From: szabo@netcom.com (Nick Szabo)
Date: Wed, 25 Oct 95 18:15:15 PDT
To: dnew@sgf.fv.com (Darren New)
Subject: Re: DigiCash
In-Reply-To: <Pine.3.89.9510240909.C1481-0100000@sgf.fv.com>
Message-ID: <199510260038.RAA21478@netcom.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain



Darren New:
> If I give you a dollar for an online newspaper and the 
> newspaper never gets to me, or I give you $50 for a textbook and the 
> textbook never shows up in the mail weeks later, who do I go to to get my 
> money back?

This is a bad-case scenario, since it involves long delay and
delivery of goods that, unlike information, have a nontrivial
marginal cost to the merchant.  These both give the merchant
incentive to skip the delivery step.  For this kind of business, 
there are several possibilities, none of which  is mature enough
to have actually been deployed yet (which is why ecash is currently 
aimed at small, immediately delivered goods and services).

* Escrow services, which take responsibility for delivery each
way (and develop a public reputation for reliably doing this).
This has the value that it still allows the parties to be mutually
anonymous (although additional tools are needed to actually
have strongly anonymous connections, the payment/delivery protocol 
doesn't preclude it).
* Ripped bill protocols might be able to substitute for escrows.
(these are quite esoteric, but can again be hidden behind a nice
metaphor).
* Deal only with a jurisdictionally reachable merchant and hope the
law is on your side (often not an available solution on the global 
Internet, but usually assumed by identified payment schemes, so
it's a reasonable fallback from that point of view).

For smaller transactions with rapid delivery times, complaining 
loudly and publicly on Usenet will soon put the business out of it.
Receipts will give such complaints more credibility, and will also
allow the clearing agent to credibly get involved.  (Obviously
in these cases anonymity is lost for a particular transaction,
but unlinkability with one's unchallenged transactions remains).
Finally, in a few markets the value add of confidentiality is enough 
to outweigh the risks for even large transactions.

Nick Szabo				szabo@netcom.com