Re: ecash-info

[rah@shipwright.com (Robert Hettinga)]

At  1:02 PM 8/19/94 -0700, Eric Hughes wrote:
>   Anyway, when I screwed up the guts to ask, Chaum told me that the going
>   price for the underwriter's license/code was $275K plus a percentage of the
>   net profits.
>
>It's no small wonder that he's not gotten anywhere.  Anybody who wants
>an operational cut of a finance system is asking for way more money
>than anybody might want to pony up.  A bank (or similar) wants to buy
>technology, not a partner.

Here I was thinking it was common knowlege, and that's why I never said
anything about it.  I have to say that I have several friends who build
real good financial models for portfolio analytics, and they get a cut of
the trading profits.

A bank is one of his customers. Of course, they're in Switzerland. I'm sure
it happens on this side of the Atlantic with people who do currency
analysis. Soft dollar stuff is a pretty common way to pay for research and
software.

That said, I think that there are probably cleaner ways for him to make
money, like leasing his software, for instance.

>   the increase in traffic about his inactivity in promotion leads me to
>   believe that he's either working hard in getting his product market-ready,
>   which makes sense, or he's dropping the ball, which I would charitably say
>   is an unfair reading of the facts.
>
>A third possibility is that he's just not getting anywhere.  If you
>want too much money for what someone else is willing to pay, you don't
>make a sale.

Agreed. I was trying not to tread on the sainted reputation of the master
by using the word "charitable". I count your "third possibility" under
"dropping the ball", by the way.

In fairness, it may be true that he's really trying to bring something to
market.  We may never know until we read about it on the front page of the
Wall Street Journal, or in the same paper's legal notices...

>There are three potential benefits from any Internet money system:
>
>1. The ability to transact and settle to the outside banking system.
              [snip]
>Here's the crux.  ONLY property one has large and direct and immediate
>economic benefits to the issuer.
              [snip]
>If you were a bank, would you pick system 1, 2, or 3?  System one will
>result in direct customer fees.
              [snip]
>So, with these three kinds of transaction systems in competition with
>each other, which do you think will win?
>
>Let me answer that for you.  It's system 1.
>
>Now Chaum wants to offer system 3, and it's expensive to purchase.
>Surprised at lack of success?  Not at all.

I think you're right.  It goes back to the haggle we had when I first
joined this list. I learned rather quickly that privacy ain't necessarily
the point here.  The technology of privacy, in particular strong crypto,
yields something useful in a much larger arena digicash and other e$.
Privacy is a beneficial byproduct of immediate and final clearing on the
internet through digicash. It is not necessary and sufficient for it's use.


It's possible that Chaum is immersed in the cryptographic details that he
thinks that privacy is digicash's primary selling point.  It certainly is
the enabling technology.  However, it seems that his marketing approach to
date has been more product driven ("Look, you can fly, and we'll let you do
it, but you'll have to do it our way.") possibly sales driven ("C'mon, fly,
and I won't bother you anymore."), but certainly not market driven ("Look
what you can do if you fly!").

Cheers,
Bob Hettinga

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