millicent ghettoes

[Sampo Syreeni]

In the wake of the recent public goods postings and some related traffic
on a couple of Finnish mailing lists, the concept of transaction costs has
somehow managed to dominate my time. That sort of thing has a lot of
unlikely consequences, some of which I think are highly CP relevant.

While I tend to agree with Tim about the shorter term trouble with
micropayments -- the fact that such payments, well, do not pay -- I'd say
in the longer term micropayments are what counts, and not perhaps
anonymity. The reason is, most of the economy is, and I think will remain,
over-ground. People really don't have enough to hide to make anonymous
payments mainstream quickly enough. Sure, they have their applications,
some of them radical. It's true they will shake the society quite a bit.
But the shadier applications can always be controlled, given the
vulnerability of the anonymity infrastructure itself.

But micropayments, they are another deal entirely. If and when they become
practical, we can envision a whole range of previous unheard-of mass
transactions taking place. The kind which need millions plus people before
they actually become profitable. This is the situation I alluded to in the
public goods example, and any market oriented solution to the problem of
coordination will eventually have to tackle the issue of aggregating the
cost. That's the problem micropayments, as an idea, are meant to solve.

So, what's so notable about such transactions? Simply the fact that they
are new. In the past entire classes of transactions (the foremost example
would be the ones we nowadays see in the international financial markets)
have been enabled by lowered transaction costs. I don't think the spread
of micropayments will be an exception to the rule. In fact I would argue
that the only *lasting* surprise offered by AP was the fact that when mild
wants of large numbers of people can be coordinated, economic efficiency
can lead to significant, and heretofore unexpected, outcomes (i.e. getting
a notable figure killed).

In the end I think such new classes of financial transactions, borne of
lowered transaction costs, will be far more significant to the society as
a whole than anonymity. I also think this is the essence of what is
driving the wider P2P cirlce, at the moment, though few people seem to
realize it. So, I would deem it quite likely that the millicent ghetto
will eventually run over us.
-- 
Sampo Syreeni, aka decoy - mailto:decoy at iki.fi, tel:+358-50-5756111
student/math+cs/helsinki university, http://www.iki.fi/~decoy/front
openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2