From: frantz@netcom.com (Bill Frantz)
Date: Thu, 11 Apr 1996 01:08:32 +0800
To: cypherpunks@toad.com
Subject: Re: Tense visions of future imperfect
Message-ID: <199604091857.LAA06933@netcom9.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


>   Financial Times, April 9, 1996, p. 13.
>
>
>   Tense visions of future imperfect
>
>   Victoria Griffith eavesdrops on writers at a conference
>   about privacy and the Net
>
>...
>
>   Martha's Vineyard-based author Simson Garfinkel, for
>   instance, came up with a few terrifying scenarios about Net
>   crime for a discussion group with David Chaum, the founder
>   of the electronic money group DigiCash. In one, a thief
>   went on an electronic spending spree with stolen digital
>   cash. In another, an elderly woman was electronically
>   robbed of her life savings. In the third, the stability of
>   the US economy was at stake.
>
>   Garfinkel described it like this: "My name is Agent
>   Jenkins. I'm an investigator with the secret service,
>   working on a counterfeiting case. And it's tough. Last
>   year, my office got a priority call from an economist at
>   Stanford. The economist was looking at something called the
>   money supply and velocity and both were increasing a little
>   too fast. They just didn't add up. The economist finally
>   figured an organisation was printing its own electronic
>   money -- just like the US government does.
>
>   "This counterfeit currency looked just like the real thing,
>   except it was a fraud. She even found some of it -- a
>   digital dollar that was signed and sealed by the US
>   government's secret key, yet had a serial number that had
>   never been issued. The money that was being made was on the
>   Net. It was everywhere and nowhere. And it was encrypted,
>   so that we wouldn't even know it if we found it. Last
>   month, we estimate, the total fraud was up to $900,000 a
>   month, and it is increasing still."

I don't see how this third scam would work in a system such as DigiCash
which uses online clearing.  Unissued serial numbers would be refused when
presented for clearing.

One scenario which would work (and could be used for scams 1 and 2) is
either stealing digital cash, or counterfeiting issued, but unredeemed
serial numbers.  In either case, if you spend it before the rightful owner
does, that rightful owner gets, as a minimum, a lot of hassle, and might
lose the cash.  If this kind of scam, particularly the counterfeiting scam,
occurs too often, public trust in the cash will disappear, and people will
refuse to buy it.

Note that people trying to maintain anonymity are particularly vulnerable
since they have to hold cash for a period of time to defeat traffic
analysis attacks.


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