I would claim that, frankly, all this grafting of audit trails onto working
internet bearer transaction protocols is going to be much more *expensive*,
which, paradoxically, is why we have book-entry settlement to begin with.
That is, book-entry settlement, for all it's violations of our collective
privacy, is *cheaper* than the physical delivery of paper/metal bearer
instruments, and that's why we use it, instead of brinks trucks, to move
most of our money around.
I would claim that if internet bearer transactions are secure enough allow
the transfer of assets without the need for audit trails, the seminal
result of all of David Chaum's original work in this field after all, then
any attempt to reconstruct those audit trails after the fact will cost
*more*, and, because of that increased cost, such attempts will probably
not be adopted by the market very well.
Oddly enough, I seriously don't think that governments will get in the way
of an economic change this fundamental. In the short term, people like
FinCEN will be able see what goes onto and off the net through ACH and the
ATM systems anyway, which nobody who's interested in making money on
illegal activity, or even those making money on privacy :-), will be able
to stop. Oddly enough, this is fine with us at IBUC, because regulators
can't then turn around and claim that money used, initially at least, to
buy mostly digital goods and services on the net can be said to be
"laundered" at all.
Eventually, of course, when the financial assets necessary to collateralize
cash issues on the net exist *themselves* in digital bearer form, all bets
are off, (and people from FinCEN have said as much) and, of course, those
assets *will* end up on the net, and in digital bearer form, because, I
claim, at least, they're to be *cheaper* that way.
As I've said before, that's a nice problem to have, because the economy
will have saved literally trillions of dollars in collective transaction
cost. Nobody's going to stand in the way of that economic freight train,
anymore than they're having any success standing in the way of the internet
itself.
A long time ago, on cypherpunks, I said that digital bearer transactions,
like those involving blind signatures, had to be three orders of magnitude
cheaper than book-entry ones in order to supplant the current ubiquity of
book-entry settlement.
Two years ago, when I started Philodox, I decided to actually operate under
that assumption, as everytime I personally tried to knock the straw man
down, it got up bigger and meaner. :-).
Now, after about a year of bashing on that premise as a part of planning
IBUC, I have no reason whatsoever to believe otherwise, and so IBUC will
prove that, once and for all. It's fairly certain, to those of us putting
the company together, that we'll end up cheaper than any form of book-entry
settlement, in any security you could care to name, by that three orders of
magnitude I kept trotting out as the necessary adoption hurdle, and
certainly on a risk-adjusted basis. Again, any transaction protocol secure
enough to be done in complete anonymity is going to be *cheaper* than any
transaction protocol which requires an audit trail for non-repudiation.
Using methods to keep audit trails in an inherently anonymous asset
transfer only makes your run at that hurdle shorter, and, like people who
don't get enough running room, is sure to fall on its face.
Cheers,
RAH
--
-----------------
R. A. Hettinga <mailto: [EMAIL PROTECTED]>
The Internet Bearer Underwriting Corporation <http://www.ibuc.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'
