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Mien Beinkpff


Subj:   Why Digital Cash is Not Being Used

>Hal Finney asks us to think about and comment on the important issue of why
>digital cash, in its myriad forms, is not in wider use. Especially on this
>list, where the Magic Money/Tacky Tokens experiment has not (yet at least)
>produced widespread use.

I believe these things will come into use fairly quickly -
perhaps not as fast as Tim, Hal, others, myself included, want, but.

Especially if the new momentum here in Cypherpunks keeps up.
Allow me to inject some of my own momentum here.

I was going to make a suggestion that this discussion move from
Cypherpunks to IMP-Interest, which seems to be a dead list. 
Cypherpunks who object to the non-crypto aspect of the Money_Threads
could just not bother with IMP-Interest, and Cypherpunks could 
take over IMP-Interest and work at actually establishing an IMP.
(Internet Mercantile Protocol). [I might have more to say about
protocols later - but already I sense a long post coming up...]

[[ I don't know if I should apologize in advance for verbosity,
   since there is soooo much mail to read and tend to...but I
   have been holding back for various reasons much related to
   the answer to the Subject: Why Digital Cash is not being used.]]

Or is there something official about the name "IMP" - I notice
the host is on bellcore, do they own the name? Can anyone own a
name such as IMP ? Anything else that needs to be said, in case
of newbies re IMP? Nick Szabo was the one who originally recommended
it, Nick - are you still there?

However, I could be satisfied leaving it on Cypherpunks...actually,
I bet a poll of active C'punk posters and interested lurkers would
approve of the digital cash conversations and the value of money
threads. We'll just have to get Hawk's Ray's ExI Mailing List
new software purchased or donated to Cypherpunks...tax decuctable...

Meanwhile, back to replying to Tim's message and Hal's rallying
of the troops and answering This Question :

>This question also goes to the heart of several related questions:

>1. Why aren't crypto protocols other than simple encryption, digital
>signatures (both implemented in PGP as the de facto standard in our
>community), and remailings (implemented in Julf's anon.penet.fi remailer
>and in the various Cypherpunks remailers) being *used*? Why no DC-Nets, no
>data havens, no digital timestamping, etc.?

Answer Number One to 1. HOMEWORK. Sorry for shouting. There is sooo
much homework to do. We've got code to write, borrow, use...

Personally, I have had PGP for many months, almost a year, I
suppose, and am only now just getting a round tuit. This Cypherpunks
"posting" will be my first public use of PGP to sign a message.
I did send a private PGP message to one friend, just for practice.
I don't have time to read alt.security.pgp enough to not have some
messages expire on me, so I couldn't answer the simple question
of Why does PGP stick an extra "- " in front of the "-----Begin
Public Key Block -----" when you include the ascii public key
block in the text of your letter. Must be a recursion type of thing,
PGP rejecting this particular insance of text as anything significant
to do with PGP signing with cleartxt=on. Anyway, that is perhaps a
faq so I'll recheck that later, ....

So, I've finally got my PGP homework done, at least enough to get
past the basics. But now to get into the PGP Tools and really start
writing code...more homework. Fortunately for you, Tim, you don't
have a Boss to worry about - your dues are all paid in this regard.

Anyway, I'll stick my virgin public key in here, but beware it has
not been signed. I have already volunteered to spring for a phone
call to Stuart Card to check public key sigs, and I'll volunteer
to phone one or two others who reply directly to me to get my key
signed by Known Cypherpunks and/or Extropians.  Anyway, later on
that. I'll probably even PAY someone in digital cash to sign my key...

Version: 2.3a


Now, I hope I used the right key! Something else to check.

So what else is on the homework list?

1. Read Chaum papers. Re-read all Hal Finney articles in Extropy.
   Really understand Alice to Bob to me and back again. Straighforward
   study, but a few time units involved. Reread Mark Ringuette mail.

2. Read Schneier. Heavy into the technical cryptography stuff, to
   be sure, but definitely required reading. Many time units.

