The Crypto Winter

[jamesd at echeque.com]

    --
On 17 Nov 2001, at 10:00, Tim May wrote:
> 6. The failure to get true digital money. Call it what you
> like, "digital cash" or "ecash" or even one of Hettinga's
> pet names, but the fact is that for both political and
> technical reasons we don't have digital cash. This has
> ripple effects for nearly all of the constructs which
> depend on digital money: data havens, good remailers, black
> nets, beacons, and of course for certain sociopolitical
> implications of untraceable transactions.
>
> Without this basic building block, we are left just with
> the "privacy" stuff...and the privacy stuff is both fairly
> boring and at the same time wrapped-up in legal/political
> baggage about secrecy, hiding things, etc. Boring!

I think this is the central key problem.

To establish any medium of exchange, one faces an enormous
critical mass problem, as the stupendous expenditures by
paypal and its competitors demonstrate.

One also faces legal obstacles, due to both money laundering
laws,and the fact that the banks everywhere have a government
enforced cartel.

Finally, one enormous factor that we all failed to appreciate
-- habit and trust.  Note the curious success of e-gold,
presumably because of the mystique of gold and the mystique
of full reserve banking.   This enormous obstacle means that
people will pick up very slowly on digital currencies.  Thus
paypal and arguably e-gold have both achieved critical mass,
but, contrary to our expectations, this has not led to
explosive growth.

> Why digital money has not happened is still an interesting
> topic to discuss. I described the two axes of "value of
> untraceability" versus "cost of untraceability" in an
> article I wrote a few months ago. I characterized the
> "millicent ghetto" that most companies have concentrated
> on, and the fallacy of the "one size fits all" pricing 
> models.

I am unaware of any micropayment scheme that made it
convenient, private, and safe, to buy images by the image and
video by the minute.  Indeed digicash seemed to attempt to
specifically prohibit such use of their technology.   A
number of schemes were floated that would have and should
have made such capability available but I am unaware of any
of them that actually worked.  All seemed to focus on
uncontroversial -- and thus unsaleable -- content.

> Now, given the events of 911 and the rush to control the
> Net and to impose new and unconstitutional limitations on
> what people can do with their own money, the likelihood of
> a quasi-visible digital money operation like Mark Twain
> Bank setting up seems to be nil.

Again, the 911 laws would not prohibit a micropayment program
-- dirty pictures by the nickel, and large payment programs
have always been illegal.  Any attempt to deliver a large
payment program would always have had to have been haven
based.

> This failure to get workable untraceable digital cash (true
> 2-way untraceable, not the bastardized, banker-friendly,
> government-friendly one-way untraceable form) is the _deep_
> reason things are stagnating.

Yes.

    --digsig
         James A. Donald
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