From: Joe Turner <turner@telecheck.com>
Date: Fri, 19 Aug 94 16:09:53 PDT
To: Jim_Miller@suite.com
Subject: Re: In Search of Genuine DigiCash
In-Reply-To: <9408192037.AA10062@bilbo.suite.com>
Message-ID: <9408192310.AA10603@TeleCheck.com>
MIME-Version: 1.0
Content-Type: text


> 
> A few days ago I asked:
> 
> > Can a case be made that anonymous digicash is less risky
> > (to a bank) than NON-anonymous digicash? 
> 
> There were no takers.  Therefore, I'll ask different questions:
> 
> Would a Chaum-style anonymous digital cash service be more profitable to a  
> bank than a NON-anonymous digital cash service?

	I think that very few would have the initiative to lay out the
money for a no-transaction cash system.  With credit cards and checks 
there is a transaction trail that you can follow to spot and get rid of
fraud.  For someone in the banking community who is used to giving out
paper transaction slips and taking deposit slips, I think it is a frightning
idea.

> Are the costs involved in offering and supporting anonymous digital cash  
> more, or less, than the costs associated with NON-anonymous digital cash?
>

It depends on what kind of hardware/software you are attempting to set up.  
Will it be a replacement to ATM and credit cards or would it be a concurrent
working solution? (ie, is a merchant who has just spent $1000 on a spiffy POS
machine that read checks, takes every credit card in existance, and ATM 
cards going to want to junk his equipment for a smart-card reader?) .

I think at this point, it is pretty obsurd to think that everyone will be
carrying around thier 486 laptop to act as a "representative" for their
smart card. 

If it is going to work:

	1. It must be convient for the customer; and/or
	2. It must save money or time; and/or	
	3. It must provide additional benifits for customers or merchants
	   (ie, privacy for customers, undeniable transactions for merchants).
 
> In other words, why might a bank chose to offer/support anonymous digital  
> cash over NON-anonymous digital cash?
> 
> If a "bank-centric" case for anonymous digital case over NON-anonymous  
> digital cash can't be made, then there's little chance we'll see anonymous  
> digital cash any time soon.

Chaum writes (sciam.txt available via ftp at: digicash.nl):

      Blinded electronic bank notes protect an individual's privacy, but
      because each note is simply a number, it can be copied easily. To
      prevent double spending, each note must be checked on-line against a
      central list when it is spent. Such a verification procedure might be
      acceptable when large amounts of money are at stake, but it is far too
      expensive to use when someone is just buying a newspaper. 

This was as I said in my earlier post-- that I would include an  
online-verification to make sure notes are real and not double-spent.  


-- 
Joe N. Turner		Telecheck International
turner@telecheck.com    5251 Westheimer, PO BOX 4659, Houston, TX 77210-4659
compu$erv: 73301,1654	(800) 888-4922  *   (713) 439-6597