From: Robert Hettinga <rah@shipwright.com>
Date: Thu, 17 Dec 1998 03:22:00 +0800
To: <cypherpunks@Algebra.COM>
Subject: Re: DigiCash Update, part II
In-Reply-To: <004d01be28a9$64561620$0401010a@luckylaptop.c2.net>
Message-ID: <v04020a21b29d677d3898@[139.167.130.248]>
MIME-Version: 1.0
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At 11:06 PM -0500 on 12/15/98, Lucky Green wrote:


> This is one of the many reasons our group has the support of several
> of the larger banks in the world, banking software/EDI vendors, credit
> card clearing houses, personal financial/cryptography software
> vendors, global media corporations, and other players that are
> required to make eCash and other DigiCash IP derived technologies
> ubiquitous.

Kewl!


So... Lucky?  Who do you have?

I mean, it looks like you're announcing that you have the only people of any
financial substance who really care about *using* this technology, much less
investing in it, and they're all lined up for you to pull the trigger and bag
DigiCash.

- From here on out, it's simple, yes? Just announce who they are, publically,
and make your tender offer.

You do that, Scott sees the writing on the wall that he can't sell to anyone
else who's not already on your list of investors, and surrenders, Dorothy.
Gotta know when to fold 'em, and all that.


So, again, Lucky, care to tell us who's backing you up?

After all, *that's* how they do hostile takeovers in *real* life. Just like
secret crypto protocols, there are no anonymous investors on the street. That
stuff's for financial fairy tales.


Well, okay, to be fair, there *is* another way to do this, too, since DigiCash
is a private company currently in the lap of a bankruptcy trustee. It's pretty
simple, really. Just buy up the outstanding debt that caused DigiCash to file
Chapter 11 in the first place and hold out until Scott & Co. forks over the
company. I'm sure that it's less than $10 million. Maybe it's way less, and, I
bet the number's completely knowable, or will be soon, since the legal
documents on the DigiCash bankrupcy are completely public information.
Whatever the amount of the nut is, it's easily chump change to a bunch players
as august as yours must be.

Presto-chango, you get the same result without making the headlines.

Nonetheless, your investors would still have to be public, yes? That's the
consequence of buying assets out of Chapter 11.

But, like the sign says, "If you lived here you'd be home now." If you *could*
do one or the other of the above, you'd have done it already. Shades of Enrico
Fermi, who noted that if there were extraterrestrials within
geologically-attainable timescales of us, they'd *be* here already.


To be honest, I don't really give a hoot *who* owns the blind signature patent
as long as they license the damn thing so the rest of the world can get on
with using it.  However, DigiCash, at the moment, has a nut to crack in the
millions of dollars. The people holding those um, nuts, don't care who pays
them as long as they get their money back. After that's taken care of, all of
us can go play moneypunks to our hearts' content. I'm pretty sure that Scott
Loftesness, after being a permanent fixture on all of the lists I've ever
started :-), knows *exactly* what to do with the patents once the bills are
paid. Or at least what *I* think he should do. :-).


Frankly, Lucky, just promising us, "HAL"-like, that "something wonderful's
gonna happen", that you have, like Nixon, "a secret plan to end the war" just
doesn't cut it anymore. Been there, done that, that dog don't hunt, etc.

Just about every time I turn around, I get private mail from some cypherpunk
or other with a secret plan to take over DigiCash and free the blind signature
patent for us all, that they're really just a stalking horse for some really
huge and famous investor, but they can't tell me who, just now. It's getting
tiring, frankly, and, like always, money talks, and so forth.

The cost of anything is the foregone alternative, including reputation
capital.


So, I guess it's time I anted up some of what little I have myself, :-), and
called your hand, here, Lucky. First, *my* cards...

After my recent trip to London, I have enough actual cash, promised from about
3 sources, and maybe from one or two more, to form a small syndicate which can
pay the present value, at 15% and an 8 year remaining life on the blind
signature patent, on about $1-2 million in equivalent patent income. I think I
can get more people and money signed on over the next few months, but if you
do the math, the amount I'm talking about is not much actual cash, paid up
front. Enough for a nice house in some places, but that's about it. However it
may be that it is, quite literally, a cash bird in the hand vs. two future
revenue birds in the bush, frankly, Scott hasn't gotten that close to the end
of his rope, just yet. He's already turned down a cash offer for more than
that that I know of, whether you and I are talking about the same rejected
offer or not.

But the amount I'm calculating above is still pretty much fair market on
what's left of the residual financial cryptography *research* value on the
blind signature patent, and that much money could, just barely, keep the
patents from being buried with DigiCash if it ever came to that. That is,
nobody knows how to actually *make* money on these patents. (Or DigiCash would
have done it already and/or somebody would have coughed up the money to buy
DigiCash out of hock by now otherwise.) But a lot of us have research *ideas*
which *might* make money, and which need to be tested in the marketplace to
see if they actually work, the payments business being what it is. So, a
million or two is about what I would guess the *entire* market is willing to
pay for the privilege of *experimenting* with blind signatures over the
remaning 8-year life of the patent. That comes to up-front, present value,
"bird in the hand", cash in the low to mid six figures, depending on how much
you think the patents can earn out in research payments.

I haven't announced the folks who've verbally committed to fund this syndicate
yet. But, I'm changing that.

I'm asking the person who's volunteering to floor-manage the legal part of the
syndicate to draw up an offering memorandum, or whatever, and when these
people who have made verbal offers have actually signed something legally
binding, I'll announce who they are publically on the Philodox website.


So, that's what I have, Lucky. My game plan is to form a small syndicate to
buy the blind signature patent, and a few patents, from DigiCash, or what's
left of it, for the estimated research revenue they may bring, but, only
*after* Scott has exhausted any ability he has to get any revenue from other
sources.


Now for *your* cards: It sounds like you're promising your investors something
significantly more than the present value of the returns on research
royalties, and I wish you luck. But it seems to me that you don't have to be
so skulduggerous, if you've really got what you claim you have in your quote
above.

And, so, Lucky, whatcha got, and, more to the point, who do ya have? Have they
signed memoranda of understanding, if not actual legal committments of
capital? Have you formed a corporation to transfer the patents to, or are you
going to purchase DigiCash, Inc., with all it's potential domestic and foriegn
liability? And so on.

Details, please.


Cheers,
Robert Hettinga


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-----------------
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'