IMP (was Re: ecash-info (fwd))

>Forwarded message:
>> From info@DigiCash.nl Mon May 30 05:44:18 1994
[snip. . .]


>>        http://digicash.support.nl
[snip. . .]

This, like CommerceNet(tm), seems to be pretty much under construction.
The store windows look nice, however...

>>
>>...
>> David Chaum



On another point, I still think I'm subscribed to imp-interest, the
internet mercantile protocol list, though I haven't seen anything much come
out of there lately. It got Detweiler-infested and flamed over pretty badly
before it went moribund, but I think imp-interest died primarily because
implicit in it was a sort of top-down-plan idea that was incongruous with
the do-it-first ethic of the internet. Cypherpunks write code, or Chaum
does, anyway ;-).

At the risk of violating that canon, ( I couldn't code my way out of a
paper bag, even though I've designed an application or two) I'd like to
start a thread here.

Could we talk about IMP here?

Here's what I think:

1.) Chaum's e-cash coupled with WWW/Mosaic is a de facto internet
mercantile protocol.

2.) It seems to me that that e-cash, contrary to the status quo's thinking,
is *critical* to internet commerce. An anonymous cash market is most
unrestricted and efficient market there is, because privacy/security (more
than trust, I think) is the capstone of any serious transaction mechanism.
The imp-interest people seemed to be afraid of e-cash because the
Chaum-patent hairball reminded them too much of the RSA/PGP fight, and
probably because they didn't want to be associated with any wild-eyed
crypto-anarchists(tm).  (As a dyed-in-the-wool yellow-dog congenital
up-by-your-bootstraps crypto-fascist <gasp> republican, I haven't the
slightest idea what they're talking about. . .)

3.) Since a big pile of the discussion on this group lately has been about
our collective concerns about an RSA-approved version of PGP, I think there
is a real parallel here in e-cash.  Not that some enterprising cypherpunk
should immediately code up "e-cash for the masses"; that would be way cool
but probably not within the second-mortgages of the people here. However,
some effort should be made to get Chaum et. al. to see to logic of
distributing *both* the "cash-register" and the "wallet" of this e-cash
system to anyone who wants it. It seems that, like Mr. Bill (Gates), his
real market is the people who make e-cash ("banks", "currency exchanges",
"mints"), not the people who use it.

Just a second.  My flame-suit is around here somewhere... OK. Flame on.

Cheers,
Bob Hettinga

-----------------
Robert Hettinga  (rah@shipwright.com) "There is no difference between someone
Shipwright Development Corporation     who eats too little and sees Heaven and
44 Farquhar Street                       someone who drinks too much and sees
Boston, MA 02331 USA                       snakes." -- Bertrand Russell
(617) 323-7923

Robert Hettinga wrote:

> >>        http://digicash.support.nl
> [snip. . .]
> 
> This, like CommerceNet(tm), seems to be pretty much under construction.
> The store windows look nice, however...
> >>...
> >> David Chaum

David Chaum's work is of course central to Cypherpunks, and has been
for the past two years (since Cypherpunks plans were laid...). Eric
Hughes worked with him in '91-'92, and many of us have talked to him
about these issues. Further, his papers on DC-Nets and digital mixes
(the basis of Cypherpunks remailers) are often cited.

I mention this not to chide or "one-up" Robert, but to make clear the
role that Chaum's untraceable digital cash has _always_ had for us.
The strength of true digicash, even if not yet fully
realized/deployed, is why so many of us are skeptical of half-baked
"digital cash" schemes that turn out upon quick inspection to have
none, or few, of the important features.

IMP-interest folks had an especially naive view, for the most part
(based on posts I saw and things I heard from participants). I wished
them well, but it seemed unlikely that a group of such hobbyists could
build a real digicash system while avoiding Chaum's work!

> implicit in it was a sort of top-down-plan idea that was incongruous with
> the do-it-first ethic of the internet. Cypherpunks write code, or Chaum
> does, anyway ;-).

Even with the smiley, are you implying Cypherpunks don't actually
write code? Some do, some don't. But Cypherpunks remailers are fully
operational, as are message pools, a form of digital money (Pr0duct
Cypher's "Magic Money"), etc.

