Digicash and loose change

[rishab@dxm.ernet.in]

rah@shipwright.com:
> I'll try to to come at this from another tack. Cryptography gives
> anonymity. Anononymity reduces the overhead. The reduced overhead should
> make digital cash more economically efficient than on-line systems like
> NetBank, or credit-cards or much of anything else, at the moment. The

If someone did an operation count of Brands' digicash protocol, I wouldn't
be surprised if it showed much more processing than, for instance, the
simple public (or even secret) key encrypt-a-credit-card-number scheme. The
latter has the overhead of transaction management - but the table lookup of
databases is much simpler than modular exponentiation.

Then there's the 'loose change' problem - one I haven't seen discussed too
much. It seems that Bob will have to total up whatever he received from
Alice and anyone else, then have notes _reissued_ from the bank in his
chosen denominations - otherwise Bob could double-spend _Alice_'s cash,
exposing her identity and getting away scot-free himself. The loose change
is in choosing the note denominations - you don't have to go to a bank to
change a 100 in 'real life'. 

Compare this with paper money. Cash has to be printed. Granted this is cheap,
particularly with US Dollars, probably the easiest currency to forge. (Even
Indian Rupees are gravure printed in multiple colours and textures. I was 
really laughing at the discussion here a while ago on how easy it is to 
pull out the metal strip from dollars - Rupees have metal woven in to the 
paper, which reflects light at an angle and is opaque, black, when seen 
through). Then there's the overhead of distribution, the 'loose change' - how
many suitcase-fulls to buy a Boeing?

Cheques (drafts, cards) are much simpler. There is a one-time overhead of
customer verification when you get your account. Transaction-time verification
is relatively simple. The additional overhead of transaction record management
is easily implemented even in existing electronic systems.

If it weren't for Cypherpunks, anonymous cash would die a natural death as
money gets wired. Anon cash _is_ value added. And I don't see why there 
shouldn't be a market. We have least 700 already ;-)


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