Re: Digital Cash

Online systems are also guaranteed anonymous.

Well, maybe, though traffic analysis may be a problem.

I did hear of an interesting case of people paying for privacy in the real
world.  In Hong Kong, the Aberdeen tunnel has drive-through smart card
readers for tolls.  The problem is, these cards don't use a privacy-
protecting protocol.  And many folks there are worried about what will
happen come 1997.  So there's now a resale market -- stores buy toll
cards in quantity, and resell them over the counter, for cash.

This underscores what I've said in the past about anonymous digital
cash:  it's not going to go anywhere unless folks are willing to pay
a premium for privacy.  There are too many sound reasons for keeping
audit trails (debugging, fraud detection, marketing analysis, etc. --
and note that the first is an issue even for folks with the best intentions
in the word; note how many remailer operators have kept logs, at least
for a while); unless there's a profit motive in doing otherwise, most
folks won't.  In Hong Kong, the threat is not just real and imminent,
it's *perceived* as such.  Whether or not there is a real threat in, say,
the U.S. (let's please not debate that!), there's much less perception
of one.

On Tue, 3 May 1994 smb@research.att.com wrote:

> This underscores what I've said in the past about anonymous digital
> cash:  it's not going to go anywhere unless folks are willing to pay
> a premium for privacy.  There are too many sound reasons for keeping
> audit trails (debugging, fraud detection, marketing analysis, etc. --

Something overlooked in the real world that encourages the maintenance of
private payment systems (cash) is th existence of a large number of people
with bad credit.

About 20% of the US population has neither credit cards nor checking
accounts.  Some of this is because of personal preference but a lot of it
is because these people can't handle something as abstract as a checking
account without wrecking it.  They *need* cash which will enable them to
use the simple budget process of adjusting to declining balances.

Thus, we see the recently introduced computer phonecards which you can use
to buy long distance phone service in advance for cash.  No hassles with
telephone account which tend to require a fixed address in any case.

Note also the popularity of secured credit cards which are now issued by a
score of financial institutions.

There will continue to be a big market for "cash" to serve this market.

DCF

"If I had recently proposed to increase the American people's taxes by
$600,000,000,000 a year, *I* wouldn't want them to have assault rifles
either." -  DCF

Note - Last October, William Jefferson Blythe Clinton proposed to increase
our taxes by $600,000,000,000 a year or so.

>Something overlooked in the real world that encourages the maintenance of
>private payment systems (cash) is th existence of a large number of people
>with bad credit.

Bad credit or no credit.  Having no record in the credit databases is
as good as have negative entries, for many purposes.

>About 20% of the US population has neither credit cards nor checking
>accounts.  Some of this is because of personal preference but a lot of it
>is because these people can't handle something as abstract as a checking
>account without wrecking it.  

A significant part of this is that banks have simply moved out of a
lot of neighboorhoods, and checking accounts are simply not easily
available.  Many people grow up without interaction with the banking
system, and therefore don't get electronified.

Eric