> At the risk of violating that canon, ( I couldn't code my way out of a
> paper bag, even though I've designed an application or two) I'd like to
> start a thread here.
> 
> Could we talk about IMP here?

Digital cash is discussed here often. And every one of the various
"digital money" schemes announced by folks has--I think--been forwared
here and discussed. In my view, Cypherpunks have talked a lot more
about Internet Mercantile Protocols than the IMP-interest list has
talked about crypto (an absolutely core technology, of course).

> 1.) Chaum's e-cash coupled with WWW/Mosaic is a de facto internet
> mercantile protocol.

Hardly. Maybe it will be in the future, but enough infrastructure
pieces are lacking that it can hardly be called a "de facto internet
mercantile protocol." I agree it has huge promise. (I suspect I'm
sounding pedantic in this post...what I'm trying to do is get across
the idea that Cypherpunks are familiar with Chaum's work--or should
be--but that much work remains to be done....merely getting excited
about Chaum's stuff is where many of us were in 1988 to 1992, with the
actual work still lying ahead. And much of the work _still_ lies
ahead.

(Cf. the soda archives for a "Glossary" and various articles on
Chaumian things.)

(2.) It seems to me that that e-cash, contrary to the status quo's thinking,
> is *critical* to internet commerce. An anonymous cash market is most
> unrestricted and efficient market there is, because privacy/security (more
> than trust, I think) is the capstone of any serious transaction mechanism.
> The imp-interest people seemed to be afraid of e-cash because the
> Chaum-patent hairball reminded them too much of the RSA/PGP fight, and
> probably because they didn't want to be associated with any wild-eyed
> crypto-anarchists(tm).  (As a dyed-in-the-wool yellow-dog congenital
> up-by-your-bootstraps crypto-fascist <gasp> republican, I haven't the
> slightest idea what they're talking about. . .)

Of course crypto and true digital cash is central....this is our whole
message, nearly.

> 3.) Since a big pile of the discussion on this group lately has been about
> our collective concerns about an RSA-approved version of PGP, I think there
> is a real parallel here in e-cash.  Not that some enterprising cypherpunk
> should immediately code up "e-cash for the masses"; that would be way cool
> but probably not within the second-mortgages of the people here. However,

You may be new to the list, but Magic Money/Tacky have been discussed
as recently as last week. And ftp sites have been listed. Also, within
the last week there were several discussions of making the schemes
more "usable by the masses." (Having said this, MM is _not_ an easily
usable, readily-convertible currency or even a payment xfer system for
real currency...again, see the many posts on this.)

> Just a second.  My flame-suit is around here somewhere... OK. Flame on.
> 
> Cheers,
> Bob Hettinga

I don't think of my comments as flamish, but the comments here seem to
bespeak no awareness of the heavy focus Cypherpunks has had on digital
cash for a long time. That we have not "deployed" digital cash is
related to many factors, including patents, lack of financial
incentive (Chaum's folks have spent perhaps 10-20 man-years and
several million dollars, and Chaum holds key patents...it is hard to
imagine any of us competing head on...and make no mistake about it: a
"Pretty Good Digital Cash" scheme would, on the whole, be a much
larger project than PGP was), etc.

Just my views.

--Tim May


-- 
..........................................................................
Timothy C. May         | Crypto Anarchy: encryption, digital money,  
tcmay@netcom.com       | anonymous networks, digital pseudonyms, zero
408-688-5409           | knowledge, reputations, information markets, 
W.A.S.T.E.: Aptos, CA  | black markets, collapse of governments.
Higher Power: 2^859433 | Public Key: PGP and MailSafe available.
"National borders are just speed bumps on the information superhighway."

re: IMP-interest folks
   [...]  it seemed unlikely that a group of such hobbyists could
   build a real digicash system while avoiding Chaum's work!

Well, the IMP people weren't tring to build digicash, but rather do
internet commerce.  Cash and anonymity were discussed, but were not
considered central to the program.

   (2.) It seems to me that that e-cash, contrary to the status quo's thinking,
   > is *critical* to internet commerce. 

