wlm4 at cornell.edu (Will
04-14-1995, 08:25 PM
Bill Machrone's PC Week article:
This material may not be reproduced in any form without
permission.
Digital cash is hardly here yet and already the battle lines
have been drawn. My March 29 column on the potential abuses of digital
cash drew strong responses from bankers, digital visionaries, and
others. In these formative days, it's important to give all points
of view a proper airing.
I still have reservations about banks in general and believe
that they should be closely regulated. Those cautions, however,
should not overshadow the good features of digital cash. We should
also be clear about what we mean by digital cash. One implementation
is as a smart card, in which you go to a bank or ATM to load a cash
value into the card. You then spend it however you like, using a
PIN code or other security device to unlock and decrement the amount
of cash in the card. It's secure, convenient, and safe. Depending on the
implementation, it can also be anonymous.
The second implementation is all based on transactions. As Dan
Lynch, co-founder of CyberCash,
href="http://www.cyber-cash.com">(www.cyber-cash.com) points out,
"Money is already digital. What is happening is that normal humans
now have access to digital tools [PCs], and some will find it useful
to directly manipulate their financial lives." Lynch's approach
doesn't create or transport digital cash; it provides a secure transport
for digital messages that have no intrinsic value, but are merely
instructions to move cash from one account to another. Given proper
safeguards, this implementation can also
be anonymous.
The power of anonymity
From my mail, it's apparent that anonymity is interesting to
many people. Far from being cyberphobes, these people intend to
use technology to undo bureaucratic monitoring and loss of privacy.
Anonymity, as David Chaum, head of Digicash
href="http://www.digi-cash.com",
says, is only available to the buyer, not the seller, in electronic
transactions.
The most avidly awaited feature is microtransactions. There's
nothing magic about microtransactions -- we see them all the time
in our telephone bills and in on-line services. But think in terms
of virtually every service being capable of incremental billing,
and your ability to bill incrementally. You could charge vendors
for the right to send you commercial solicitations, also known as
junk mail. Digital cash, if implemented right, will be ubiquitous,
and the transaction cost will be low enough to allow
use by everyone. Because the transaction is cash, not credit, small
businesses can do business with everyone, from individuals to
corporations.
Digital cash could be the solution to many problems. The essentially
free nature of the Internet could remain unchanged while extra-cost
services could flourish, depending on the quality, desirability,
and pricing of their content. I still don't think that digital cash
is a prerequisite for shopping on the Internet; credit-card mechanisms
serve the larger vendors well. The difference will be that many
smaller vendors will be able to play, too.
If you have a Web browser, check out Digicash and CyberCash.
They're instructive for their similarities and their differences,
as well as for the ways in which they use and extend financial institutions.
That said, I reiterate that the banks, for whatever part they play
in our fiscal futures, need careful regulation and supervision.
As famed bank robber Willie Sutton answered when asked why he robbed
banks, "That's where the money is." Indeed.
You can E-mail Bill Machrone at
wmachrone@mcimail.com or
72241.15@compuserve.com
This post transferred from the cdb-l mailing list
This material may not be reproduced in any form without
permission.
Digital cash is hardly here yet and already the battle lines
have been drawn. My March 29 column on the potential abuses of digital
cash drew strong responses from bankers, digital visionaries, and
others. In these formative days, it's important to give all points
of view a proper airing.
I still have reservations about banks in general and believe
that they should be closely regulated. Those cautions, however,
should not overshadow the good features of digital cash. We should
also be clear about what we mean by digital cash. One implementation
is as a smart card, in which you go to a bank or ATM to load a cash
value into the card. You then spend it however you like, using a
PIN code or other security device to unlock and decrement the amount
of cash in the card. It's secure, convenient, and safe. Depending on the
implementation, it can also be anonymous.
The second implementation is all based on transactions. As Dan
Lynch, co-founder of CyberCash,
href="http://www.cyber-cash.com">(www.cyber-cash.com) points out,
"Money is already digital. What is happening is that normal humans
now have access to digital tools [PCs], and some will find it useful
to directly manipulate their financial lives." Lynch's approach
doesn't create or transport digital cash; it provides a secure transport
for digital messages that have no intrinsic value, but are merely
instructions to move cash from one account to another. Given proper
safeguards, this implementation can also
be anonymous.
The power of anonymity
From my mail, it's apparent that anonymity is interesting to
many people. Far from being cyberphobes, these people intend to
use technology to undo bureaucratic monitoring and loss of privacy.
Anonymity, as David Chaum, head of Digicash
href="http://www.digi-cash.com",
says, is only available to the buyer, not the seller, in electronic
transactions.
The most avidly awaited feature is microtransactions. There's
nothing magic about microtransactions -- we see them all the time
in our telephone bills and in on-line services. But think in terms
of virtually every service being capable of incremental billing,
and your ability to bill incrementally. You could charge vendors
for the right to send you commercial solicitations, also known as
junk mail. Digital cash, if implemented right, will be ubiquitous,
and the transaction cost will be low enough to allow
use by everyone. Because the transaction is cash, not credit, small
businesses can do business with everyone, from individuals to
corporations.
Digital cash could be the solution to many problems. The essentially
free nature of the Internet could remain unchanged while extra-cost
services could flourish, depending on the quality, desirability,
and pricing of their content. I still don't think that digital cash
is a prerequisite for shopping on the Internet; credit-card mechanisms
serve the larger vendors well. The difference will be that many
smaller vendors will be able to play, too.
If you have a Web browser, check out Digicash and CyberCash.
They're instructive for their similarities and their differences,
as well as for the ways in which they use and extend financial institutions.
That said, I reiterate that the banks, for whatever part they play
in our fiscal futures, need careful regulation and supervision.
As famed bank robber Willie Sutton answered when asked why he robbed
banks, "That's where the money is." Indeed.
You can E-mail Bill Machrone at
wmachrone@mcimail.com or
72241.15@compuserve.com
This post transferred from the cdb-l mailing list