2. a. Buy the book. Not in our library. I am broke and cannot afford
   hefty tome right now. However, I have entered a contest which pays
   $150 first prize and $75 second in credits at my favourite bookstore.
   Unfortunately they will not issue digital cash certificates with
   which to redeem said prize at the Internet Bookstore, which doesn't
   yet take digital cash, because there is not yet a true internet 
   bank - wait - what's that I hear about INFO_Banque ???

   Anyway, Win contest, order book. Will take at least two weeks for
   contest, then a week to get the money, then two weeks order from
   bookstore. With luck, I'll have a copy within six weeks. And if
   I don't win the writing contest, with The Great Newfoundland Novel,
   Page 1, then it's off to a farther payday...probably September
   at current rate of progress.

2. b. Do the Errata list.

2. c. Get the Diskette. Pay BS in digital cash for diskette.
      Get licence from BS to resell software to my Customers.

2. d. Get a box of the books and sell them to my Customers.

3. Get my own machine to do all this on. Certain perqs apply to my
   use of my employer's facilities, to be sure, but they do not
   extend indefinitely and in all directions. More code to write.
   More paydays down the road... Send me real cash money.

4. Start a BBS. Well, maybe I can make some money at it, once I get
   a machine and some phone lines...but I'm way out in the boonies
   here. I'll need a satellite dish internet feed, because I can't
   get a commercial one except through academic routes, and I don't
   want to go through academic routes and would not be allowed, anyway.

5. Get a Netcom account?   Is this possible for a Canadian? I'd
   still have to telnet from some supplier here. I'll go for my
   own service with my own satellite dish. Investors, anyone?
   Ripe market! Send for Prospect-Us.

6. Learn Unix. Maybe I'll get a shell account on Sameer's machine.
   I've been a DEC RSTS/VMS Basic-Plus/VAX BASIC V2 programmer for
   too long, and I've not yet become unixificated. I don't even
   know if I could read a C++ program. I'm obsolete...again.

7. Reactive HEx - opps, premature - see below for rest of this point.

8. Become a security expert. Definitely need SecureDrive/Dev/Other.
   More ftp'ing to do. I really appreciate all the Cyperpunks keeping
   ourselves posted on the latest and greatest and the news regarding
   these products, as well as the pearls of wisdom from DCF. I expect
   most of us could, after homework, become successful security
   consultants. And there are a lot of anarchists about!

   But, isn't Unix full of security holes?  When I set up my own
   Netcom company, won't I be hacked?  Ray?  HELP? Oh yes, I've
   got to get into Pr0duct Cypher's product. What's a firewall?

9. Start up INFO_Banque.  I am almost ready to do this, but not
   quite. Something I said about homework...  so Cypherpunks,
   Extropians, (no, please do not forward this post to Extropians.
   I am refering to Extropians who are Cypherpunks...), friends,
   go easy on my new .sig. However, there ain't no time like the 
   present, neither, hey!

Speaking of time...

>2. What *incentives* are there for creative programmers to devise and/or
>implement new crypto protocols if essentially everything for the past year
>and a half (since the fall of 1992, which is when PGP 2.0 and remailers
>became widely available) has languished?

There's gold in them thar hills. I will be willing to put money
into it, when I get some money. This process of emerging from 
bankruptcy and becoming judgement proof is interesting, but it
takes time, and money. Also, discipline. Having proven myself
incompetent at my financial affairs, how dare I speculate upon
starting a bank?  Well, there it is. Fuck 'em. Feed em fishheads.
I'm going to do it anyway. I'll even go out on a limb and say
that I'm going to tell you all how I'm going to do it, except
don't expect an answer Real Soon Now. I've still got to figure
out the solution to the duplicate spending problem.
>3. What are the "killer apps" of crypto?

Cypherpunks want to know. Cypherpunks are writing them...

And please, Tim, We Really Do Need The FAQ. I have heard
you toss out tidbits about the Cyperpunks FAQ. More, please.
We really do value your postings and ideas and caveats and 
reputation - nobody else could do it...Tim... 

>4. What platforms and user environments should would-be developers target?
>What machines? What networks? What languages? (An ongoing interest of mine.
>Objects, scripts, Visual Basic (!) VBX tools, TCL, perl, many platforms,
>etc. A tower of Babel of confusion is upon us.)

