Robert Hettinga wrote:

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http://digicash.support.nl

[snip. . .]

This, like CommerceNet(tm), seems to be pretty much under construction. The store windows look nice, however...

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... David Chaum

David Chaum's work is of course central to Cypherpunks, and has been for the past two years (since Cypherpunks plans were laid...). Eric Hughes worked with him in '91-'92, and many of us have talked to him about these issues. Further, his papers on DC-Nets and digital mixes (the basis of Cypherpunks remailers) are often cited. I mention this not to chide or "one-up" Robert, but to make clear the role that Chaum's untraceable digital cash has _always_ had for us. The strength of true digicash, even if not yet fully realized/deployed, is why so many of us are skeptical of half-baked "digital cash" schemes that turn out upon quick inspection to have none, or few, of the important features. IMP-interest folks had an especially naive view, for the most part (based on posts I saw and things I heard from participants). I wished them well, but it seemed unlikely that a group of such hobbyists could build a real digicash system while avoiding Chaum's work!

implicit in it was a sort of top-down-plan idea that was incongruous with the do-it-first ethic of the internet. Cypherpunks write code, or Chaum does, anyway ;-).

Even with the smiley, are you implying Cypherpunks don't actually write code? Some do, some don't. But Cypherpunks remailers are fully operational, as are message pools, a form of digital money (Pr0duct Cypher's "Magic Money"), etc.

At the risk of violating that canon, ( I couldn't code my way out of a paper bag, even though I've designed an application or two) I'd like to start a thread here.

Could we talk about IMP here?

Digital cash is discussed here often. And every one of the various "digital money" schemes announced by folks has--I think--been forwared here and discussed. In my view, Cypherpunks have talked a lot more about Internet Mercantile Protocols than the IMP-interest list has talked about crypto (an absolutely core technology, of course).

1.) Chaum's e-cash coupled with WWW/Mosaic is a de facto internet mercantile protocol.

Hardly. Maybe it will be in the future, but enough infrastructure pieces are lacking that it can hardly be called a "de facto internet mercantile protocol." I agree it has huge promise. (I suspect I'm sounding pedantic in this post...what I'm trying to do is get across the idea that Cypherpunks are familiar with Chaum's work--or should be--but that much work remains to be done....merely getting excited about Chaum's stuff is where many of us were in 1988 to 1992, with the actual work still lying ahead. And much of the work _still_ lies ahead. (Cf. the soda archives for a "Glossary" and various articles on Chaumian things.) (2.) It seems to me that that e-cash, contrary to the status quo's thinking,

is *critical* to internet commerce. An anonymous cash market is most unrestricted and efficient market there is, because privacy/security (more than trust, I think) is the capstone of any serious transaction mechanism. The imp-interest people seemed to be afraid of e-cash because the Chaum-patent hairball reminded them too much of the RSA/PGP fight, and probably because they didn't want to be associated with any wild-eyed crypto-anarchists(tm). (As a dyed-in-the-wool yellow-dog congenital up-by-your-bootstraps crypto-fascist <gasp> republican, I haven't the slightest idea what they're talking about. . .)

Of course crypto and true digital cash is central....this is our whole message, nearly.

3.) Since a big pile of the discussion on this group lately has been about our collective concerns about an RSA-approved version of PGP, I think there is a real parallel here in e-cash. Not that some enterprising cypherpunk should immediately code up "e-cash for the masses"; that would be way cool but probably not within the second-mortgages of the people here. However,

You may be new to the list, but Magic Money/Tacky have been discussed as recently as last week. And ftp sites have been listed. Also, within the last week there were several discussions of making the schemes more "usable by the masses." (Having said this, MM is _not_ an easily usable, readily-convertible currency or even a payment xfer system for real currency...again, see the many posts on this.)

Just a second. My flame-suit is around here somewhere... OK. Flame on.

