[107702] in Cypherpunks
Stupid British article about DigiCash
daemon@ATHENA.MIT.EDU (lcs Mixmaster Remailer)
Thu Jan 21 14:58:26 1999
Date: 21 Jan 1999 19:40:04 -0000
To: cypherpunks@cyberpass.net
From: lcs Mixmaster Remailer <mix@anon.lcs.mit.edu>
Reply-To: lcs Mixmaster Remailer <mix@anon.lcs.mit.edu>
> The problem that floored both Cybercash and Digicash was that in
> providing a form of cash that was portable over a network, they
> sacrificed one of the key characteristics that people attribute to and
> expect from cash - that it is portable in the direction of the pub, the
> shops and the local swimming baths. As a result Digicash and Cybercash's
> systems seemed to be something 'other' than cash. And nobody wanted
> that. (Even though the mechanisms are different, we generally see cash,
> credit and debit as essentially the same thing - "our money"). Digicash
> and Cybercash weren't seen as 'money' - rather more like 'Internet
> buying tokens' which you had to acquire first, before you could exchange
> them for goods and services you actually wanted.
Anyone who has used the DigiCash payment system will recognize that
this is a completely false characterization of the problem.
The problem was simply that it was extremely difficult to sign up for
DigiCash, and almost no one accepted it. It was the classic chicken
and egg problem, with the additional hurdle that getting into the system
was expensive and complicated.
If DigiCash had made it as easy as clicking on a link to get some
ecash, purchasing it by credit card, many more people would have tried
it. Instead, you had to get an account with a special bank, which
involved downloading, printing and filling out a multi-page form, and
faxing it to the bank. It was a very complicated and time consuming
process and I doubt that they ever had more than a few hundred
customers.
With such a small base of users, it is no wonder that few merchants
were willing to support this alternative payment system. And with
almost no merchants accepting the cash, even those hardy souls who
managed to get themselves set up with the DigiCash client had nowhere
to spend their ecash.
> The other fatal assumption made by DigiCash and Cybercash was that such
> tokens would be stored on PCs. But PCs are not the only way to access
> the Internet. With the arrival of other net access 'clients' such as
> Java stations, Digital TVs, the new generation of mobile phones and so
> on (many of which will have no storage space of their own), the proposed
> e-cash model was doomed to the status of an interesting learning
> experience. Some vendors are still persisting with similar token type
> models (notably Digital Equipment Corp. with its Millicent system).
> However, it is unlikely that any such moves will prosper on a large
> scale.
On the contrary, this was not a "fatal assumption" of DigiCash. Had
they added support for Java stations, Digital TVs, and mobile phones,
it would have made absolute no difference in the outcome. It would
not have increased their customer base by one person, because
virtually no one is using these technologies. DigiCash very properly
concentrated their efforts on PC-based wallets because that is what
customers are using today. If and when people start using their smart
phones to buy things, DigiCash could explore that technology. But in
the time frame in which DigiCash was in and out of business, these
other technologies were completely irrelevant.
> What is needed then is a form of cash that exhibits all the
> characteristics of real notes and coins (portability, anonymity etc.)
> and can be used both in cyberspace and the 'real' world. Currently, the
> most feasible solution seems to come in the form of smart card based
> e-cash. (For supplementary information on e-cash see 'Who's Who In The
> Future Of Money' from Issue 3 of this newsletter). With smart card
> readers already part of the mobile phone network, being shipped as
> standard with many PCs and being used as the access mechanism for
> digital TV services - a smart card e-cash option looks the most likely
> solution for facilitating micropayments.
This article is written from a British perspective. Smart cards are
coming into wide use in Europe, but they are virtually non-existent in
the much larger US market. A European payment system based on smart
cards may be a possibility, but for Americans it is not an appropriate
technology to pursue at this time.
The poor quality of the earlier analysis in the article makes their
conclusions questionable. It is as though they started from their
desired conclusion and worked backwards to produce an analysis of the
failures of ecash vendors which would lead to it.
