From: Robert Hettinga <rah@shipwright.com>
Date: Tue, 7 Jul 1998 19:16:11 -0700 (PDT)
To: John R Levine <reinhold@world.std.com>
Subject: Re: IP: "CyberCash can't oust credit cards"
In-Reply-To: <v03130308b1c7c7a655e2@[24.128.118.45]>
Message-ID: <v04011731b1c8810ffc50@[139.167.130.246]>
MIME-Version: 1.0
Content-Type: text/plain


At 2:19 PM -0400 on 7/7/98, John R Levine wrote:


> CyberCash's entire business model for e-cash is wrong.  They ask for a 4%
> slice of each transaction, which is absurd.  How much do issuers of real cash
> ask per transaction?  Zero, of course.
>
> As I've mentioned before, the way you make money with money is seignorage,
> that is you print it and make your profit on the float and on coins that are
> never redeemed.  Works great for travellers checks.  I suspect that Bob H.
> would agree.

Pretty much. Actually, the model I like is one where transactions on the
net are free, but putting money *on* the net costs some smidge of money,
just like buying traveller's checks cost money, something like one or two
percent, I think.

You can't get any network effects, oddly enough, if you charge to take it
*off* the net, because merchants have to *pay* to participate. It would be
as if you had to pay to redeem a traveller's check. If that were the case
nobody would accept them. Pretty serious seignorage loss that would cause.
:-).

Again, I've a white paper on this. If anyone's interested, I'll send it to
them offline.  And, again, the dbs list folks have already seen it. :-).

Speaking of gratuitous plugs ;-), there are only two more days until I
close the subscription book on the symposium, and I still have some room.
See <http://www.philodox.com/symposiuminfo.html> and register now, if you
want to go.

Cheers,
Bob
-----------------
Robert A. Hettinga <mailto: rah@philodox.com>
Philodox Financial Technology Evangelism <http://www.philodox.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
The Philodox Symposium on Digital Bearer Transaction Settlement
  July 23-24, 1998: <http://www.philodox.com/symposiuminfo.html>