From: rah@shipwright.com (Robert Hettinga)
Date: Wed, 25 Jan 95 06:24:53 PST
To: cypherpunks@toad.com
Subject: e$: Guilds, Friedman, and Web-servers for mutual funds
Message-ID: <v01510101ab4bb4545cd9@[199.0.65.105]>
MIME-Version: 1.0
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At 11:00 PM 1/24/95, Don Doumakes wrote:
>But I don't buy your other implication, that it is a Good Thing to
>unleash the unlicensed.

'Scuse me while I pound on scripture a bit.

I tend to concur with the esteemed Milton Friedman, who said, in summary,
that the primary benefits of any regulation, licensing regulation in
particular, accrue to the licensee. The people left standing after
regulation prices their competition out of the market tend to do very well
indeed.

There is a point here for cryptoanarchy, and I'll get to it in a minute.

Let's take the most hardened example of your point, and apply the logic of
Mr. Friedman, through the twisted filter of my logical processes, of
course. The poster child for this argument is of course, medicine. If, in
the late 19th century, the Food and Drug laws weren't passed, and the
guildification of the medical business didn't occur, what would medicine
look like today? I believe that the same scientific rigor would be applied
to the technology of medicine as has been done already. Too much money to
be made here finding real cures. Mobs would lynch/sue people who were
proven frauds by science and exposed as such in the press. So much for
licencing improving the "quality of practitioners".  I expect that medicine
would be less like Magick to us mere mundanes, and the apprentice/arcana
system that prevails may be in fact more subject to the laws of supply and
demand. In addition, if there weren't so many "rules" in the medical
business, the medical insurance business wouldn't be so non-competitive,
besides the inherent silliness of "insuring" a basic service like medicine.
Imagnine food insurance, or car repair insurance, patently uneconomic
"extended warrantees" notwithstanding.

OK. So what does this have to do with crypto. First, the whole
cryptoanarchic thing, which I include in this argument by fiat by pointing
to the Cyphernomicon: in this case, cryptodocs and their "Blade Runners"
(see Burroughs' book with the original title) will be able to practice
their trades with impunity, using regulatory arbitrage and outright
anonymity to defend themselves, relying on their success records with other
patients as their credentials. Second, instant settlement and electronic
commerce. With these tools you can buy any software (Video, Sound, Text,
Data) and their appropriate processing mechanisms from anywhere. You can
even buy "wetware" i.e. the time of an actual doc, and settle the trade
instantly.

Speaking of settling trades with guilds, I had something beat me over the
head while watching CSPAN's nth replay of October's "Networked Economy"
conference. (Tape number 48765, $35, CSPAN, 202-737-3220) As much of this
stuff as I try to read or see, I hadn't seen this before until about three
weeks ago. A comment made on a panel discussion by Scott Cook, the
president of Intuit (Quicken), and erst-while-Mrs. Bingamon's-not-looking
Vice President of Electronic Commerce at Microsoft, really got my
attention. He was on this panel with the president of Mosaic (now
Netscape), and the Prince of Darkness Himself (I think this was still
before the MS/Intuit merger announcement), among others.

To wit,

You can sell anything digitable on the net.

Now we know about doctors ;-), movies, songs, information feeds,
jokes-of-the-day, and software, but how about this: Financial Services.

Financial services? Sure, Mr. Cook says.  All we need is a little
"mainframe peristroika". Securities are mostly traded on a book-entry
basis, that is, in IBM mainframe(still!) computer accounting systems . The
back offices are all automated. So what about the people at the front of
the house? When you call up Fidelity and talk to a phone rep, what are you
doing? You're talking to someone on the phone who's punching what you want
into a computer for you.  You can do that yourself on any good
World-Wide-Web browser, all of which are forms-capable, and even secure,
now.

I've been doing consulting jobs with Fidelity off and on for a quite a few
years now.  I thought I knew where the people who would say "yes" to the
idea of web-publishing net-able information were. The same bunch had just
posted an opening for someone to go swing deals with the online services
(AOL, Compu$erve). So, I figure, how much could it possibly cost to hang a
web-server on the net with mutual fund blurbage, perspectuses, etc., on it.
A whole bunch less than it would take to negotiate and develop a
Fidelity-zone in AOL, yes?

Obviously, the next step would be to put up fund quotes, and then, when
secure-HTML and digital signatures work for real, the ability for people to
move their own money around by themselves.  They can do that now with a PIN
number and Fidelity's voice response system, so why not on a Web server
with NSA-proof security?

Someday, there may even be digital cash, or a reincarnated bearer security
business.  Chaum and others talk about anonymous voting schemes which make
great substrates for anonymous internet securities markets where anyone can
trade their securities without a stockbroker... Sound familiar, anyone?
Perry and Eric and I beat this to death six months ago or so. I took the
better part of the beating, if I remember...

So anyway, I went on a hunt for the bunch which was going to build
Fidelity's web-server. I found a huge mess of domain-name registrations
belonging to Fidelity. I found out that they have a T1 hooked up to
NearNet, that they had shown several people I know the pages they had for
Web server they're building, and it looks like they're bringing it online
real soon now, like a few weeks. Evidently, they've been there, done that,
or they're going to, anyway. Sigh.

Another new business idea bites the dust. Undaunted, maybe I should go to
Franklin/Templeton (Bahamas, anyone?), or Vanguard, or Pioneer, or Scudder,
and see if they're interested in keeping up with the Johnsons. :-).  Or
maybe not...

Cheers,
Bob Hettinga



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Robert Hettinga  (rah@shipwright.com) "There is no difference between someone
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