Fallacious use of 'bank' in net payment systems

[Anton Stiglic]

----- Original Message ----- 
From: "Ian Grigg" <iang at systemics.com>
To: "Anton Stiglic" <astiglic at okiok.com>; "bear" <bear at sonic.net>
Cc: <cryptography at metzdowd.com>
Sent: Saturday, May 17, 2003 11:52 AM
Subject: Fallacious use of 'bank' in net payment systems


> Anton Stiglic wrote:
> 
> > Payment systems don't need a PKI, but
> > a centralized server as you said, and
> > also needs some kind of financial
> > institution to bootstrap things (which is easier
> > to do in a closed system, than in an open
> > system like the Internet).
> 
> And, bear wrote:
> 
> > (2), Each
> > and every consumer system will need configuration and
> > a relationship with a "bank" somewhere to cash such
> > tokens made to them - and that requires the attention of
> > the consumer again to maintain a business relationship
> > which he won't bother to do unless there's a significant
> > (more than a few dollars a month) revenue stream.
> 
> One of the more pervasive fallacies
> in the digital payments world derives
> from the use of the words 'bank' and
> 'financial institutions'.

I completely agree.  This is why I said "some kind of financial
institution", but that was bad wording, issuer is better.  You 
only need someone that can collect money from users for the 
tokens it issues, and this is easier done in a closed system (the
point I wanted to make).

Depending on the digital payment scheme you want to implement, 
the issuer can be an ISP, a phone company, cable provider, or
even a grocery store...  It's easier to get a digital payments system
working if you are in a closed system since different issuers don't
need to collaborate (to transfer payments, etc...)

--Anton

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