From: "Perry E. Metzger" <perry@imsi.com>
Date: Thu, 2 Jun 94 08:52:30 PDT
To: hughes@ah.com (Eric Hughes)
Subject: Re: IMP (was Re: ecash-info (fwd))
In-Reply-To: <9406021538.AA05856@ah.com>
Message-ID: <9406021552.AA02177@snark.imsi.com>
MIME-Version: 1.0
Content-Type: text/plain



I agree with virtually everything Eric says with one small exception...

Eric Hughes says:
>    E-cash is critical
>    because of it's efficiency.  
> 
> Almost all the efficiency comes from the fact that it's electronic,
> not that it's cash.  It is true that cash systems more quickly
> consolidate receivables, but the advantage over paper is _relatively_
> small.

The advantage is that its electronic AND that its secure. Since its
secure, the intermediation costs drop dramatically as the possibility
of fraud goes down. One could do electronic payments with credit cards
and email right now -- but the costs would be pretty bad.

There is another advantage you've glossed over, which is the fact that
since fraud is difficult, anyone, not just vendors, could receive
payment. (Vendor fraud is a huge cost in credit cards.)

I agree, however, that any truly secure electronic payments system has
these advantages -- anonymity isn't needed to gain most of the cost
benefits. I'll also note, by the way, that the stupid smartcard
systems that simply rely on "tamperproof" (ha!) cards that "know"
balances aren't going to have especially lower costs than credit cards
-- increased fraud might even raise costs! A truly secure system has
an enormous advantage over such systems.

Perry