From: an407769@anon.penet.fi (jerry the golden retriever)
Date: Tue, 14 Nov 1995 20:29:33 +0800
To: cypherpunks@toad.com
Subject: ecash in pcweek
Message-ID: <9511122125.AA09326@anon.penet.fi>
MIME-Version: 1.0
Content-Type: text/plain



Opinion: Digital Cash Takes Step Toward Reality

>From PC Week for November 13, 1995 by Bill Machrone

Some people are always looking for new ways to make money. Other people
are always looking for new ways to spend money. They're running headlong
into one another on the Internet. Most of the digital cash and
electronic commerce schemes out there are still in their infancy, but
many of them are predicated on making a transaction fee off the people
who want to buy things in this new, electronic medium.

Making money from people spending money is hardly a shocking
proposition. But all the approaches that call themselves any kind of
"cash" are stretching the definition. To the best of my knowledge, cash
is the thing you can spend without having it costing you a cent, so to
speak.

The only way you'll see digital cash without transaction costs is if a
powerful but paternalistic ruling body gets into the business. That
doesn't mean if Microsoft builds it into the operating system, but
rather if the government gets involved and makes some form of electronic
money transfer legal tender, and therefore immune to fiscal
encumbrances. This isn't remotely close to happening, so don't get your
hopes up.

Meanwhile, things are getting pretty interesting in the real world of
digital-cash transactions. Digicash (www.digicash.com) has partnered
with the Mark Twain Bank to offer online shoppers a debit card-like "E-
cash" account that they can fill with real money and then use either in
normal purchases or microtransactions from vendors who accept E-cash.
You pay a combination of setup fees, monthly fees, and money-movement
fees, but the overall goal is to make the transactions painless,
transparent, and anonymous. The anonymity factor is a key component of
real cash and a design requirement of Digicash. It's extremely unlikely
that anyone could spoof the system and spend your money; yet you can re-
create your E-cash on your own machine if you have a disk crash.

Portland Software (www.portsoft.com) has also attacked the issue,
putting itself in the position of vendors who want to sell things
electronically. Its approach, called ZipLock, is suited to selling
software products on the spot but is also suitable for published
content, artistic images, and fonts. It approves your credit and goes
through an unlocking/decrypting routine on the spot. The ZipLock
transaction is much more like a normal credit-card transaction and in
fact uses the communications infrastructure built by a major credit-card
clearinghouse. In effect, it transforms your PC into a point-of-sale
terminal, where all you have to do is enter your credit-card number. If
you're ordering software or other electronically deliverable goods,
they're transmitted and decrypted on the spot. Other merchandise is
delivered via the usual direct-marketing vehicles. Fees are paid by the
merchant, which means that the transaction cost is built into the price.

Although E-cash and ZipLock are hardly the only two electronic-payment
schemes out there, their differences are instructive. Each appears to
have a significant, valid role in building consumer confidence in online
commerce.

Bill Machrone is vice president of technology for Ziff-Davis Publishing
Co. He can be reached at wmachrone (MCI Mail) or 72241,15 (CompuServe).
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