Yes, I cannot even attempt an answer here yet. It matters, of course,
but I would speculate that it will be done, perhaps in EACH of these
ways on all the platforms that there are for sale to our Customers.

However, we've got to nail down the protocol. Maybe the
Magic Money Model will take off. Pr0duct Cypher, do I need to
become anonymous?

>Here is my first-cut analysis of the digital cash situation.

>I. Why is Magic Money/Tack Tokens, in particular, not being more widely used?

>- Nothing of significance on the List to buy, hence no incentive to learn
>how MM works. (Just because someone announces that their new article is
>available for 10 Tacky Tokens doesn't a demand make!)

Yeah, I've noticed this, too. But I want to buy books, and I want
to sell stuff to my Customers, and I want them to use my cash from
my bank to pay for this stuff. And I want cooperating banks all using
the same INFO_Banque Protocol (TM WmRG right now) to use my cash
and I'll use theirs, and we'll have 700 Cypherpunks and 300 Extropians
start up 1000 new banks all using our own developed and pgp-like-available 
software, for a small fee.

Within a little while, I am going to offer my own INFO_Banque digital
cash for sale to Cypherpunks and Extropians, and eventually everyone
in the world, and keep a US Dollar Trust account in a secret "real"
offshore bank somewhere in the Cayman Islands or El Salvador. But
before I can do that, well, you know...homework...

Still, if you want to get the ball rolling, send me $10 and I'll
deposit it in trust, sticking my own reputation on the line ...
Actually, I don't know if there are any legal implications to 
that, because my private company Macronic Systems, Inc. is incorporated
specifically NOT as a bank, because different rules apply to a bank,
but my INFO_Banque is not incorporated anywhere. It is a virtual
entity of mine that nobody can get at just yet. Hell, Tim, I'll
give you all the Thornes you want for $10 - if you still want them!
Be the first one on your block. Just to keep myself honest, my home
address is 28 Warren Place, St. John's, Nfld. Canada A1A 2A1. Now,
wouldn't you trust someone with a postal code like that! I hesitated
at putting that here in a Cypherpunks message, but what the hell...
just tell Detweiller I am armed and dangerous...

>- Semantic gap. I confess to not having the foggiest ideas of how to go
>about acquiring Tacky Tokens, how to send them to other people, how to
>redeem them (and for what), etc. Having nothing to buy (no need), and
>plenty of things to occupy my time, I've had no interest in looking at MM.

This will change. Maybe you don't need stuff and can always buy it
conventionally anyway. But with the rapidity with which Mosaic and
WWW applications are growing around the world, there will soon be
many on-line stores. I want to open one myself...just get me my
new alpha-sun-mips-cray box with a few gigs raid cryptofied...
and a satellite dish network feed and notebook and four wheel
drive with a cellular phone and ...

Any comments on the newly announced secure mosaic?

>When I buy items like t-shirts from people on this list, I simply write
>them a check and send it. Very simple. The banks handle the complexities.
>And writing a check is a "prototype" (or script) that is learned early by
>most of us. Not so with any of the various digital cash schemes. In 10 or
>20 years, sure, but not now.

Yes, this is fine. But we are talking anonymous money, untraceable
transactions, cryptoanarchy, stuff like that. We know about cheques.
(I wish you yanks could get your spelling right!)

>This is not to take away from the excellent work--I gather from comments by
>others--that ProductCypher put into MM. His greatest achievement may turn
>out to bring this issue to the fore, to wit, what will cause people to
>bridge this semantic gap (understanding) and actually begin to *use* these
>new constructs?

Yes, I gotta add this to my homework list.

>- as others have noted recently (and this is a well-known issue),
>alternative currencies must offer some advantage over existing currencies,
>or at least be roughly on a par with them.

Agreed - of course. We've got to beat VISA/MC/AMEX/Travellers Cheques
in transaction costs, and we've got to pay with Digital Postage. I 
love that term! It explains it all. Quote from the upcoming
INFO_Banque Catechism (R) : Digital Cash pays for itself.

- ---  "frequent flier miles,"  ----  elided.

