From: Tim May <tcmay@got.net>
Date: Mon, 5 May 1997 05:13:47 +0800
To: Hal Finney <cypherpunks@cyberpass.net
Subject: Re: Bypassing the Digicash Patents
In-Reply-To: <199705041819.LAA00411@crypt.hfinney.com>
Message-ID: <v03007801af92b4de05b2@[207.167.93.63]>
MIME-Version: 1.0
Content-Type: text/plain


At 10:19 AM -0800 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'll give a simple example, related to cash vs. other payment mechanism in
ordinary store transactions. The key is that traceable, identifiable
payments offer more opportunities for repudiation of debts, for increased
paperwork to handle such disputes, etc.

Concert tickets, at least here in California at BASS and similar outlets,
is a "cash and carry" proposition...no credit cards accepted. Why?
According to the clerks I've talked to over the years, cash and carry means
any cancellations of concerts forces the purchaser to arrange for a refund
either directly through the concert promoter or by arrangement at the
ticket office.

With repudiable (repudiatable?) payment systems, those involving promises
to pay or credit arrangements, one can "cancel a check" or notify VISA that
a charge is being disputed. These hassles ripple back through the system.

Thus, an "anonymous" (more precisely, a nonrepudiatable) transfer system is
cheaper for the seller.

(And such cash systems are almost certainly cheaper for merchants for other
types of transactions. Getting the money immediately has to be at least as
cheap as having checks, credit cards, tabs, etc. Obviously.)

Chaumian anonymity acts like this cash and carry system.

Also, from the merchant's point of view, having a system "where it is possible
to do so, but we choose not to" opens up the possibility of sting
operations, with a traceable records. I imagine most drug sellers would
prefer a system where no traceability can ever be turned on.

Of course the sellers and buyers may have differing judgments on the costs
and values of anonymity, depending on various factors.

--Tim May

Having said all this, I don't buy Bob Hettinga's "leap of faith" that
anonymous bearer instruments (or whatever he calls his geodesic things)
will automatically and obviously be cheaper than less anonymous
alternatives. For some things they will be, for others things they won't.

--Tim May


There's something wrong when I'm a felon under an increasing number of laws.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA  | knowledge, reputations, information markets,
Higher Power: 2^1398269     | black markets, collapse of governments.
"National borders aren't even speed bumps on the information superhighway."