Financial Times, April 9, 1996, p. 13.

Tense visions of future imperfect

Victoria Griffith eavesdrops on writers at a conference about privacy and the Net

...

Martha's Vineyard-based author Simson Garfinkel, for instance, came up with a few terrifying scenarios about Net crime for a discussion group with David Chaum, the founder of the electronic money group DigiCash. In one, a thief went on an electronic spending spree with stolen digital cash. In another, an elderly woman was electronically robbed of her life savings. In the third, the stability of the US economy was at stake.

Garfinkel described it like this: "My name is Agent Jenkins. I'm an investigator with the secret service, working on a counterfeiting case. And it's tough. Last year, my office got a priority call from an economist at Stanford. The economist was looking at something called the money supply and velocity and both were increasing a little too fast. They just didn't add up. The economist finally figured an organisation was printing its own electronic money -- just like the US government does.

"This counterfeit currency looked just like the real thing, except it was a fraud. She even found some of it -- a digital dollar that was signed and sealed by the US government's secret key, yet had a serial number that had never been issued. The money that was being made was on the Net. It was everywhere and nowhere. And it was encrypted, so that we wouldn't even know it if we found it. Last month, we estimate, the total fraud was up to $900,000 a month, and it is increasing still."

I don't see how this third scam would work in a system such as DigiCash which uses online clearing. Unissued serial numbers would be refused when presented for clearing. One scenario which would work (and could be used for scams 1 and 2) is either stealing digital cash, or counterfeiting issued, but unredeemed serial numbers. In either case, if you spend it before the rightful owner does, that rightful owner gets, as a minimum, a lot of hassle, and might lose the cash. If this kind of scam, particularly the counterfeiting scam, occurs too often, public trust in the cash will disappear, and people will refuse to buy it. Note that people trying to maintain anonymity are particularly vulnerable since they have to hold cash for a period of time to defeat traffic analysis attacks. ------------------------------------------------------------------------ Bill Frantz | The CDA means | Periwinkle -- Computer Consulting (408)356-8506 | lost jobs and | 16345 Englewood Ave. frantz@netcom.com | dead teenagers | Los Gatos, CA 95032, USA