From: hughes@ah.com (Eric Hughes)
Date: Sun, 7 Aug 94 10:52:24 PDT
To: cypherpunks@toad.com
Subject: e$: Cypherpunks Sell Concepts
In-Reply-To: <199408070228.WAA26202@zork.tiac.net>
Message-ID: <9408071723.AA18249@ah.com>
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   Is it possible to accurately estimate the cash transaction load of an
   economy?

I have some 1992 USA figures on this.  The number of checks was 58
billion (58 * 10^9).  The number of card transactions was 12 billion.
There were about 2 billion other electronic transfers.  72 billion
total.  Cashless transactions are about a tenth (roughly, this is from
memory) of the total.

So as a first cut, assume about one trillion (10^12) transactions to
be tracked per year.  Assume 1/8 Kbyte per transaction (that's a lot).
If you stored transactions on 8 Gbyte tapes, that's 2^40 xact * 2^7
bytes/xact * 2^-33 tapes/byte = 2^14 tapes, or about 16 thousand.  A
robotic retreival device for 16 thousand tapes is certainly feasible;
I've seen a similar system for about 2 thousand 9-track tapes -- it
was feeding a Cray 2 at Livermore in their fusion center.

Now that's just storage, not the whole system.  But it's apparent from
these estimates that a real system is certainly affordable, and,
possibly, relatively inexpensive as such totalitarian devices go.

Remember, "suspects" (10^-3 of the population) can be filtered out
before hitting tape and stored on about 128 Gbytes of hard disk, for
very fast retreival and realtime analysis.

   When *every* business transaction can be scrutinized (as much as physically
   possible, per above) at any time, for any reason the government deems
   necessary, it makes a sizable business case *for* traceable electronic
   cash.  This is probably the place to put the lever on the business
   community.

It might be, but remember that in making the case to business, the
financial privacy, such as it exists today, is _not_ "at any time, for
any reason".  It might be in the future, but then you're making a
perceived-weaker argument.

   Non-recorded transactions exist already. It's keeping them from
   dissapearing that we're really talking about here.

The number of non-recorded transactions, however, is dropping.  The
largest class, cash, got some reporting requirements clamped on it
recently.  We are talking about both ensuring that the current
non-recorded transactions stay that way and allowing for non-recorded
electronic transactions in the future.

   It might be the threat of
   international deployment and regulatory arbitrage which brings them around,
   and fires up the lobbying apparatus on our side of the issue.  

With that in mind, shouldn't you have your first conference in London,
invite a bunch of US bankers, and raise the issue explicitly?  As soon
as you can get different countries competing for revenue, you're more
than halfway home.

   On the other hand if those reporting
   requirements are frictionless, they don't *need* to fight it, do they...

Nope.  And remember, the divide-and-conquer is likely already
starting.  The first bank to provide FINCEN with a live transaction
feed will likely see some regulatory hurdles fall, no?

Eric