   Of course crypto and true digital cash is central....this is our whole
   message, nearly.

When I responded directly to the original message, I claimed that it
wasn't central to internet commerce.  I was speaking there about the
realpolitik of deployment.  Internet commerce can and might happen
without anonymity.

That doesn't make it any less central to my own and other's desire
that it be present and available.

Eric

1.) Chaum's e-cash coupled with WWW/Mosaic is a de facto internet
   mercantile protocol.

Hardly.  The announcement just says it's available, not that anybody's
using it.  Since the information came from a press release, we can
assume that lack of mention of an important customer, like a bank,
means that there are no such customers right now.  What that says to
me is that DigiCash has looked for customers, and not found any.
They've certainly had the time.

Furthermore, it's not clear that this software can be both legally and
usefully deployed in the USA.  The Foreign Bank Secrecy Act of 1974
requires the microfilming of all checks of value over $100, with
administrative provisions for extending the required recording
keeping.  Other check-like transaction accounts have since been added.

So can a bank avoid this?  First, they can limit transaction amounts
to less than $100.  That violates my criterion of usefulness; it would
have some utility, to be sure, but just as surely would be a severely
crippled utility.  Second, they might be able to record the
transaction as a "cash purchase".  The problem here is that this
accounting technique may be ruled non-compliant by the regulators,
which would make the transaction _illegal_ (since there's not way to
comply by recording both parties).  The regulators have been
authorized to move activities across the boundary of legality by
legislative action.  Now, one cost of deploying any such system would
be the expected (negative) value of the risk taken in losing the whole
development investment to an adverse regulatory decision, let alone
possible actual penalties.

Even beyond this, there's the IRS $10K cash reporting limit, and the
attendant restrictions on structuring.  Detection of structuring
becomes much more difficult, and banks are held responsible for at
least some of the enforcement.  Here's another set of risks, like
above.

Just how big is the potential Internet market (in, say, two years),
compared to other banking segments?  Precious small right now, really.
Just plain profitability is also an issue.  Add to that costs of
licensure and costs of risk and you're left with some significant
barriers to USA deployment.

   2.) It seems to me that that e-cash, contrary to the status quo's thinking,
   is *critical* to internet commerce. 

No, it's not critical.  Some form of transaction mechanism is
critical.  Privacy is not critical to the bulk of the economy, though.
Face up to it.  If it were, it would be so obvious that we wouldn't be
discussing it on a mailing list.  In fact, _we_ wouldn't be discussing
it, but rather a whole bunch of bank vice presidents.

   An anonymous cash market is most
   unrestricted and efficient market there is, because privacy/security (more
   than trust, I think) is the capstone of any serious transaction mechanism.

Is anonymous cash really the most efficient?  No, not in all cases.
When no one is looking, the anonymity is irrelevant, and
identifier-based schemes work fine.  Is, for example, anonymity the
most efficient for the Federal funds transfer network?  No, because
the values of money are so large that default on a transaction would
case serious systemic problems.

Cash does have some advantages, in particular its immediate and final
clearing.  These can reduce transaction costs in certain markets.
Anonymity, however, is not a panacea.

Characterizations of where anonymity is _already_ practiced indicate
potential places for initial deployment.  Negotiation for trades in
the foreign exchange market are frequently anonymous, even though the
trades themselves are not.  There is a gold and silver exchange in
Shanghai, I think it is, where the exchange keeps no records and all
transactions are settled between traders.  Motivated list members may
wish to hit the libraries and look for more.

   3.) Since a big pile of the discussion on this group lately has been about
   our collective concerns about an RSA-approved version of PGP, I think there
   is a real parallel here in e-cash.  

PGP only requires the cooperation of your email correspondent in order
to function.  The risk of a patent infringement suit is small, since
the parties involved are small.  Digital cash requires the
participation of many more parties, some of whom have, almost of
necessity, deep pockets.  

The parallel does not extend very far.  Without the creation of an
entirely black market which can remain completely unexposed (and this
is more difficult that it appear even on second or third thought), it
is unlikely that digital cash technology will be usefully deployed
independently.

Eric