From: Lyle_Seaman@transarc.com
Date: Sun, 7 Nov 93 13:48:12 PST
To: cypherpunks@toad.com
Subject: Re: Real-world digicash
In-Reply-To: <9311071909.AA04142@jobe.shell.portal.com>
Message-ID: <AgrKlkuSMUw8Q6Tsk6@transarc.com>
MIME-Version: 1.0
Content-Type: text/plain


hfinney@shell.portal.com writes:
re NetCash:
> The anonymity was not strong.

Hmph.  You can say that again. There is no real anonymity in NetCash
(v1).  What they describe is something like an online (non-anonymous)
system with the suggestion that people may achieve anonymity by
trafficking in coins without verifying their validity.  If they
receive an invalid coin, T.S.  In such an environment, you can bet
that everyone would keep records of all off-line transactions so they
could recover their losses if they were passed an invalid (spent)
coin.  The suggestion that a (non-anonymous) Currency Server might
simply avoid tracking coins is poppycock.  That would work for epsilon
months, until the CS was strongarmed into keeping logs.
One valid point that the NetCash paper raised was that a framework
must be devised in which currency exchange can occur, without forcing
an intermediate transfer into paper. 

I like Nick's suggestions regarding mostly-offline digicash.

A couple of issues which it seems must be pointed out:

1.  Any digicash scheme is going to require some hardware.  You just
can't do this with pencil and paper.  They don't all require
special-purpose, tamperproof hardware, but very few people are going
to be willing to keep long lists of numbers and do complex arithmetic
in their head...

Hal sez:
> Today, most credit card transactions do an on-line check, so I don't think
> that on-line systems should be ruled out, although eventually a dedicated
> network separate from the internet would probably be needed.  The total
> data transfer per transaction is not large, a few hundred bytes.

The credit-card infrastructure is funded by the 3%-7% cut that the
credit company gets from each purchase.  Who is going to fund such an
infrastructure (potentially much much much larger) for cash
transactions?  Presumably, it would be someone who stands to make a
profit from these transactions, but how will that profit be realized?
Maybe the digicash vendor will charge for on-line verification.  I
guess that works.  It lets the dcash recipient decide whether to trade
off risks against known costs, which I like.

> to a "nym", but to a real person.  (There is still the possibility Mike
> raised of stealing someone's cash, similar to how you might steal someone's
> PGP secret key today, but perhaps this will not occur often enough to
> be a problem.)

A widely-used digicash scheme will certainly include small computers
for performing the transactions.  Such a computer should be guarded as
well as one's wallet, or one's home safe.

> So this off-line system will actually require more bandwidth for communication
> with the bank than Chaum's on-line system would (because of the extra
> transaction information that has to be sent).

Requiring more bandwidth isn't really a problem.  The available
bandwidth of any network is practically infinite, if you don't care
about delay. For all practical purposes, the off-line systems don't care
about delay.  (to forestall flames, I will admit that the delay
must be small enough to reduce the temptation to double-spend, and
that it must be small enough to prevent the holder of cash from losing
value due to inflation.  Delays on the order of days are not
unreasonable.  Given current technology (ie, without purchasing any
new hardware), the workstation on my desk can handle 10 times the
bandwidth that it now does, if I will accept delays on the order 
of several days.) 

I forgot what else I was going to say.  I think my 'nym is stealing my
thoughts. 

Lyle		Transarc		707 Grant Street
412 338 4474	The Gulf Tower		Pittsburgh 15219