>(The proposal recently that vendors of products, like t-shirts, give a
>discount for MM payments is of course unworkable. This is asking real
>people to give up real dollars for an ideological cause of marginally
>little significance to them. The advantages of MM must be real, not phony.)

Of course.

>II. Other Experiences with Digital Cash in Some Form

>- On the Extropians list a while back (I've since left that list), there
>was an interesting experiment involving reputations of posters and "shares"
>in their reputations. Brian Hawthorne introduced is "Hawthorne Exchange,"
>HeX, with eventually a few hundred or so reputations trading. The unit of
>exchange was the "Thorne," with each new list member given 10,000 Thornes
>to trade with.

>Trading was very sparse, 

... elide ...

>But I think the system was ultimately a failure. Nothing interesting was
>for sale, and Thornes had a ridiculously low value (reflecting of course
>their "toy" nature...my $20 bought 20,000 Thornes, as I recall). By "low
>value" I mean that the number of Thornes given to each participant (Hint:
>"given" is the important word) was worth nominally $100 (by Brian's sales
>price--probably none were ever sold at this price), worth $10 to me and
>others (by my offer of $1 per 1000 Thornes), and probably worth much _less_
>as the HeX market languished and, probably, ultimately folded. (Does
>anybody on the Extropians list know if it is still operating? And what
>happened to by shares when I left the list?)

Well, yes I know, sort of. Brian Hawthorne couldn't handle the 
Extropians volume because of work commitments. I don't know if
he was on Cypherpunks or not. So he auctioned off HEx, and I bought
it for a small fee. It was announced, but, of course, you missed it...

HEx is now dormant and will be for a little while yet.
I am expecting to be able to find a place from which to run it
real soon now. Meanwhile, it is in limbo. There has been no crying
demand from Extropians to get it back on line. When I do get some
of my homework done, I will take the purchased software system,
complete with all the current state of reputations, accounts,
and so on, and figure out what to do with it. The reason I bought
it was not so much to run a market for the reputations of Extropians,
but because reputation markets are going to be valuable commodities
in the near future, as internet commerce ramps up. I want to expand
upon the concepts and write some code and start marketing HEx in
a way that can make me and my Business Partners some money. 
My INFO_Banque will register reputations for digital postage fees,
and receive and arbitrate contributed information about reputations,
from other reputation holders, for some small transaction fees.

I have been wanting for months to expound upon these ideas and
seek feedback from Extropians and Cypherpunks regarding what to
do with this reputation market. I will accept any ideas any of
you want to donate... if they are earthshattering and they make
some money for me and my Business Partners/Investors in the long 
run, I may even repay with digital cash royalties.

Other uses include digital timestamping - when I can get a
machine and ups and raid box and backup site and security and
all that other stuff I want - I will start offering services 
like this. What with all the other ambitions I have mentioned
here in this Mein Beinkpff message/posting, I could easily spend
a few hundred grand getting this together - if I didn't have
a full-time job to do to feed my family, etc etc....

It's funny, too, because despite ponderings on these matters over
the past year or more, I never asked myself the question that came
up in the digital cash/value of money threads today - Who is going
to Trust Me?   I know I can trust me, and in theory a mix chain
will be reliable if you can trust one of the links, so if I become
one of these mix chain links through _my_ INFO_Banque, then _I_
know the chain will be reliable. Similarly, _you_ will trust 
yourself, and soon there will be 700 Cypherpunks and 300 Extropians
and all 4 IMP-Interest people all having anonymous remailers and mixes
operating, so any sub-chain of eight INFO_Banque Protocol banks
will virtually HAVE to be reliable for our commerce...

But nobody can trust me not to run off with the cash - good
point. How do we solve this one?  I guess I'll have to start
from the beginning and build a reputation for it...  When
I _do_ get my homework done, and start offering services for
real, when etc etc happens, then you can be sure that if you
send me real US Dollars to deposit on account for INFO_Banque
digital cash transactions, they will be deposited in a Trust
account. Maybe it will at first turn out to be merely digital
cheques, but maybe if Perry lets me in on his secrets and some
of the stuff he has learned from these six-figure guys at
Citibank who are out trying to figure out how to capture this
market, well maybe then we can get somewhere...

