[Cryptography] Digital currencies

John Levine johnl at iecc.com
Tue Jun 21 23:31:01 EDT 2016

>> How do debit cards fit into this world view?  My statement is equally
>> true for debit cards, 
>At present, debit cards are handled through the credit card settlement
>system.  I suppose they do not incur as much risk to issuers, although
>probably customers can still contest charges, albeit with more
>difficulty.  In any case, the credit card companies can still extract
>huge rents from them though.

In the US, at least, there is a credit card processsing system, which
verifies transactions with a signature and takes a percentage (Visa,
M/C, Amex), and there is a debit card processing system which uses PINs
and has a small typically fixed fee (Maestro, Pulse, etc.)  It is
possible to run debit card transactions through the credit card
system, which banks of course prefer.  There have been lawsuits
between banks and merchants about this, with the merchants wanting to
run all the debit transactions through the cheaper PIN system.

>> Debt is a red herring here.  The issue is with processing transactions,
>> regardless of what those transaction represent or how those
>> transactions are organized.
>I don't think so.  A system suitable for micro-transactions cannot be
>based on debt because if settlements involve a human too frequently then
>transaction fees become too large. 

This will come as a surprise to all of the kids who charge 79c sodas
on their credit cards.  You set a credit limit and clear the
transactions once a month or when the amount hits the credit limit.


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