plan to deploy digital cash premature. I see several ways around this: 1. The research groups centered around Chaum, with other CWI folks like Brands having other approaches, will be likely centers of expertise. Not surprising. Of relevance because this is where the impetus will be concentrated. 2. I can imagine a financial entity (bank, brokerage, etc.) having a working group looking into this. As a research project, as a way of keeping current on something important. 3. Digital cash may come out of left field, sort of analogous to the way hypertext is arriving unexpectedly from the Mosaic/Web developments (done by a small group, fairly quickly). What I can't see is a bunch of us going to a bank and "shmoozing" with them and then having them see the light. Maybe Bob sees things differently. Maybe he's right. Who knows. What I know is that changing the world by exhortation is usually a hopeless task. Examples work much better. Cypherpunks write code. --Tim May -- .......................................................................... Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@netcom.com | anonymous networks, digital pseudonyms, zero 408-688-5409 | knowledge, reputations, information markets, W.A.S.T.E.: Aptos, CA | black markets, collapse of governments. Higher Power: 2^859433 | Public Key: PGP and MailSafe available. "National borders are just speed bumps on the information superhighway."
NewJargonNotice("suspension account") Is this new nomenclature? It sounds less risque than "float", I must say... As Hal pointed out, this term refers to the double-entry book notation used to keep track of how much digital cash has been withdrawn but not yet deposited. I don't think I invented this use of the word "suspension", but I also can't find where I might have picked it up. One can consider that a digital cash exchange creates a delay between the two legs of the transaction. In between the beginning and end, the transaction is suspended. That's the sense of the word. "Float" is a financial concept, not an accounting one or a legal one. The issues are greater than financial ones only, and the terminology needed is correspondingly greater. Eric
participants (5)
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Hal -
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jamesd＠netcom.com -
rah＠shipwright.com -
tcmay＠netcom.com