I've gone on too long now...to wrap this up...snip

>III. What Markets Might Make Use of Digital Cash

I repeat, there's gold in them thar hills.

>- illegal markets, for transferring wealth in fairly large amounts. Not at
>all clear how this will happen, and it sure won't happen with some
>fly-by-night hackers and/or students offering a new service.

Yes, it is now the middle of the night. 4:34 am, NST, actually.
[Real timestamping update - geez, its now 2 hours 10 minutes later.]

>(I didn't mention that one of the persistent concerns about learning new
>crypto protocols here on this list is the epiphenomenality (transience) of
>it all...remailers appear and then vanish when the students go away or lose
>their accounts, features added make past learning useless, and so on. Life
>is too short to spend it learning crufty details that will go away in a
>matter of months. I'd hate to buy $300 worth of TackyTokens and then find
>that their value went away when J.Random User graduated!)

Yes, this stuff has to be professionalized. Capitalized. Done.

>- betting markets, the "Internet Casino in Cyberspace," etc. Nick Szabo was
>once championing this, and I think it could be an interesting, and very
>real, market. Lots of issues here.

More, please. If a few more Cypherpunks could break that PRNG in
Montreal...$600,000 he got! And they paid him! Well, they _had_
to, just for letting them in on the hole...well, if I could just
break it _once_ ...

>- Digital Postage. This remains my favorite. There's a _need_ for
>untraceable payments (else why use a remailer?). I've written about this
>extensively, as have others.

Yup. I like this. Do include your previous writings in the FAQ...

>If remailers offered robust (see above point about crufty, flaky, hobby
>remailers) services that they operated as _businesses_, with reasonable
>attention to reliability, interconnectivity to other remailers, overall
>robustness, and carefully articulated policies about logging, privacy,
>etc., then MM or something similar could have a real value.

MM or whatever, we've got to nail down the protocol. In spite of
my "out of the mouths of babes" approach here and now, I do intend
to do this stuff as a business, to make profits, once a few problems
are ironed out regarding eating, drinking, playing darts, living
forever, etc.

>IV. Is there Any Hope for Cypherpunks Software Use?

>The remailers (of Hughes and Finney, with other contributions) came in the
>first few _weeks_ of existence of the Cypherpunks group. Julf's system
>already existed.

I'll run one, too, as part of the integrated INFO_Banque services.

>Remailers were the "low-hanging fruit" that got plucked fairly easily (not
>taking anything away from Eric, but he himself says he learned enough Perl
>in one day to write the first, crude remailer the _next_ day!).

Well, I guess things are looking up. It can't be all that difficult.
If I could master paper tape fortran on a PDP-8/L, what with the
RIM loader and the BIN loader and 110 baud, surely I can get into 
unix in a few days. Sigh. I must be getting old if I can remember
flip chip modules that had transistors on them, doing transistor-
to-transistor logic, building gates,... Tim, you must have been
one of the ones that made this old stuff obsolete! Well done

>Later protocols have not fared as well. Why this is so is of great 
> importance.

>That's a topic unto itself, and one which I hope to write about soon. Lots
>of important questions and interesting issues.

You said it, boy. I think I'll copyright and publish my 
INFO_Banque Catechism as part of my Ideas for Sale programme.
Hey, you did say we needed _something_ for sale on the net, didn't

But please, sir, can we have more? Please write about Protocol.
Soon. Like, forget the line-by-line response you were going to
make to _this_ message...  heh heh. (Opps, I almost said ...
no, I can't repeat it...)

>--Tim May

	Bill Garland,
	    whose new .sig might become this :
| I am an Extropian. |   Macronic Systems, Inc. offers Ideas for Sale !  |
|  BEST: DO_IT_SO !  |    Go for it :  Pledge a Digital US Dollar now.   |
|  CryptoAnarchist.  |        Send PGP key for more information.         |
|    Cypherpunk.     | Get in on the ground floor. Invest Now. Trust me! |
|  Owner : MSInc.,   |---------------------------------------------------|
|  HEx, INFO_Banque  | Day Job : Bill Garland  =  [email protected]   |
 \__________________________________o o_________________________________/

Version: 2.3a