Re: All our eggs in one basket?

Some of Jim's points can be addressed with existing protocols.  When
the bank sends you cash which you have withdrawn they would want to send
it in such a way that they get a return receipt from you.  That way they
can prove you have received it.  Schneier's book describes such a
"digital certified mail" protocol in section 6.3 of his book, but it
looks like it uses a lot of data.  More concise implementations may
exist.

Other forms of cheating could be imagined.  I could send cash to a
company, and they could refuse to send me goods, but claim that they
had done so.  Or I could receive goods from a company, but claim that
they never arrived.  These could also be addressed with certified mail,
either paper or digital, depending on whether the goods are physical or
electronic.

In an online system, the bank could refuse to accept a cash deposit, even
though it was valid cash, claiming that it had already been deposited.
To prevent this, the bank would have to record who made each deposit in
the past and stand ready to reveal this information.  A merchant could
collude with the bank to provide forged deposit records to help with
this scam.

I don't see how to solve this one, but if it were done on a large scale
people might become suspicious about the excess of apparent double-spending
via a small number of merchants.  The bank's reputation would suffer, as
long as people found out about it.  Perhaps customers should demand that
banks publish statistics about (apparent) double-spending in order to
detect this scam.

Hal Finney
hfinney@shell.portal.com

It seems we're worrying about something that is between a non-problem and a
simple copy of an existing problem.

Today we use paper cash and paper forms.  I go to the bank to make a
withdrawal, I fill out a paper form requesting money.  They take the form,
fail to give me cash, claim that I have been given cash.  What recourse do I
have?  (Several is the answer, but the point is that it's not a problem new
to digicash.)

Today I order from a supplier.  I send a paper form of payment (P.O., check,
paper copy of my CC #, etc.).  They cash such form and do not send me goods
(or claim that they did and they were lost in transit).  What recourse do I
have?  (Again, several.  Again the point is that digicash does not seem to
be introducing new problems; rather it's giving us new forms of old ones.)

As a side note: one of the reasons I use credit cards (even though it gives
a record of my purchases that can be used for marketing and other unintended
purposes) is that the CC company does a large volume of business and
guarantees my transaction.  If I dispute a charge with the merchant, the CC
company automatically takes my side.  They take it out of the merchant's
hide.  Plus, since the merchant doesn't want to be in a bad way with a big
customer (Visa, say) -- there is a huge incentive for him to make good, much
more incentive than if he were dealing with me directly.

For these reasons, I think that something like CC houses will still prosper
under a digicash regime.

--Alan Wexelblat, Reality Hacker, Author, and Cyberspace Bard
Media Lab - Advanced Human Interface Group	wex@media.mit.edu
Voice: 617-258-9168, Pager: 617-945-1842	PUBLIC KEY available by request
Try not to have a good time ... This is supposed to be educational.