Subject: Guys Please stop

From: Ronald Duncan <[email-masked]>
Date: Mon, 31 Dec 2001 12:33:45 +0000

It has been interesting, but it is getting a little out of hand.

Please flame each other in private.

Regards -- Ronald

-----Original Message-----
From: Steve Schear [mailto:[email-masked]]
Sent: 31 December 2001 03:23
To: [email-masked]
Cc: [email-masked]
Subject: Re: The Privacy/Untraceability Sweet Spot (was Re: An idea for
sustainablefile sharing.)

At 08:56 PM 12/30/2001 +1100, Michael H. Voase wrote:
>Steve Schear wrote:
> >
> > Your comments indicate you know virtually nothing about Mojo Nation and
> > what they are/were trying to do.  I understand you are enamored with
your
> > idea but its sloppy and intellectually dishonest to demote the ideas and
> > substantial labors of another without a thorough examination and 
> consideration.
> >
>
>         You are correct, that was extremely rude of me. My upmost and
>sincere appologies. I will endeavour to be more diligent in future when
>researching topics. I will also CC this to the trade WG. Thanks for
>pointing this out.
>
> > Mojo Nation was/is an open source development project.  All client SW
and
> > the system's underlying protocols are pretty well documented in both
design
> > papers and the source code.  Only the mint, its keys and a small amount
of
> > other simple server software has not been openly distributed.  Its only
a
> > relatively small project to recreate the mint and other server (tracker)
> > software and launch your own Mojo-based service using the source.
> >
>
>         Again, my sincere appologies, both to the list and the
>MojoNation project. I didnt realise they had moved to
>Source Forge, or the fact that it is an open source project that is
>near reaching 1.0 status.
>
>         However, now that I have had an opportunity to obtain and
>reveiw the source, there are a few issues with the system that would
>open it to possible fraudulent use, and serveral basic principals
>it is built upon are fundamentally flawed.
>
>         First of all, the concept of a 'micropayment' is vacuous.
>The fact of the matter is that a transaction is a transaction
>and a payment is a payment be it large or small. Without a foundation
>in clearly defining what a 'micropayment' is, the system is open to
>ambiguity. This alone would fail if it were to be tested in a court of
>law.

I think not.  Most countries, including the U.S., differentiate closed 
value systems (e.g., token systems in amusement parks) and those operated 
as open systems whose value is exchangeable for external values.  In 
general, closed systems are unregulated from a banking perspective.

> > There was/is no reason Mojo (the currency) can/could not be applied
within
> > other SW constructs.  It made sense to keep the application of Mojo
within
> > Mojo Nation as the Evil Genius' resources were too small to support the
> > creation and maintenance of an open exchange system for other services.
> >
>
>         True, there is no reason why 'mojos' can't be exchanged. However,
>who would want to? Without a firm basis in cold hard currency, why would
>anyone want to trade upon it.

>Where is the accountability? Where is
>transparency? What is the exchange rate? Who sets the exchange rate?
>Is it free of insider trading?

Even assuming one can convince most potential users that nothing "funny" is 
going on, in the end its all based on reputation.  The "reputation of the 
dollar" is related to my belief, and the belief of billions of others 
around the planet, that for whatever reason a piece of paper with the right 
markings on it will in fact be accepted by billions of others, by millions 
of small banks and moneychangers, and even by the U.S. Government. And the 
related belief that loans, IOUs, promissory notes, bonds, and numerous 
other instruments denominated in these "dollars" will very likely be 
accepted or exchanged, blah blah, by millions or billions of other actors.

Thus, what is the "reputation of the dollar"? Is it because of foolproof 
anti-forgery measures? Is it because of the laws of the U.S.? Etc.?

No, it is a kind of collective hallucination.

>         Also, the details of the transactions involved are
>somewhat murky. Trying to directly track hardware usage is excessive
>in a situation where provision of such hardware and bandwidth is
>provided by the user, and may be fundamentally provided
>as a direct result of other activities.
>That decision belongs to the user, and is based on the hardware
>and service available to their equipment. The fact that they are
>willing now to do it for free indicates that the expense involved
>is not excessive. Otherwise, they would not do it at all.
>
>         No rather that trying to concoct some artificial
>interpretation for what the real equipment and support costs,
>hand over a part of the transaction and let the user decide
>if it is worth their while or not. As technology moves forward,
>the associated costs of transactions will decrease over time
>and the provision of payment can be decremented until a reasonable
>balance between cost of deployment and return on investment is
>achieved.

This was taken into consideration early in Mojo's plans.

>         These factors cannot be determined fully until a real
>world test of the system is done before bringing it online.

It is never possible to fully determine everything in any new venture.  If 
I understand your objection then no venture would ever launch.

> > Infrastructure (including back office and fraud prevention) fixed and
when
> > the numbers are worked through it becomes obvious to most biz dev types
> > that they don't add up.  The reason Mojo was based on system resources
is
> > that it eliminated much of the risk and settlement costs.  The focus on
the
> > "millicent ghetto" for ecash value systems with external convertibility
is,
> > I believe, a fatal mistake of almost all e-payment services.
> >
>
>         Well, you admit it yourself here sir, a fatal mistake.

The Mojo was never externally convertible.  The mistake was never made.

>         I agree whole heartedly, except with a few points.
>
>         Back office resources and fraud prevention should be provided
>by the payment service which should exist as a trusted entity that
>can be held accountable for its actions.

