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Before we begin: we define cash here to mean something very much like paper money. For something to be cash, it must have the properties of:

Many casual definitions of cash seem to use the phrase "anonymous cash", which is similar to "free gift" -- the qualifier shouldn't be necessary, but the very term has been polluted by entities offering half-solutions that lack one or more of the desireable features of real cash. When we say cash, we mean (at least) all the properties above.

We are not necessarily talking about a micropayments system, e.g., one that is efficient for very small transactions. Such a system could be very useful for charging by-the-page or even by-the-byte for copyrighted content, but tends to be very difficult to implement in practice due to the overhead of the system used to manage it. Our problems are difficult enough without trying to be efficient enough for micropayments as well. For our purposes, we'll assume that any system that's efficient enough to make a one-dollar payment reasonable is efficient enough. Maybe we'll come up with a system that allows people to charge a millicent for something instead, but we may not be so lucky that we can improve the system by five orders of magnitude.

People have been trying to bring cash to the net for years, and the prospects don't look much better now than they did years ago. Efforts have been stymied by at least four major factors:

And yet real cash has numerous advantages:

A modest proposal

How might we solve this? One solution might be to convince a credit-card company to sell prepaid cash cards.

For example, imagine this scenario: You want to buy something on the net, but you don't want to tell a possibly unbounded number of people what you're buying. You walk into the local 7-11 and plunk down $10 in paper money. In return, you get a card that looks approximately like a credit card, except that it's really cheaply made -- probably a laminated piece of paper like a subway Metro card. It's worth $10 (or maybe $9.95, and the credit card company gets the nickel). You then go buy a book online, and supply the card number for payment, just typing it into the form on the web page like it was any random credit card. If you can't use up the last 75 cents on the card buying things, you bring it back to 7-11 the next time you buy a card, and those 75 cents are added to some more paper money to refill a new card.

This solves almost all of the above problems, immediately. It does not require any sort of cryptographic infrastructure that isn't already deployed; instead, it uses the preexisting credit-card database structure. It is definitely anonymous, because you paid for the card using something else anonymous, namely paper money, and didn't need to supply any other identification in the transaction, because paper money is honored everywhere without additional ID. (It is possible that two successive purchases on the card could be correlated, so it may be wise to change cards frequently to break such connections; similarly, if there is any possibility that refilling a new card from an old one might make an entry somewhere that links the two cards, perhaps it's better to abandon the last 75 cents on the card -- or hand it off to a stranger on the street in return for 3 quarters.)

What are the problems with this scenario? There are several:

Unfortunately, we've now arrived at a solution that is so easy technically that all the pieces are virtually in place (with the exception of peer-to-peer payments) -- but we must convince businesses to do the right thing, and, in particular, that it's worth more than their data-mining efforts.

How can we possibly do this? That's something we need to figure out at the workshop.

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Lenny Foner
Last modified: Thu Apr 13 18:14:41 EDT 2000