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Question: Who needs DigitalCash?

See also: PrivacyRequired.

On greater reflection, this is only really, really useful for money laundering and pornography. You can't even use it for weapons trafficing really because this only works without physical addresses. Oh well, we all know porn runs the Internet. Sounds good to me. -- SunirShah, on LimitedKnowledgePurchasing

I would have to disagree Sunir, what about micropayments to remove banner ads, or sending money to an artists' tip jar, yes pornography and money laundering may be a dark stain on the new economic frontier, but I think that applies to any frontier and is not prevented by big brother activities anyway (http://www.e-dinar.com/en/main_parts/9/rahn.html). Embrace freedom! --AndrewMcMeikan

Rebuttal: DigitalCash is not LimitedKnowledgePurchasing.

Yes, it is. Or it can be. DigitalCash != DigitalMoney? because Cash != Money. If I go somewhere to eat, then pay with a \$20 bill, they take it. If I write a check, they have my name, address, bank name, drivers' license number and possibly (in the US) my social security number. Cash implies a certain amount of transactional anonymity, while other money implementations (credit cards, checks, purchase orders) do not. --DaveJacoby

As to the link you mentioned, I quote: New encryption programs furthermore enable complete security. Of course it is a frontier, of course it is dangerous, but belittling the dangers makes it even more dangerous. See AvoidIllusion and the book SecretsAndLies.

Further down, I quote: Repeal the Bank Secrecy Act and the subsequent anti-money laundering legislation. The existing legislation is not cost effective, is subject to abuse, interferes with basic civil liberties to an unacceptable degree, and actually results in higher levels of crime. If the numbers are correct, the legislation is not cost effective. As to the basic civil liberties and the higher levels of crime, I have seen no evidence. Can you elaborate on that? --AlexSchroeder

I'd tell you why it upsets civil liberties and causes crime except that then my alter ego with fake pasport ID's and bank accounts would then have to kill you to prevent anyone finding out about my secret barter trade in illicit items to avoid being tracked by evil corporations intent on SPAMing me (all said tounge in cheek and not to be taken as an admission of guilt or complicity even should I have involvement in anything whatsoever)--AndrewMcMeikan

The statement about DigitalCash being only useful for the dregs of society was hyperbole. The point was that the concept of anonymous transactions are only useful when there's something to hide and there's nothing to ship. It matters not whether I use DigitalCash or a credit card to buy books from Chapters because they have to mail those books to me anyway. In theory I could have an anonymous postal box, but not many people do. So there's no justification in providing that infrastructure (high cost, high maintenance, high responsibility, high risk).

On the other hand, if there were digital transactions that needed to be anonymous (there's something to hide), DigitalCash will be necessary. But there aren't any, not now, except for porn. When there is enough demand from real people (not net.nerds), perhaps such a system will be created. It could be in the banks' interest to do so because they will be moving more cash through their system.

But note that people happily use credit cards and debit cards and cheques all the time without worry. So, do you think people really care? It's too much work to care about something that doesn't really harm them a lot.

The arguments about boundary cases are just that: boundary arguments. Those arguments aren't remotely useful when talking about economics, the domain of the mainstream. Still, as I said, anonymous transactions sound good to me, because I am a net.nerd. I'm also a civil libertarian, so I could appreciate the ability to purchase digital content anonymously. Question, though. Am I in the minority? -- SunirShah

Do not just think of it from the buyers end, imagine that I am selling a banned book (say a supressed religous text, or political information) to keep freedom of speech I need to be able to hide my identity yet still recieve payment without any paper trail. Put yourself in the shoes of an oppresive regime and you will see that to stop speech you must prevent anonymous payments both buying and selling. Users of this may be in the minority now but many people are begining to realise just how little privacy they have. In Australia almost everything is paid by EFTPOS. When you look at your bank statement your can trace each days activity by following the purchases date stamped to the minute. I do not particularly like the staff at my bank knowing what I buy and when. Will my life insurance premiums go up because I buy junk food too often? --AndrewMcMeikan

With respect to the dismal acceptance of digital cash, I believe most of the blame lies with the mishandled patents of David Chaum. Chaum's digicash didn't really license their patents to other folks. Money is only as good as people agree that it's money. If I recall correctly, there was only one bank (Mark Twain Bank or something like that) that viewed digicash's 'tokens' as valid. Anyway, they bankrupted. Lots of folks, I'm guessing, are waiting for his patents to expire which should be pretty soon. Others are looking at [lucre], which supposedly does blinding without stepping into Chaum's patents. -- MattBradshaw

Buzzword of the day (at least here in 2009): MicroTransactions. I've tried out sites that use microtransactions before, and the requirement of digging out a credit card and keying numbers in is an effective damper on spending money (this is good for my budget, of course, seeing's I need to save said money to be able to pay for this college education I'm getting... but it's not good for the site!) Some sites have you purchase "credits" beforehand using, say, $5 and then have you spend the credits bits at a time when microtransactions take place - and indeed, "credits", once purchased, are easier to spend than real money.

Phone payment is also an option, but so far the carriers fees required are prohibitive, and a phone number can be used by basically anyone you give it to, so a phone number is not a good method of authentication (someone grabs your phone, knows your number, and receives the textmessage with the authentication number to key in - and you're screwed.) This is why I still don't have anything more sophisticated than a Jitterbug (phone out here that's specifically marketed as not having loads of features). Of course, this is veering into identification-is-not-authentication territory, so I'll just quit rambling now. -- NatalieBrown



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