Re: Mosaic to support digital money in September
From: jamesd@netcom.com (James A. Donald)
The model uses account based digital money. It is overly centralized, but it is an excellent step towards a decentralized system of digital money.
The cypherpunks are experimenting with digital token based money. Digital token based money is damn inconvenient, and each digital token currency requires a single centralized server which tends to monopoly and is thus highly vulnerable to government coercion. Although the server does not know which of its clients has been transacting with which, it does know the thing that the government is most interested in knowing - how much the client got, and how much he spent.
For this reason I think decentralized account based digital money is the best hope.
I don't know to what extent this system represents "account based digital money". It doesn't sound that different from emailing your credit card number, something you can do already using PEM or PGP2.4. I suppose you will have digital checks with this system as well. But all of these systems will allow total tracking of your transactions by the banks. The digital cash systems we have been experimenting with do not know "how much the client got, and how much he spent." There is nothing stopping a given holder of Magic Money cash from being anonymous to the bank. He does not have an "account" with the bank. (The structure of the client interface is somewhat misleading in this regard - the user has to go through an initialization step in which he communicates with the bank, and it might appear that he is in some sense registering or opening an account. Actually, he is just grabbing an information packet which shows the current exponent-to-cash-value mapping.) In a (hypothetical) "mature" Magic Money system, people could exchange cash tokens issued by a number of banks using anonymous networks to communicate with each other and the banks. There is no need to trust the bank's circumspection or immunity to political pressure to preserve your privacy. Hal
I wrote:
Although the server does not know which of its clients has been transacting with which, it does know the thing that the government is most interested in knowing - how much the client got, and how much he spent.
Hal writes
The digital cash systems we have been experimenting with do not know "how much the client got, and how much he spent." There is nothing stopping
I stand corrected. -- --------------------------------------------------------------------- | We have the right to defend ourselves and our James A. Donald | property, because of the kind of animals that we | are. True law derives from this right, not from jamesd@netcom.com | the arbitrary power of the omnipotent state.
Hal writes I wrote:
and each digital token currency requires a single centralized server which tends to monopoly and is thus highly vulnerable to government coercion.
The digital cash systems we have been experimenting with do not know "how much the client got, and how much he spent." There is nothing stopping a given holder of Magic Money cash from being anonymous to the bank. He does not have an "account" with the bank. (The structure of the client interface is somewhat misleading in this regard - the user has to go through an initialization step in which he communicates with the bank, and it might appear that he is in some sense registering or opening an account. Actually, he is just grabbing an information packet which shows the current exponent-to-cash-value mapping.)
I stand corrected. On reflection I see that if I receive digital tokens to my true name, I can pass them anonymously to a pseudonym registered in the Cayman islands, and the server will only know that the pseudonym received them. It will not know that my true name received them. The pseudonym can then pass new digital tokens to my true name without the server knowing. This system is indeed secure, but only if widely used (mature). It is not clear to me that it is capable of competing with insecure account based digital money. Since US banks will only be permitted to issue account based money (digital checks) and Swiss banks etc will probably issue primarily account based money at first, it will be necessary to have an interface between digital token based money and account based money. If both are used, as we hope will happen, what then will be the competitive advantage of digital tokens? One advantage is that it is not necessary for the shopkeeper to know the customers worth or identity, or to check with the customers bank. But the shopkeeper, when dealing with an anonymous customer, still has to check with the server to see if the coins have already been used, so this advantage is no advantage at all. Any other advantages? -- --------------------------------------------------------------------- | We have the right to defend ourselves and our James A. Donald | property, because of the kind of animals that we | are. True law derives from this right, not from jamesd@netcom.com | the arbitrary power of the omnipotent state.
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