1995-01-02 - Re: Anonymous payment scheme

Header Data

From: Mark Terka <werewolf@io.org>
To: Samuel Kaplin <skaplin@skypoint.com>
Message Hash: 0df66a5c3d4088b3dccc9ddc8447636f338cb0692e09cf6fd65d53191f462c68
Message ID: <Pine.BSI.3.91.950102041835.6592B-100000@wink.io.org>
Reply To: <qbx1lKjqRC$2075yn@skypoint.com>
UTC Datetime: 1995-01-02 09:46:07 UTC
Raw Date: Mon, 2 Jan 95 01:46:07 PST

Raw message

From: Mark Terka <werewolf@io.org>
Date: Mon, 2 Jan 95 01:46:07 PST
To: Samuel Kaplin <skaplin@skypoint.com>
Subject: Re: Anonymous payment scheme
In-Reply-To: <qbx1lKjqRC$2075yn@skypoint.com>
Message-ID: <Pine.BSI.3.91.950102041835.6592B-100000@wink.io.org>
MIME-Version: 1.0
Content-Type: text/plain

On Mon, 2 Jan 1995, Samuel Kaplin wrote:

> This idea just popped into my head, just as I was about to fall asleep.
> Being the idiot that I am, I had to get up to write it down. This idea has

....best time for ideas....between sleep and wakefulness.....:>

> Let's suppose myself and 10,000 of my closest friends form the First
> National Cypherpunk Bank and Trust. We go through all of the hassles in
> order to be the issuer of a Master Card or Visa. Now instead of having a
> credit line, it is set up as a debit card. The card's limit is how ever

Why jump through the hoops Visa or M/C would send you through if its a DEBIT
card??? You don't need them for something like that, simply the 
acceptance of the Internet community, that credits from another user 
drawn on the Cypherpunk Bank would be accepted.....which leads to your next

> much you have prepaid the bank in advance. Once you have hit your prepaid
> amount the card no longer gets approved. Now because everything is prepaid,
> there is no risk to me, so I'll put any name you want on the card. The
> questions I have are:

Sounds good.....and practical. ANY citizen in the world deposits with your
"Bank" legal tender in an account. US dollars would likely fit the bill as
they are pretty well accepted from North America to North Korea (black market
maybe.....but still accepted :>).

Then, when someone presents to your Bank proof of purchase/transfer etc
(a digitally signed message with your PGP Key perhaps?) then you transfer
a dollar figure from one account to another ...... assuming both purchaser
and seller have accounts atthe Cypherpunk Bank.

If the purchaser does.....but the SELLER doesn't, then (if so desired by
the seller) you have three choices:

   1) open an account, f/o (favour of.....sorry....I'm a Banker so pardon
      my lapsing now and agin into our jargon) of the seller, transferring
      in the requisite amount of US $ for the seller's later use (ie...
      then HE goes out and buys something over the 'Net).

   2) wire to the sellers account (overseas?) through a correspondent bank
      to the sellers bank where he has an account the US $.

   3) mail a draft in the appropriate US $ to the seller's designated address
      .....either snail mail or Fed Express, or whatever courier is selected.

> Is this legal in the U.S.?

Dunno....I'm in Canada. But I know that U.S. banking arrangements are
medieaval so I doubt it.

> If so, is anyone doing it?

See above :>

> If it's not legal in the U.S., is it legal anyplace else.

Sure.....Canada right now has a fully operational debit card system in place.
You go to a supplier to make a purchase and they run your bank card through
a machine just like your credit card for the purchase. Difference being, $$$
from your chequing account are debited, as opposed to to the line of credit
on your credit card being debited. You have dollars in the bank 
sufficient for the purchase, then no problem.

> If this is a gray area, why wouldn't this scheme work?

Its a perfectly workable scheme....IF...the BANK in question is trusted as
the medium of exchange. Thats the ONLY thing stopping its implementation,
namely having a trusted institution to handle the deposits/transfers.

Lets put it this way, I think the scheme would have ALOT more acceptance if
you as a seller presented your invoice for settlement at Chase Manhattan or
Bank of Montreal as opposed to the Cypherpunk Bank :>. 

> If this scheme was set up, it appears to me that the infrastructure for
> anonymous payments/netcash is already in place. Of course the issuer would

Sure it is....co-ordinating the infastructure would be interesting, but 
doable. The main thing is....is it economically viable for the institution
in question? Would there be enough commerce doneover the 'Net to justify
implementation of the supporting infrastructure (ie Internet hook-up's,
training of staff, etc).

Once there exists a demand for the service, coupled with a reasonable rate
of return to the Bank for provision of the service, then you'll see ALL
the top 20 banks in the world do it.

Until then, nobody will do it simply because the Cypherpunks think it is
a good idea. :>

<Sorry guys...I answered this online so no PGP sig this time.....>

Mark Terka     | werewolf@io.org             | public key (werewolf) by
Toronto,Canada | dg507@cleveland.freenet.edu | public key server or request