Cheers, Bob Hettinga

I don't think of my comments as flamish, but the comments here seem to bespeak no awareness of the heavy focus Cypherpunks has had on digital cash for a long time. That we have not "deployed" digital cash is related to many factors, including patents, lack of financial incentive (Chaum's folks have spent perhaps 10-20 man-years and several million dollars, and Chaum holds key patents...it is hard to imagine any of us competing head on...and make no mistake about it: a "Pretty Good Digital Cash" scheme would, on the whole, be a much larger project than PGP was), etc. Just my views. --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."

1.) Chaum's e-cash coupled with WWW/Mosaic is a de facto internet mercantile protocol. Hardly. The announcement just says it's available, not that anybody's using it. Since the information came from a press release, we can assume that lack of mention of an important customer, like a bank, means that there are no such customers right now. What that says to me is that DigiCash has looked for customers, and not found any. They've certainly had the time. Furthermore, it's not clear that this software can be both legally and usefully deployed in the USA. The Foreign Bank Secrecy Act of 1974 requires the microfilming of all checks of value over $100, with administrative provisions for extending the required recording keeping. Other check-like transaction accounts have since been added. So can a bank avoid this? First, they can limit transaction amounts to less than $100. That violates my criterion of usefulness; it would have some utility, to be sure, but just as surely would be a severely crippled utility. Second, they might be able to record the transaction as a "cash purchase". The problem here is that this accounting technique may be ruled non-compliant by the regulators, which would make the transaction _illegal_ (since there's not way to comply by recording both parties). The regulators have been authorized to move activities across the boundary of legality by legislative action. Now, one cost of deploying any such system would be the expected (negative) value of the risk taken in losing the whole development investment to an adverse regulatory decision, let alone possible actual penalties. Even beyond this, there's the IRS $10K cash reporting limit, and the attendant restrictions on structuring. Detection of structuring becomes much more difficult, and banks are held responsible for at least some of the enforcement. Here's another set of risks, like above. Just how big is the potential Internet market (in, say, two years), compared to other banking segments? Precious small right now, really. Just plain profitability is also an issue. Add to that costs of licensure and costs of risk and you're left with some significant barriers to USA deployment. 2.) It seems to me that that e-cash, contrary to the status quo's thinking, is *critical* to internet commerce. No, it's not critical. Some form of transaction mechanism is critical. Privacy is not critical to the bulk of the economy, though. Face up to it. If it were, it would be so obvious that we wouldn't be discussing it on a mailing list. In fact, _we_ wouldn't be discussing it, but rather a whole bunch of bank vice presidents. An anonymous cash market is most unrestricted and efficient market there is, because privacy/security (more than trust, I think) is the capstone of any serious transaction mechanism. Is anonymous cash really the most efficient? No, not in all cases. When no one is looking, the anonymity is irrelevant, and identifier-based schemes work fine. Is, for example, anonymity the most efficient for the Federal funds transfer network? No, because the values of money are so large that default on a transaction would case serious systemic problems. Cash does have some advantages, in particular its immediate and final clearing. These can reduce transaction costs in certain markets. Anonymity, however, is not a panacea. Characterizations of where anonymity is _already_ practiced indicate potential places for initial deployment. Negotiation for trades in the foreign exchange market are frequently anonymous, even though the trades themselves are not. There is a gold and silver exchange in Shanghai, I think it is, where the exchange keeps no records and all transactions are settled between traders. Motivated list members may wish to hit the libraries and look for more. 3.) Since a big pile of the discussion on this group lately has been about our collective concerns about an RSA-approved version of PGP, I think there is a real parallel here in e-cash. PGP only requires the cooperation of your email correspondent in order to function. The risk of a patent infringement suit is small, since the parties involved are small. Digital cash requires the participation of many more parties, some of whom have, almost of necessity, deep pockets. The parallel does not extend very far. Without the creation of an entirely black market which can remain completely unexposed (and this is more difficult that it appear even on second or third thought), it is unlikely that digital cash technology will be usefully deployed independently. Eric