From: Robert Hettinga <rah@shipwright.com>
Date: Tue, 6 May 1997 08:28:29 +0800
To: cypherpunks@cyberpass.net
Subject: Re: Bypassing the Digicash Patents
In-Reply-To: <199705041819.LAA00411@crypt.hfinney.com>
Message-ID: <v0302096eaf9414e15d5a@[139.167.130.246]>
MIME-Version: 1.0
Content-Type: text/plain


At 2:19 pm -0400 on 5/4/97, Hal Finney wrote:

> It is hard to understand why a system where it is impossible to track
> payments (Chaumian anonymity) is cheaper than one where it is possible
> to do so, but we choose not to.  If avoiding tracking payments is cheaper
> than tracking them, why wouldn't participants just not bother to track
> them even when they theoretically could?

I believe Greg Broiles and others have answered this sufficiently for now.

I'll vamp a little by saying, of course, that there's no way to tell until
the two methods of digital cash are actually measured. However, I'd, um,
bank, on the Chaumian variety, if the patents were ever unencumbered by
Digicash's unfortunate business model.

I'll also comment on the "information exaust" issue by saying that I agree
with Hal's hypothesis that one of the reasons that the information is there
is because of the non-repudiation requirements of government enforcement.
It behooves marketers to then leverage the cost distortion of the finance
department's data collection engine by adding in, at the margin, a little
additional data for processing. On the net, there will be no requirement
for this. The only people who need to keep books will be the meatspace
net-affiliated banks. The only books kept in putting money on the net or
taking it off, would be an aggregate number at the trustee, and the
withdrawls and deposits of people taking money on and off the net from
their respective personal and business bank accounts. The underwriter and
every transaction on the net, particularly those for information
(everything from music to surgery), do not need any transaction information
storage. A lot of incentive to keep money on the net, over time. Also, the
smaller the transaction size, the more important freedom from transaction
storage becomes. Again, the idea of micromoney "mitochondria", a
micropayment-settlement system for various internet resources, like SMTP,
or even bandwidth, comes to mind.


So, Tim and Ray also have right idea when they talk about how most small
businesses don't need all the information they're forced to collect by the
government for one reason or another. And, again, I claim that the net and
Moore's law creates *dis*economies of scale, probably to the microbusiness,
bot-sized, level, someday. And, the smaller the business entity, the less
information it really needs to operate. As you subdivide a market, the more
you trend towards perfect competition. (Of course, I mean "perfect
competition" in the commodity-price use of the phrase, where one soybean is
as good as any other. Fungible, in other words.) Branded soybeans are an
oxymoron, which is why you can buy and sell futures in them.


Finally, with the most abject apologies to the superior (with a brick, sir)
financial knowlege of Mr. Chrispin, the very best piece of information
about an efficient market for something is its most recent price.

No, I don't think this represents the end of the "marketing concept" as a
business model, but certainly when transaction cycles can be measured in
the microsecond range, a swarm of autonomous entities will probably do a
better job of fulfilling consumer wants than a multi-month top-down market
analysis by an MBA.

Cheers,
Bob Hettinga

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