Re: crypto anarchy thoughts

[rah@shipwright.com (Robert Hettinga)]

At  8:17 PM 8/28/94 +0200, nobody@ds1.wu-wien.ac.at wrote:

>Digital cash never made it off the ground because credit card
>companies are now held to stricter laws about disclosing account
>information, and banks provide competitive debit cards and live under
>the same disclosure laws (i.e. credit/debit cards good enough for
>99.99999% of the people).  Furthermore, merchants are restricted from
>culling purchase records to build dossiers on spending habits (or face
>legal action), so manufacturers now rely on voluntarily supplied info,
>usually by enticing customers with various benefits of "registering",
>such as rebates, discounts, sweepstakes entries, etc.  Nobody cares
>that digial cash preserves anonimity, because bank and stores aren't
>interested, and customers want the extra benefits that stores offer to
>add their name to their database.

Any argument which uses anonymity as the first cause for implementing a
digital cash system deserves to lose. Like sophisticated engraving,
intaglio printing, and a zealous anti-counterfeiting effort, strong crypto
and zealous anti-double spending efforts are the technologies which enable
trust in a digital cash certificate for it's own sake. The trust of that
certificate is what lowers costs a transaction using it to the point where
vendors don't need security deposits to back up their credit card float,
and where direct connection to a trusted third-party aren't necessary for
that or a debit card transaction. It also obviates the need of identifying
who you get it from.

It's money that's the issue here. Same as it ever was. Privacy, and maybe
even crypto-anarchy or anarcho-capitalism, is the icing on the cake.

>
>For this reason, offshore banks don't fare too well since the digital
>cash they issue generally isn't spendible.  It is convenient however,
>if you need to transfer money from one account to another.  But you
>have to go to a "money broker" who will exchange your digital cash for
>spendible cash, and pay a transaction fee.

A digital cash issuer (an underwriter) doesn't have to be domiciled in an
imaginary foriegn country in order to survive. It can sit in New York, or
Boston (I hope...), or (horrors) Washington DC. I expect that maybe someday
banks may eventually hold portfolios of outstanding digital cash, and it's
easy to see an eventual secondary (derivative) markets for bundles of
digital cash, in the same way mortgages are handled.  It's also easy to see
how it will be easier to leave it the underwriters to handle the stuff in
the beginning, and for a bank to get commissions for referring customers to
a specific underwriter.

In this model, the "money broker" is actually the issuer and the bank
simply is an agent, like in traveller's checks.

Cheers,
Bob Hettinga


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