From: cman@communities.com (Douglas Barnes)
Date: Sun, 8 Oct 95 17:52:22 PDT
To: cypherpunks@toad.com
Subject: Re: cypherpunks digicash bank?
Message-ID: <v02120d02ac9e26d1b4f9@[199.2.22.120]>
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>Douglas Barnes <cman@communities.com> writes on cypherpunks:
>> I'm afraid you may have somewhat misunderstood the motivation behind
>> the Identity Agnostic paper. In no way is it intended as a way of
>> not facing the music wrt regulators in the country(s) where such an
>> institution has offices. The IA approach is intended as an possible
>> alternative for an institution that might otherwise license from
>> Chaum.
>
>So it's intended for avoiding patent issues only?

Yes, and not really so much because of price. I'm not the only person
who has found David hard to work with -- he has apparently decided to only
license "respectable" organizations that will not, in his eyes, make his
technology look "bad". I can tell you from painful, expensive experience
that a band of cypherpunks does not qualify as "respectable" in his eyes.
Alas for David, his technology is fundamentally cypherpunk -- there
is little motivation for a "respectable" institution to be the first
penguin on this stuff.

So, if you're a bank, licensing from David is cheap and relatively
painless, but there are powerful disincentives to deployment. Also,
assessing demand is problematic. For a small cypherpunk startup, the
demand is obvious, there are powerful incentives, but the cost of
licensing and David's reluctance to license a slightly wild-eyed
startup act as a barrier. There is certainly a middle ground, but
nobody seems to be stepping forward.

My understanding was that we were exploring the idea of a much smaller,
non-bank organization going into the digital cash business. Note that
while this is theoretically interesting to me, the fact that I'm talking
openly about this stuff is largely due to my decision _not_ to get
personally involved in this kind of venture except as a sidelines
cheerleader, or as an absolute last resort if nobody deploys.

Given that we're talking about a small, cypherpunk-motivated NBFI, I
think the IA stuff will work fine. It should be presented to the
regulators as if it were a fully-blinded system, since there won't
be any guarantee that blinding isn't occurring.

You raise the issue of using software not supplied by the "bank" --
if we're talking about a c'punks project, I'd assume you'd make the
full source code of the system available. The change of a client
from non-blinding to blinding would be about two lines of code.

You've also discussed the issue of commercial uptake -- as I see
it, one of the primary goals of a project like this would be to
provide incentive to deploy to the allegedly numerous Chaum licensees
that have not implemented a damned thing so far. And, with a nice
interface -- or at least the sort of generic GUI interface you can
get with Java -- it might do surprisingly well on its own merits.
Realistically, as soon as someone large comes along, you're likely
to get squashed. But it would be an interesting ride, and you might
just end up getting bought out instead of squashed.

As for a limit on transaction size, my understanding is that Mondex
is using $300 initially as a transaction limit. This certainly seems
reasonable, and it skates in underneath a lot of magic numbers.