"Virgins in the Bathtub"-- Baltimore Digital Commerce Society, June 12th

Thu May 31 09:46:11 EDT 2001

Someone else forwarded me this. For some reason, I feel like passing it
along... :-).

I confess to correcting a grammatical error in the original.

See you in Baltimore.

Cheers,
RAH

--- begin forwarded text

Date: Thu, 31 May 2001 07:16:42 -0400
To: cypherpunks at toad.com
From: Peter Wayner <pcw at flyzone.com>
Subject: "Virgins in the Bathtub"-- Baltimore Digital Commerce
  Society, June 12th
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Robert Hettinga, the CEO at the Internet Bearer
Underwriting Corporation (IBUC), will be coming to
Baltimore on June 12th to give the inaugural
lecture for the Baltimore branch of the Digital
Commerce Society. Bob is well-known for his
pursuit of the cheapest possible way to swap cash,
stock, bonds, or any other security over the
Internet. Today, many businesses pay 2% or more of
a transaction for the convenience of using the
credit card system. If IBUC succeeds, costs could
drop well into the smallest fractions of a cent.

The talk will be held at the Engineering Society,
a downtown club with a rich tradition of
supporting Baltimore technology. A reasonably
priced lunch is included. Contact me
(pcw at flyzone.com) for more information and
reservations. This is an ideal chance to hear one
of the most innovative financial minds explore the
next generation of payment mechanisms.

In the future, the Baltimore branch of the Digital
Commerce Society will sponsor similar lectures
from industry leaders. Please let me know if you
are interested in helping organize the group.

For directions:
http://maps.yahoo.com/py/maps.py?BFCat=&Pyt=Tmap&newFL=Use+Address+Below&addr=11+Mount+Vernon+Place&csz=Baltimore%2C+MD+21201&country=us&Get%07Map=Get+Map

Time: 12:30 on June 12th

Menu and cost: to follow

Here's his abstract:

  Virgins in the Bathtub -- Political Cryptography,
Cypherpunks, and Internet Bearer Transaction Settlement

Robert Hettinga
Internet Bearer Underwriting Corporation

Eric Hughes, the canonical cypherpunk, did, by all accounts, a gloomy talk
on internet payments at Stanford recently. The announcement was full of the
usual imprecations against long and deep "bathtub curves", excessive
Non-Recoverable Engineering costs, and the continually-immanent danger of
instant catastrophic system failure.

Paradoxically, the very thing that got Hughes and cypherpunks interested in
finance in the first place, blind signatures and other internet bearer
transaction protocols -- a set of frankly political cryptographic protocols
designed prevent the exponential collapse of financial privacy and smash
the nation-state (or corporations, depending on who you talked to) in the
process -- are exactly the technologies which overcome the criteria that
Hughes himself has laid out as show stoppers to the adoption of any new
internet payment technology: the inability to do low-margin, low risk
transactions at high volume in any reasonable development time-frame, and
the need to use massive marketing efforts to cause their adoption. His
abandonment of them over the last 6 years is, then, somewhat curious. It
might be that the politics of internet bearer transactions, and the
requirement to pay the mortgage, are now much less glamorous than than
they used to be.

Certainly internet bearer transaction protocols can be functionally
anonymous, giving fits, in cryptoanarchist terms, to "rent-seeking
confiscators of honestly earned wealth" everywhere. Nonetheless, internet
bearer protocols can instantaneously execute, clear and settle transactions
from millidollars to gigadollars at several orders of magnitude lower
transaction cost than server-farmed (and clerk-excepted) book-entry
transactions. Furthermore, they can be underwritten onto the net without
much recourse to branding or any other accoutrement of modern marketing.
The finance of pre-funded notes (like cash and bonds) has been historically
a business of graded fungible commodities bought and sold in microeconomic
"perfect competition" by relatively unknown entities. Finally, the
aforementioned "bathtub" full of non-recoverable engineering costs is just
about full now, and without much help from internet payment companies
themselves. Efforts by the financial clearing and settlement networks to
use the much cheaper technology of the internet, coupled by demand for much
lower transaction costs by bubble-shocked internet goods and services firms
-- including those in the capital markets -- have pretty much paved the way
for internet bearer transactions, from financial back-office and trading
intranets, to securities depository internet APIs, to client authentication
and even "walletware" itself. In light of these developments,
political-cum-financial cryptographers, and other financial virgins, might
soon emerge, finally, from their respective bathtubs into profitability, if
not respectability itself. Here's hoping someone hands them a towel when
they do.

Robert Hettinga is a reformed spreadsheet mechanic and almost-lapsed
cypherpunk who found himself, two years ago, starting the Internet Bearer
Underwriting Corporation because no one would do things *his* way. IBUC is
currently working on internet bearer finance projects -- with paying
customers -- from one end of the payment bell-curve (Rabin-signature
millidollar streaming cash backed up by custodial cash-reserve account
balances) to the other (Unsponsored Network Depository Receipts backed up
by CREST-linked custodial securities-account balances), and at several
places in between, including, apparently, retail cash settlement for
internet goods and services in transactions above one dollar.

Before IBUC, Hettinga wrote rants on the net which ended up in print in
various places, including a series for the Financial Times Virtual Finance
Report demonstrating that any financial instrument could be issued onto the
internet using a variety of peer-reviewed financial cryptography protocols.
In addition, he started or helped start (in reverse order) the Edinburgh
Financial Cryptography Engineering Conference, the Philodox Symposium on
Internet Bearer Transaction Settlement, the Digital Bearer Settlement List,
the International Financial Cryptography Association, the International
Conference on Financial Cryptography, the Mac-Crypto conference, the
mac-crypto list, the e$/e$pam lists, the DCSB list, and the Digital
Commerce Society of Boston.

--- end forwarded text

-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
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'

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