From: "William H. Geiger III" <whgiii@invweb.net>
Date: Thu, 5 Mar 1998 00:34:01 -0800 (PST)
To: Bill Stewart <bill.stewart@pobox.com>
Subject: Re: Digital Bearer Settlement
In-Reply-To: <3.0.5.32.19980304152937.007e0c20@popd.ix.netcom.com>
Message-ID: <199803050833.DAA19434@users.invweb.net>
MIME-Version: 1.0
Content-Type: text/plain


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In <3.0.5.32.19980304152937.007e0c20@popd.ix.netcom.com>, on 03/04/98 
   at 03:29 PM, Bill Stewart <bill.stewart@pobox.com> said:

>Nice article, and I'll have to see if I can get Ian
>to talk about HINDE for this month's Bay Area Cypherpunks.

>One thing I noticed while reading it, though, is that you still have "and
>then you go to jail" at the end of some transaction failure branches,
>though most of the failure branches end with "Nothing happens". While
>you're not doing book entry at every step,
>bearer instruments still depend on the maker honoring them,
>whether it's exchanging the bank note for gold pieces
>or trading the digicash bits for Federal Reserve Notes --
>"then the banker goes to jail" can still happen,
>and a digicash world may not have as many S&L Bailout
>political favors as the Reagan Years provided.
>Also, there are the transactions where you trade
>digicash for goods&services, and there's still the problem
>of making sure the goods&services got delivered,
>making sure the payment got delivered, and dealing with
>poor quality products.  For purely digital products,
>like consulting hours, movies, and microcode, there are
>protocols that can take care of the exchange,
>but for goods&services involving real stuff,
>like pizza delivery, there's still an element of
>trust required.

Well there are a couple of different approaches depending on the
environment of the transaction.

If it is what I call a "cash and carry" environment where you, the
merchant, and the product are all physically in the same place then the
transaction can take place as any cash transaction would. the merchant
gives you the product, you give him the e-cash bits and the transaction is
done.

If the environment is a "mailorder" environmet where you and the merchant
are in remote locations then there are two different approaches:

- -- COD:

  You place the order, the merchant delivers it. At the time of delivery
you pay for the product.

- -- Escrow:

   You place the order. After placing the order you transfer your e-cash
bits into an escrow account. When the merchant has verification that the
bits are in escrow he ships the product. Upon recept of the product you
release the funds from the escrow account and the merchant is paid.

    Now with escrow based system you can be more creative with the product
insurance end of things. You an the merchant may agree that there will be
a 30 day trial period where the funds will stay in escrow and during that
period you can judge the quality of the product. If a complaint is filed
with the escrow agent within the 30 day period then you would have X
number of days to return the product and get your money back. Merchants
could set up warranty insurance where x% of sales are kept in an escrow
account to cover returns/warranties. All kinds of fun stuff could be done.

- -- 
- ---------------------------------------------------------------
William H. Geiger III  http://users.invweb.net/~whgiii
Geiger Consulting    Cooking With Warp 4.0

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