"Unfortunately, this is not quite accurate. All "digital bearer instrument"
schemes require a central clearing mechanism to prevent double spending.
This
amounts to an account based system. Such systems can be PKI based and so
are more secure than e-gold. But they, also, can be spoofed and hacked by
sufficient effort."
There is a major difference. A digital bearer instrument (DBI) itself an
"account" however, as soon as it is spent, the account ceases to exist.
Because the "account" is non-persistant, there is no account number and
password to be hacked. Instead, the actual thing of value is the encrypted
packet which resides on your hard drive, zip disk, or floppy. To steal it,
the hacker has to copy it from your computer AND get your private key AND
password. Since it is rather simple to save your DBI'sand private keys on
a floppy, CD, or ZIP Disk, and then take them out of the computer, you can
have bullet-proof security.
It is true that any scheme has weaknesses. However, by simply upgrading to
a security scheme that is one or two magnitudes more diffucult to break, the
amount of fraud should decrease by a similar degree. The harder it is to
break, the smaller the pool of qualified thieves. :-)
It may not be worth it to the average customer to upgrade to a smart-card
system. But the average e-merchant loses anywhere from tens of thousands to
hundreds of thousands of dollars a year due to fraud. It might be worth
investing that money into a smart-card incentive program.
Far more people use credit cards than use password-only schemes like e-gold.
Cards are publically accepted and easily marketable. All we need is
universal card readers.
HK
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