Re: In Search of Genuine DigiCash

[rah@shipwright.com (Robert Hettinga)]

At 10:08 PM 8/23/94 -0400, Jason W Solinsky wrote:
>Well we agree that the selling point is economic efficiency. But "anonymity
>reduces overhead" ?

I keep getting tangled up in that. I'll try again. Anonymity is not the
issue. Strong Cryptography is the issue. Anonymity comes from strong
crypto. Like I said before, anonymity is the byproduct of using strong
crypto to build a digital cash system.

It's like what I said about flight in this same thread. It turns out the
best way to go really fast is to fly (at least until someone builds an
evacuated tunnel with a magnetic levitation train in it, anyway). In
inventing aviation, we discovered how to go really fast.  It turns out that
going really fast is a cheaper way to do things if time is valuable. Being
able to fly, while an end in itself, is also a byproduct of wanting to get
somewhere fast, at least in economic terms.

It turns out that in creating an anonymous digital cash system, you can do
very cheap, irrefutable transactions offline in an internetworked
environment.  That's cheaper for a whole lot of reasons, a relatively minor
one being the ability to pool the cash without a lot of transaction
recordkeeping. You don't have to know who gave you each piece of money in
order to find who stiffed you, if it happens.

The reduced overhead increases economic efficiency. There are other reasons
for not doing on-line transactions. Including credit checks, interest
calculations on outstanding balances, vendor reserve requirements,
transaction threading, on-line wait states and bandwidth, etc.  It's
considerable.

In addition, I'll forward to you off-line the Eric Hughes postings that got
me started on this. They were put here on 8/19 at 12:20, 1:02, and 4:24 and
4:43. Cheez, looks like I'm citing scripture here. I feel like one of those
fundamnmentalists you see in football endzones on TV. You know, the guys
with the sign that says "John 6:66". ;-).

> There are alot of reasons why I think anonymity is important, but I fail
>to see any significant economic advantage that anonymity confers to a person
>who otherwise couldn't care less about it.

I think like stellar formation, evolution and economic progress, the
privacy of digital cash may be a happy accident resulting from the
activities of a random process (internet commerce) looking for a way to
make itself more efficient. It happens.

Cheers,
Bob Hettinga



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