Tell that to the holders of Beenz and Flooz.

>Liability to
>the payment service should be limited to the value of the transfer.
>The responsibility of the payment service is to provide the wire
>protocols and back end servers needed to collect double entry
>accounting records. With the provision of this infrastructe factored
>into the transaction cost, a sustainable model of record keeping
>can be established.

Not in the case of most millicent systems.  When such factors are included 
the costs can exceed 20 or more percent of the transaction value.  For 
example, e-gold (which advertises transaction costs of 1% or $0.50 which 
ever is less) charges a whopping 40% when cost are of very low value.

> > By failing to acknowledge the "high-value" markets for untraceability,
> > characterized by such things as Swiss bank accounts
> > and income-hiding, porn-trading rings, and information markets, the
whole
> > technology of privacy/untraceability gets ghettoized into low-value
markets
> > like "untraceable subway tokens" (wow, gee!), weak versions of proxy
> > surfing tools, and boring attempts to get people to use digital money
for
> > things they don't mind using Visa and PayPal for.
>
>         Umm, most of these 'high-value' markets are just the same as
>the 'low' value markets. A payment is a payment, If the price is high
>then so be it. The copyright holder and their content must compete
>with all other available content on a level playing field.

Ahh, but when cost models are worked out in detail it often becomes quickly 
evident that low cost transactions are a money loser.

>         However, some of these so-called 'high valued' transfers
>could be characterised criminal activity. Considering much of what
>would make the content so valuable that it is in the exceptionally
>high price range, usually falls into the class of illegal or contraband
>information. For example, selling millitary or corporate secrets
>is obviously illegal, and attempts to sell such content over the
>payment service would be prohibited. In such cases it would be the
>responsibility of the international body running the service (probably
>either the world bank or a special commission of the United Nations)
>to detemine wether the content was appropriate for distribution.
>The content would also have to be the property of the individual
>or company wishing to deploy that content across the network.
>Stolen company secrets are not the property of the theives, thus
>would be barred, and turned over to the authorities.

You obviously don't understand the concept of digital bearer certificates 
and anonymity.

>         Also a clear definition of what characterises a sale over
>the service would need attention. Content which is sold over the
>service is a sale, not a license agreement. The purchase of goods
>over such a service must be limited actual sales, where the native
>rights of the reciever are respected. Attempting to attach special
>conditions of sale should be rejected by the network. There are
>existing payment methods that adequately deal with this type of
>transfer, and as such, content of this manner should be redirected
>to that service. Content of this type would include items such as
>licensing source code from a commercial software supplier would
>fall under this model, along with expensive software packages.

Your business model appears based on assumptions of a relatively static 
balance of market power between copyright holders, publishers and 
consumers.  This is think is a fatal flaw.  You should consider that the 
present copyright situation may be little different from the situation 
faced by the church upon the invention of moveable type presses.  Other 
than the accelerated pace of change the result is likely to be quite
similar.

>         However, as to the rest of your rant (for wont of a better
>word), you seem to have drifted off the topic of a public payment
>service into the shifty realms of corporate criminals, assasins
>and peadophiles. In regard to these comments, all I can say is
>that the appropriateness of materials for general distribution
>must be rated by relevant rating authorities. All liability and
>responsibility of obtaining censorship rating rests with the
>copyright holder (as it does now in the classical model).

The classical model is about to end.  See Lessig's "Code is Law".

>         Lastly, as for people wanting to use 'untracable accounts'
>would be in for a nasty shock. The payment service must publish
>all sales publicly for ratings information, sans the identities of
>the purchasers. Also published will be the ratings information of
>people supplying content, and the top software suppliers. Beside
>making the system accountable, it also provides essential tool
>for users wishing to decide who is the best software supplier and
>content supplier for their needs. So if the authorities needed
>to investigate the accounts of people _receiving_ money over the
>network, they wouldnt even need a warrant, just a search over
>the ratings website should do. However, the actual names of
>individuals will be withheld, rather using account titles instead.
>Upon reciept of a warrant from law enforment officials, the
>account name of the individual or company would be made available.

I doubt the millions fo people who are now getting much of their 
entertainment for free via P2P are at all interested in telling anyone 
anything significant about their meat space identity or using any millicent 
payment schemes.  Have you used any of these services?  Do you know what's 
happening?

steve

---

From: Steve Schear <[email-masked]>
Date: Mon, 31 Dec 2001 09:13:28 -0800

>Please flame each other in private.

Sorry if the exchange appeared to be a bit too private.  I saw it as an 
opportunity to discuss some of the underlying, but not often discussed, 
issues surrounding small payment business models.  I think most on this 
list, including myself, want to see a thousand payment system flowers 
bloom.  We live in interesting times.  The legal, market and technical 
landscape underlying payment systems is in great flux.  Many approaches 
have been suggest or tried and its only by understanding what 
considerations drove the decisions of others that we can learn from one 
another and improve chances for future success.

steve

---

From: Eric Brunner-Williams in Portland Maine <[email-masked]>
Date: Mon, 31 Dec 2001 12:51:44 -0500

uh, more than one outbreak of ragweed. fine. an implementation, better still,
two, that could, by some stretch of the imagination, interoperate, and might
do so sooner/better/faster in the presence of a specification, would be the
next step in an ietf wg.

there is the drm tf over on the irtf-side of the house as well, but lo-cal
advocacy is no more welcome there.