Re: The Bank of the Internet!?

["Perry E. Metzger" <pmetzger@lehman.com>]

Jim McCoy says:
> We want to be the ones who will define the protocol for currency on
> the net.
[...]
> We are staring small and have no real plans on becoming future banking
> powerhouses (The Gnomes of Austin perhaps... :) but we would rather it be
> us who define the standard than Chase Manhattan or the US Government.

I don't care for the Government, but I suspect that Chase Manhattan
has a much better idea of the problems involved in cash transfer and
accounting systems than you guys do. People who've never worked for
financial institutions rarely understand where the real problems are.

I don't mean this to be patronizing -- I have a good deal of respect
for the smarts of people like Eric Hughes -- but its simply the truth.
I remember the first time I did some research into back office systems
and discovered where the real expenses at an institution were -- and
nearly fell over in shock. Real world bank people have to worry about
things like how to make sure that exceptional cases involving manual
intervention (which represent well over 95% of expense) are minimized,
they worry about auditing and making sure that systems are structured
in such a way as to avoid constructing the capacity to embezzle into
the system. They have to worry about downtime, clearing regulations,
imaging documents, and other gunk.  I say gunk because its all largely
unglamorous in the same way that 99% of mechanical engineering is now
both unglamorous and yet still critical to the safety of, say,
automobiles.

Doing these all right are skills which I have gained a good deal of
respect for over the years. A bunch of hackers with experience in
nothing but cryptography might get some of the privacy aspects right
at the expense of producing a system which is otherwise unworkable. I
wish you luck, but I want to warn you in advance that there is a good
reason that computer people doing design work at banking institutions
are usually a rare breed that get paid six figure salaries. If you set
out to do this, it isn't going to be a part time job, and it isn't
going to be something you can do without a good deal of expertise,
either learned the hard way or hired.

Perry