From: cman@communities.com (Douglas Barnes)
Date: Sun, 22 Oct 95 10:36:25 PDT
To: cypherpunks@toad.com
Subject: Mondex vs. Digicash (was: Godzilla vs. Mothra)
Message-ID: <v02120d02acb032401526@[199.2.22.120]>
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I disagree with Michael's assertion that Mondex will necessarily
win over Digicash. Here's why:

o The availability of Digicash in the US, for real, with spender
  anonymity, will be announced very soon; reporter activity on
  this subject is consistent with an embargoed press release for
  Monday or Tuesday. From posts to the list it's clear that a fully
  working system, ready for customers, will be announced.

o When doing market research on this subject, it became clear that
  low-value payments are largely going to be used for impulse
  purchases. If the Digicash system allows people to set up their
  accounts without getting out of their chairs (which I suspect will
  be the case, if they do it right), it will initially get more
  adopters.

o One or both systems could be found to have serious security problems;
  who knows what the outcome of their discovery & exploitation would be?
  I know at least one group of people who believe they have a good line
  on a serious security problem in Mondex.

o Even if the Mondex hardware were given away for free, think how
  much fun it is for the average user to add a new piece of hardware
  to their machines... ever install a sound card and CD-ROM drive on
  a PC? I remember reading something like 20% of all "multimedia"
  kits were returned, largely due to user install problems. If there
  is a competing method that costs the same and _doesn't_ require
  the hardware, people will tend go with this.

o In my conversations with state and federal regulators, it is clear
  that it _is_ possible to issue spender-anonymous e-cash. If you ask
  them, "Hey, can I create fully anonymous digital cash?", they go
  apeshit, but if you explain that the money uses existing (auditable)
  channels going in, and existing (auditable) channels going out, and
  that only spenders are anonymous, they relax considerably. They may
  change their minds later, but we're about to get an existence proof.

o It's not clear that _either_ system is going to win completely in
  the next 10+ years. Although there's been considerable shakeout in
  the last ten years, there is still a huge variety of non-electronic
  payment methods -- how can you be so sure that Mondex will win over
  Digicash, and that they won't co-exist like, say, money orders,
  currency and cashier's checks (three instruments with both similar
  and dissimilar attirbutes)?

Douglas Barnes
Electric Communities