Digital Cash

[hughes@ah.com (Eric Hughes)]

>Online systems make
>the double-spending relatively easy to prevent, but, besides inconveniences,
>the online transaction has a transaction cost that may make the system
>unusable (e.g. a 5 cent telephone message unit costs too much for a newspaper,
>though it may be fine for paying for contraband tobacco at $5/pack.)

A 5 cent message unit assumes that a phone line and modem are being
used, and that there is a call setup charge that the business pays the
phone company.  There are more efficient ways.

You can buy "metallic pair" service from most phone companies.  That's
a rental of a single pair of copper wires without dial tone attached.
The cost around here is about six or eight dollars per month, flat
rate, of course.  One collocates equipment at the central office; this
means a nearby office in practice.  Now if you run, say, IP over this
link, the per-message charge is down in the fractions of cents.

This is not to say that online systems are going to be less expensive,
merely that the cost comparisons for possible deployments are not
obvious.

Eric