>From: "R.A. Hettinga" <[EMAIL PROTECTED]>
>Sent: Oct 25, 2005 8:34 AM
>To: cryptography@metzdowd.com, [EMAIL PROTECTED]
>Subject: On the orthogonality of anonymity to current market demand

>That is to say, your analysis conflicts with the whole trend towards
>T-0 trading, execution, clearing and settlement in the capital
>markets, and, frankly, with all payment in general as it gets
>increasingly granular and automated in nature. The faster you can
>trade or transact business with the surety that the asset in question
>is now irrevocably yours, the more trades and transactions you can
>do, which benefits not only the individual trader but markets as a

The prerequisite for all this is that when the asset changes hands,
it's very nearly certain that this was the intention of the asset's
previous owner.  My point isn't to express my love for book-entry
payment systems.  There's plenty to hate about them.  But if the
alternative is an anonymous, irreversible payment system whose control
lies in software running alongside three pieces of spyware on my
Windows box, they probably still win for most people.  Even bad
payment systems are better than ones that let you have everything in
your wallet stolen by a single attack.  

>However "anonymous" irrevocability might offend one's senses and
>cause one to imagine the imminent heat-death of the financial
>universe (see Gibbon, below... :-)), I think that technology will
>instead step up to the challenge and become more secure as a

What's with the heat-death nonsense?  Physical bearer instruments
imply stout locks and vaults and alarm systems and armed guards and
all the rest, all the way down to infrastructure like police forces
and armies (private or public) to avoid having the biggest gang end up
owning all the gold.  Electronic bearer instruments imply the same
kinds of things, and the infrastructure for that isn't in place.  It's
like telling people to store their net worth in their homes, in gold.
That can work, but you probably can't leave the cheapest lock sold at
Home Depot on your front door and stick the gold coins in the same
drawer where you used to keep your checkbook.

>And, since internet bearer transactions are, by their very
>design, more secure on public networks than book-entry transactions
>are in encrypted tunnels on private networks, they could even be said
>to be secure *in spite* of the fact that they're anonymous; that --
>as it ever was in cryptography -- business can be transacted between
>two parties even though they don't know, or trust, each other.

Why do you say internet bearer transactions are more secure?  I can
see more efficient, but why more secure?  It looks to me like both
kinds of payment system are susceptible to the same broad classes of
attacks (bank misbehavior (for a short time), someone finding a
software bug, someone breaking a crypto algorithm or protocol).  What
makes one more secure than the other?  


--John Kelsey

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