Interests of online banks and their users [was Re: Cryptogram: Palladium Only for DRM]

R. A. Hettinga rah at shipwright.com
Tue Sep 17 18:34:27 EDT 2002


At 1:07 PM -0700 on 9/17/02, jon at jonsimon.com wrote:


> As far as I know, banks assume that a certain percentage of their
> transactions will be bad and build that cost into their business
> model.  Credit and ATM cards and numbers are as far from secure as
> could be, far less secure than somebody doing online transactions
> from a Wintel machine on an unencrypted connection, let alone an
> encrypted one.  Until somebody takes full advantage of the current
> system and steals a few trillion dollars in one day, the problems
> are  easier to deal with than a solution.  Until that happens,
> there's no  reason for banks to go through the pain of dealing with
> or requiring  Pd.

I wouldn't go that far. While Pd. -- and a certain long-term
ejaculative (look it up...) denizen of my kill-file -- is pretty much
a disingenuous shuck, greed is an amazing thing. The lowest cost
producer of anything, transactions, say, will not only make more
money than its competitors, but they will also *survive* longer than
anyone else. To quote, um, Stalin, "quantity has a quality all its
own."


So, if strong financial cryptography gives us the lowest
*risk-adjusted* cost per transaction by some very large amount, the
market will adopt it just as quickly as if confronted with a threat
that only strong cryptography can remedy.

As software (in the <http://www.nobel.se/economics/laureates/1992/>
Gary Becker sense, things that can be more or less perfectly copied)
and wetware (valuable opinion, for lack of a better word) become more
important compared to hardware (stuff, discovered, extracted, or
built), the more valuable strong, secure, (geodesic :-)) networks and
(bearer :-)) financial cryptography becomes.



Cheers,
RAH




-- 
-----------------
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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