From: tcmay@netcom.com (Timothy C. May)
Subject: Re: In Search of Genuine DigiCash
To: mpd@netcom.com (Mike Duvos)
Date: Tue, 16 Aug 1994 11:32:49 -0700 (PDT)
Cc: rah@shipwright.com, cypherpunks@toad.com

In this post I'll:

* agree with Mike Duvos

* respond to Bob Hettinga's comments about my comments

* discuss reasons why digital cash is a tough nut to crack

and

* compare Cypherpunks to the British Interplanetary Society and the
German and American rocketry enthusiasts of the 1930s


Mike Duvos writes:

> Ordinary counterfeiting is analog.  Close inspection will always
> reveal differences which can be used to distinguish fake money.
> 
> Counterfeit anonymous DigiCash, on the other hand, is
> indistinguishable from the real thing.  If a bank is signing
> blinded notes for customers and has underwritten to exchange for
> cash any note bearing a verifiable signature, a cracked signature
> algorithm is a very serious matter indeed.

Exactly, which is why digital cash has much promise--but also many
technical and regulatory pitfalls. If there was _ever_ a "don't try
this at home" crypto technology, it is this one.

(A "launch" of digital cash is a whole more involved, I think, than a
launch of credit cards, and it took much planning and deep pockets for
Bank of America to launch BankAmericard in the 60s.)

I won't quote Mike's wonderful scenario about ChemCash...the type of
scenario-planning we need more of.

The current technical state of the art in Chaumian digital cash is
murky, with new papers still coming out, resolving details or raising
new issues. It may be that a stable digital cash system is ready to
go, but I don't know. (The Crypto conference is coming up soon---we'll
hear more from those who attend.)

> The half-life of such an innovation could be practically forever,
> as long as the discoverer does not get greedy and his siphoning
> off of value remains hidden in the daily float.  By the time the
> bank realizes that there seems to be much more ecash in
> circulation than they have issued, the perpetrator is likely to
> be long gone and the bank is likely to be kaput.

Digital cash is a lot like those "prize contests" that people game
against, exploit loopholes in, find nonrandomness, etc. Contests which
were _expected_ to have a payout of $1M but actually had $30M worth of
claims. The courts don't look too kindly on contest runners who say
"We goofed...the contest is over."

A "digital run on digital money" would not be a pretty
sight...computers clogging the lines trying to cash out before the
bank shutters its doors.

I'm not saying this'll happen, just that much work is needed. And most
Cypherpunks are in a poor position to do the work. Digital cash isn't
likely to come out of our enthusiastic posts. (Not to sound negative,
but it just isn't. What may come is a cadre of people who gain enough
knowledge to hire themselves out to Chemical Bank or Marc Rich or the
Sultan of Brunei...who knows.)

Which brings me to Bob Hettinga and our conflicts in enthusiasm. I'll
make several points, briefly:

1. Yes, I despise cutesy terms like "e$." I didn't single out Bob for
this, as I'd forgotten who introduced it. We've a string of these
product names: DigiCash, CypherFranques, e-money, e-cash, NetCash,
DigiMarks, etc. All of these are *way premature*, in my opinion.

2. I'm not opposed to Bob's or anyone else's enthusiasm, I just don't
see the real problems to be overcome being overcome by hyping or by
calling conferences of bankers.

3. We've had a couple of experiments already. "HExMarks" was a digital
money scheme, with technical flaws, on the Extropians list, and there
were some comments--by Jeff Garland as I recall--that he was planning
to reintroduce it on a wider scale. And of course there was the "Magic
Money" scheme of Pr0duct Cypher, with efforts of others to use it
(recall the offer by Black Unicorn to redeem Magic Money/Tacky Tokens
for cans of soda?

(By the way, "Magic Money" and "Tacky Tokens" are nothing if not
cutesy, so do I object to their names? No way! The frivolity suggests
that the creators know that these are just early experiments, things
to play around with, early prototypes.) 

4. Enthusiasm is a fine thing. But the obstacles are not easy ones.
Several of our leading Cypherpunks spent a year trying to put a
digital bank together...reading the laws and rules on commercial paper
and that sort of stuff, talking to financial people, and working the
math out. They can comment here if they feel so inclined, but I won't
say more now.

And Chaum, the originator of many/most of the ideas, and no mean
cryptologist himself, has spent the past decade putting together his
system. Apparently he's spend at least several million on this.

(And don't forget the patent situation. Anyone entering the digital
cash arena is likely to face the usual challenges.)

In closing, I think digital cash will someday be very important. I
have my own ideas about where and how to first deploy it. 

If the enthusiastic proponents succeed, wonderful. But I've never been
a believer in the idea that it's all marketing, salesmanship. Bob
Hettinga and others may believe that digital cash is at the point
where what is needed is to persuade some bankers to fund work, through
a series of meetings, conferences, shmoozes, etc. I suspect not.

However, if this is indeed the correct path, at least partly, then Bob
really ought to think about becoming an employee of DigiCash, e.g.,
Marketing Manager.

(I do not mean this tongue-in-cheek, as a put-down. I mean this
seriously, and in a helpful tone. Really. The core technology, such as
it is, resides in Chaum's group, with perhaps some others also having
core knowledge that are not part of Chaum's group...folks like Brands,
Boz, the Pfaltzmanns, etc. If the big hurdle is now _selling_ the
system, and Bob wants to do it, then it's pretty clear that he should
hop on a plane to Amsterdam and spend some time with Chaum and his
staff. This would be much more effective than trying to get us--the
folks on this list--enthusiastic enough to "do something," which ain't
gonna happen, for the various good reasons I've mentioned in this
post.)

Deployment of digital cash is not an easy task, any more than a group
of rocket enthusiasts can build non-trivial rockets. However, rocket
enthusiast groups, such as existed in Germany, Britain, and the U.S.
in the 1930s, can provide the staff for actual, real efforts. The
analogies with Cypherpunks are close: many of our members are doing
crypto full-time, others are spreading the tools within their
companies, and some have formed companies to build products. The
Werner von Braun of digital cash may be amongst us.

Well, enough for now. The whole issue of digital cash, what it really
is, why it hasn't happened, and what could allow it to happen, would
take a chapter of a book.


--Tim May



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