Re: First Virtual?

Mark Terka writes:
>  Ok, so what are our options, given that this company seems to think
>  of security in terms of a plastic padlock. From corresponding posts
>  on the list, the only other alternative, Digicash, doesn't seem to
>  be too responsive to anyone's participation right now.

It seems to me that DigiCash mistakenly 'jumped the gun' and announced before  
they were truly ready to test.  This is such a common ocurrance in the  
computer industry that I'm suprised people are making noise over it.   
However, it indicates their reluctance to ship something before it's ready,  
which is good considering the technical and political challenges of the task  
they are undertaking.

How can you really compare the proposed DigiCash systems versus FirstVirtual?  
 One is a 'toy' system for moving credit card numbers around without actually  
broadcasting them in the clear, the other is a cryptographically secure  
digital cash type system.  It's not suprising that FirstVirtual is ready  
sooner than DigiCash.  However, assuming each system was ready and working as  
advertised, which would you trust for your financial transactions?  With the  
possibility of millions and billions of dollars of commerce ocurring on the  
net in the near future, which do you think most people will want to use?

While FirstVirtual may have it's place in the world of online payment  
systems, it is IMHO no replacement for a real digital cash system.  The fact  
that most of the people who have even heard of these new payment systems are  
unaware of the not so subtle differences should alarm most cypherpunks.   
Digital cash isn't going to happen overnight (although most of us would like  
it to), and the last thing we want is for systems like FirstVirtual to become  
the de facto standard for online payment...


andrew

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	I saw a presentation Monday by Nathaniel Borenstien of First
Virtual.  While I agree that there is a strong need for a good digital
cash system, FV is not attempting to fill that niche.

	FV is a credit card clearing system for the internet.  Its
current system is designed for small transactions involving
information resources.  It is not intended to be used for selling
physical objects of value.

	As such, it forces the merchant to assume risks, in that the
buyer has two opportunities to turn down a transaction.  (When it is
mailed to them, and when the credit card statement arrives.)  That
second opportunity to decline charges also adds to the security of the
system.  I won't say its good or perfect, but it does add something.
FV really isn't taking much risk, or making much profit in their
$.29+2% transaction fees.

	FV plans to make its money in other ways.  They simply needed
a way to collect credit card numbers to make those other ways work.
They decided to make that means of payment generally available, and,
while hackable, it is better than credit card numbers.  (Those who
would suggest PGP encryption should take careful note of how much
trouble psuedo-mandating signing of posts is creating here.)

	The other ways FV plans to make money are providing
information services, such as joke of the day.  Others were not
mentioned, and in fact, when someone asked, Nathaniel was avoiding the
question when I said they'd be providing jotd, at which point he said
yep.  He was pretty admant about not talking about vapor.

	If you get a chance to hear him, do.  It was very interesting,
and afterwards, off the record, he might have some interesting things
to say.

Adam


| How can you really compare the proposed DigiCash systems versus FirstVirtual?  
|  One is a 'toy' system for moving credit card numbers around without actually  
| broadcasting them in the clear, the other is a cryptographically secure  
| digital cash type system.  It's not suprising that FirstVirtual is ready  
| sooner than DigiCash.  However, assuming each system was ready and working as  


>I'm glad I'm not the only one who thinks FV is a joke.  The entire
>security of the system rests on the difficulty of intercepting and
>forging e-mail.  Forging e-mail is dead easy, intercepting isn't much
>harder.  While the implementors are correct that an online
>payment-system will have to be simple to use in order to gain wide
>acceptance, sacrificing all security for ease of use is a grave
>mistake.  It just begging to be ripped off, providing people actually
>sell something via FV worth ripping off.

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How can you really compare the proposed DigiCash systems versus
   FirstVirtual?  One is a 'toy' system for moving credit card numbers
   around without actually broadcasting them in the clear, the other
   is a cryptographically secure digital cash type system.

Digicash and First Virtual and Net Bank are all payment systems.  The
primary benefit is moving money.  _All_ other benefits are secondary,
including privacy and security.

As far as actually being a payment system, it's Digicash's trial which
is the toy system.  It can't move money.  First Virtual, no matter
what its flaws, can.  Not particularly securely, not quickly, but
money will move.  Just because FV is a bad payments system doesn't
mean it's not a payments system.

There's no question at all that Digicash's technical means are
superior to First Virtual's.  But technical means alone do not make a
business and Digicash at this moment doesn't have a business but
rather only a possible opportunity for one.

First Virtual has all sorts of problems.  Its security sucks.  It will
have a higher fraud rate than other credit card uses.  Merchants won't
particularly like it because of this and the delay in payments.  Users
won't like it because the interface sucks.  It's not fully fungible
money, because you can't use it for arbitrary commmerce.  Fine.
Because of all these concerns, FV won't be suitable for many purposes,
but it will be for some.

What FV's commercial advantage will be is that they'll have a
pre-existing user base on hand when the improved system comes.  This
is a not insignificant advantage, since it's much easier to deal with
someone you've already been dealing with than with somebody new.

Eric