e$: Cypherpunks Sell Concepts
At 1:38 PM 8/6/94 -0700, Blanc Weber wrote:
From: Timothy C. May * what's really holding back the spread of digital cash?
What is the status of the work on this? I would like to keep up with its progress, if there are sources for the information. (besides The Economist)
e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$e$ I'll bite. I think that practically the only thing holding digital cash back at this point is pure and simple hucksterism. The whole concept of e$ (shorthand for e-money, with apologies to other currencies) should be promoted more. People who Really Work for a Living in Finance should be educated about the potential impact of strong crypto on money. There was a comment from Perry a while back which hit home with me. He said:
The problem is not a need for a killer app -- there are dozens. The obstacle is regulatory problems, and finding a large and reputable sponsoring organization (like a big bank).
Now, that makes sense to me. It would go a long way towards legitimizing e$ and strong crypto if a largish bank put up a pilot project where they were exchanging, that is, making a secondary market in, real e$; maybe even DigiCash(tm). Ethier they or someone else could actually underwrite it, because you have to have both to make the market exist. Having heard what Eric has said about potential regulatory problems, I think that most of them are inadvertant obstacles, because they certainly weren't put there to obstruct e$, which didn't exist when they were written. I think if a reasonable (i.e. not illegal) business case were put to the regulators, they would (as usual) conform to whatever business interests want. I think that in order for the above to happen, some softening up of the targets has to occur. I understand that there are people on this list who are interested in selling seminars on strong crypto to the finance community. What about doing that in the context of a conference program to a larger audience? Get some famous heavies in the business world and in cyberspace to salt the conference flyer with. A certain EFFer comes to mind, among others who may be sympathetic to e$. Invite mostly businesspeople, preferably those in finance and finance operations, but also regulatory/political types. Teach them what e$ is and how it works. In return, e$vangelists can learn what questions their potential market actually need to have answered before e$ will be real. Maybe a deal or two happens, who knows? Repeat the process every year or two, but start the first one off as a "ground school" in the fundamentals. This thing doesn't have to be affiliated with the cypherpunks list any more than the original Computer Faire was affiliated with the Homebrew Computer Club. I wrote up an agenda when I was in the throes of the idea, and it's somewhere around here (I *know* it is...). Off the top of my head, I figured there'd be a schmooze reception the evening before, a brief primer on strong crypto and e$ in the morning, a schmooze luncheon (with speaker), a "where do we go from here" panel populated with business heavies in the afternoon, and a schmooze reception (with product demos, if any) in the evening to close. Notice it's very heavy on the schmooze. I challenge you to do huckster without lots of schmooze... This is not to be a volunteer effort. People who worked on this would get paid. The conference wouldn't happen if the attendance numbers weren't there. The participants will pay somewhat serious money to attend, and they will be interested in making money with the information obtained and contacts made at the conference. I'm pretty sure I want to do this one. I'd like to do it on this coast (Boston) because the money's over here, anyway, and there's still some technology over here that hasn't been made obsolete in the Bay Area. Besides, the east coast's halfway to Amsterdam, right? (yeah, I know, so's Anchorage...) So. Does anyone have any pointers? Cheers, Robert 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
I'll bite. I think that practically the only thing holding digital cash back at this point is pure and simple hucksterism. It certainly needs that, but I don't think it's sufficient. Having heard what Eric has said about potential regulatory problems, I think that most of them are inadvertant obstacles, because they certainly weren't put there to obstruct e$, which didn't exist when they were written. The obstacles are certainly not for electronic money, which the Fed's been using for some time now, but rather for electronic cash, which includes anonymity. The USA provides a fair amount of financial privacy to everyone but the government, particularly law enforcement. So the _business_ case for privacy is largely felt to be already satisfied by the regulators. I think if a reasonable (i.e. not illegal) business case were put to the regulators, they would (as usual) conform to whatever business interests want. The Treasury department, among others, really _doesn't_ want non-recorded transactions. Unless the banking community as a united front _does_, I don't think it will happen domestically (USA) before other deployments. If there's not a united front, it'll be divide and conquer. Eric
There are two legal problems that I could see being used against digital cash. The first is the civil war era prohibition on banks issuing private bank notes. This was done in an attempt to force people to switch over to U.S. government notes, and was successful. (Actually, it is not a pro- hibition per se, but rather a prohibitive tax on the use of such notes.) I don't have a reference to where this actually appears in the code, but I have read about it in many histories of currency in the U.S. It seems to me that digital cash issued by a bank is functionally very similar to a paper bank note issued by that same bank, suggesting that this law would apply. The second problem is the regulation of "scrip" and barter systems. This was pointed out on the list last year by someone who had actually been involved in a private barter or scrip system which was shut down by the government, at great cost to all concerned. These regulations can be found at 26 CFR 1.6045-1. From subsection (f)(5)(ii), "Scrip is a token issued by the barter exchange that is transferable from one member or client, of the barter exchange to another member or client, or to the barter exchange, in payment for property or services". I think this one will eventually get the "NetBank" people in trouble. (You call a 900 number and in exchange for a charge on your phone bill they give you a digital token you can exchange for property or services by participating merchants.) Barter exchanges are required to get the names and SS numbers of all participants and report their transactions to the IRS. This would be inconsistent with the privacy we seek from ecash. There are probably other regulations but I would think these two would have to be addressed initially, at least by anyone thinking of setting up these services within the United States. Hal
participants (3)
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Hal -
hughes＠ah.com -
rah＠shipwright.com