On Monday, May 13, 2002, at 09:11 AM, Adam Shostack wrote: > > It also requires that the early adopters can convince merchants and > banks to jump into a system from which they get none of the benefits > which motivate Alice and Bob and me to adopt ecash. I want ecash for > privacy; why do the merchant and bank want it? > > That financial instruments are an N>2 party problem, unlike, say fax > machines or email, make it that much harder.
I don't see any plausible chance that the current credit card systems will get replaced by our kind of system. Lots of reasons, which folks here have been writing about for years. The original efforts to deploy Diner's Club, Amercan Express, and BankAmericard systems are useful to study (for those of a Harvard Business School bent). Is it hopeless? No, just don't aim for the moon with hopes of replacing VISA and MasterCard with versions of Cypherpunks Club, Untraceable Express, and BankCyberspaceCard. It ain't gonna happen. (Some of us have been saying this for many years.) This is closely related to the "millicent ghetto" problem I have talked about, where folks want untraceable digital cash to permeate all levels, especially for routine, day-to-day transactions. Draw this diagram: -- X-axis: VALUE of untraceability or privacy, from "millicents" to "dollars" to "tens of thousands of dollars" to "more" (Example: an anti-Saudi activist who gets caught faces beheading. He will place a very high value on having his tranactions or communications untraceable to him. Joe Sixpack doesn't give a whit that Safeway knows his purchasing habits, so selling untraceability to him via a newfangled form of card is bullshit.) -- Y-axis: COST of getting the untraceability or privacy. Same monetary units. Log scale, of course. (Example: The cost of a military cypher system, with code clerks, crypto shacks, special safes, etc. is fairly high. It only works when the value of what is being protected--ICBM Boomer sub locations, for instance--is greater than the cost.) Many in the crypto community make the natural mistake, I think, of looking at the theoretical lowest cost of a PGP or signature verfication kind of computation and think "The cost is low, especially with today's processors, so everybody should be using crypto." But costs also involve costs of adopting a technology, deploying it, teaching consumers to use it, etc. Credit cards faced these costs in the 60s, when they were first widely deployed, but the advantages they offered millions of consumers and merchants were great enough to justify the expenditure of time and money. (Credit cards are great for merchants not for just for the reasons discussed in the last few days here, but mainly because they encourage customers to _spend_. Think about it. Someone walks past a window display, sees an item, and decides to "Charge It!") I said it isn't hopeless. Anonymous and untraceable systems are desired by some. The existence of Swiss banks, hawalahs, and money laundering shows this. The porn trading rings show this. Go after those markets. What are those markets? Recall my .sig from a while back: black markets and unsavory transactions, tax avoidance, and so on. This is what Orlin Grabbe has been targeting. Check his site out. Use Google. Forget the millicent ghetto, forget the crusade to convince Sally Sixpack that she like, rilly, rilly needs crypto. Go after those who already _know_ they need untraceability. Go after niches where VALUE >> COST. Don't try to argue that the world needs to replace its multi-billion dollar infrastructure of credit/ATM/debit/Telecheck/etc. systems so that Sally Sixpack can pay for her groceries with "untraceable digital cash" when she's just handed the Safeway clerk her Customer Loyalty Discount Card! Go after those who _need_ these technologies and who don't need it deployed in every corner market and gas station. But don't do it under your own name or your corporate name, for if They (Feds, Saudis, movie studios, Mafia) know that your company is building the infrastructure for stealing music or for publishing birth control info for Saudi women or for laundering money, they WILL take you down. Via lawsuits, freezing assets, criminal or espionage prosecutions, or just running you over in your parking lot. (I said this several years ago to some Great White North folks who were planning an untraceability system you may have heard of. Hmmmhhhh.) Jeez, I write essentially this same article a couple of times a year. Nothing every changes. --Tim May
