[117813] in Cypherpunks
Re: ecash deployment thread (Re: BlackNet Markets -- Organs? Kidneys?
daemon@ATHENA.MIT.EDU (Anonymous)
Sat Sep 11 06:17:21 1999
Date: Sat, 11 Sep 1999 12:02:33 +0200 (CEST)
Message-Id: <199909111002.MAA25430@mail.replay.com>
From: Anonymous <nobody@replay.com>
To: cypherpunks@cyberpass.net
Reply-To: Anonymous <nobody@replay.com>
For another take on ecash and crypto anarchy, see
http://deja.com/getdoc.xp?AN=522697733 for a highly critical review
of Neal Stephenson's Cryptonomicon. The author focuses on weaknesses
in both the justification and the implementation of the crypto anarchy
enabling ecash.
Adam Back writes:
> I would've thought porn sites would be the obvious application for
> anonymous ecash. I think James Donald argued this point some time
> back.
Most people don't care that much, even buying porn. It's a free country.
Being interested in sex is hardly a crime; even kinky stuff is OK.
(Most porn is so boring it's amazing anybody buys it anyway. Spider
Robinson once wrote that in the average porno shop, only 10% of the
material will appeal to any given customer. Sounds about right...)
> > And the recent account of the Boston area comments by Andrew Odzylko
> > on why digital cash is still not here are instructive. (That was
> > another post, the report by Howie Goodell, that should have gotten
> > more discussion.)
>
> I read it. My take on why ecash hasn't taken off is because it's a
> slow starter, and the players have been going at it like a bull in a
> china shop. (Spending vast amounts of venture capital, which the
> fledgling ecash startup couldn't possibly hope to make returns on at
> the rate they're spending money. So they run out of cash and fold.)
That talk was mostly about differential pricing (charging more to some
people than others, like hardback books costing more than paperbacks).
Sure, this is marketing 101. But ecash has nothing to do with
differential pricing; the one is a payment method and the other is a
marketing philosophy. No reason was give in the posted notes why ecash
would interfere with differential pricing. The whole thing seemed to
be a giant red herring.
The problem getting ecash going has always been chicken and egg. If there
are 100 people in the whole world signed up for the ecash trial, and
three shops, neither people nor shops have incentive to join the system.
Of course, by the same token, if you get past a certain threshold,
then it takes off. But that threshold is way, way up there.
For all the talk about how laws are irrelevant, code is all that matters,
it is clearly laws that have prevented ecash from taking off. Because of
intellectual property laws and financial regulations, only bankers are
in a position to try this technology out. If we didn't have those laws,
there would undoubtedly be a number of ecash issuers now, competing and
agreeing to honor each other's issues of currency. This is what has
happened historically in areas where issuing private money is legal,
and the net would be a perfect environment for this kind of competition.
> The resulting problem is not pretty, approaches might be:
>
> - a 2-way anonymous ecash design where either the mint is distributed,
> and each node is dynamically replaceable;
Or, the mint is hidden. Once the Freedom network gets operating
perhaps anonymous servers will become practical. Freedom doesn't support
anonymous servers as such, but you could have public meeting points where
the mint and its clients come together anonymously, such as chat servers.
> - or a protocol where the mint can be anonymous (Wei Dei's B-money is
> can do this because mint's are distributed and effectively using a
> scarce resource (CPU time) to mint money)
B-money is an account based system and is not anonymous, just
pseudonymous. It also relies on trusted servers to keep track of who
has how much. Still it might be worth trying in a small community.
One problem is that the system makes money by crunching CPU cycles,
such as to find hash collisions. In any such system, you're going to
have some people who are lucky enough to be rich, and some who are going
to be poor. It's as if we proposed to make, say, pine cones be money.
Some people have a pine cone gold mine in their back yards, others would
have to travel hundreds of miles just to see a pine cone.
With CPU cycles some people have access to a thousand unused workstations
at night, while others are stuck at home with a 15 year old 386 processor.
It ends up being a wealth transfer from the CPU-poor to the CPU-rich.
You're going to have rich and poor, and therefore the proposal will be
resisted by those who anticipate that they would be poor. This makes
it hard to develop a consensus to begin using the system since it will
be perceived as unfair.
> - or a mint in a jurisdiction which is willing to resist world banking
> /government cartel pressure. say a robust tax haven, or a maverick
> country such as perhaps Russia. there appear to be two Russian
> ecash systems which claim to be anonymous:
>
> www.paycash.ru
> www.webmoney.ru
>
> pay cash at least described their protocol which was a Chaumian
> ecash variant. webmoney don't say much about what crypto they're
> using other than 1024 bit RSA, however Hettinga rumoured they were
> using Chaumian protocols also (perhaps because Chaum's patents
> might not hold in Russia)
Sure, we'll trust a Russian mint. The Russian people are known and
admired all over the world for their honesty, integrity, and strict
commitment to the very letter of their agreements. Right?
> Your other problems are:
>
> - fungibility -- how to get money into and out of the system in a
> robust and reliable way so the cash is readily exchangeable
Probably "liquidity" would be a better word for this. Eventually we
might get to the point where there is enough e-commerce that money which
stays in electronic form would be useful. Earlier someone suggested
an MP3 market where you'd get credit for uploading and could spend it
for downloads. If you can come up with a closed-loop economy like this
then it would help with the transfer problem. Makes anonymous mints
more practical too.
> - ensuring relatively stable value if you expect it to be used for
> value storage, for any length of time
Part of the general problem of trusting the mint, making sure it won't
abscond with the financial goods.
> - interfacing with non-anonymous payment systems where repudiation is
> possible. eg. buying ecash with stolen credit card numbers is the
> ultimate perfect crime.
Why is this different from buying other commodities with stolen CC
numbers? One difference is that what is being purchased are information
goods, so there is no paper trail in terms of shipment and delivery, but
there are other information products for sale for credit card numbers
(software, music, soon perhaps videos). The same procedures used in
those industries could be followed for sellers of ecash.
