Re: Geodesic Payment Systems? (was Re: Meeting notes from ANSI X.9 Meeting on Electronic Payment)

[Wei Dai <weidai@eskimo.com>]

On Tue, 5 Dec 1995, Nathaniel Borenstein wrote:

> In terms of crypto-privacy, anonymous communication, and things like
> that, I agree completely.  However, it's genuinely more complicated than
> that where money is concerned, because there are aspects of the
> translation between "bits and bucks" that have some extremely serious
> practical complexities.
> 
> A true geodesic structure is self-supporting and self-structuring.  A
> cryptographic infrastructure can and should be similar, I agree
> completely.  However, a *monetary* infrastructure needs convertability,
> and the points of conversion are always the best targets of attack for
> criminals.  (I've been casting about for an analogy to physical
> geodesics, and it's hard to find one.  The best I can come up with is to
> imagine that in order to convert a carbon buckyball to a more
> conventional set of carbon molecules, you had to do it through a service
> bureau that was capable of error, fraud, or subversion by outside
> criminals.  This would ONLY matter if you ever wanted to do such
> conversions, but it would matter a lot then, especially if you had to
> suffer a serious financial loss if you got the wrong carbon molecules at
> the end of the process.)

I agree that conversion points are good targets for attack.  Therefore
whether conversion services are centralized or distributed will partly
depend on the economy of scale in protection against criminals.  I'm not
sure how much of this economy of scale exists for conversion between
electronic and physical monetary instruments.  But if we're converting
between one eletronic system and another, then cryptographic protocols
reduce the cost of protection to nearly zero for even small organizations. 

Wei Dai