Robert Hettinga on Wed, 14 Apr 1999 20:39:03 +0200 (CEST)

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<nettime> A conversation with Chaum on DigiCash's future...

     [orig to,,, and Digital Bearer Settlement List 

--- begin forwarded text

Date: Wed, 14 Apr 1999 09:57:30 -0400

Transcript of the telephone conversation with
David Chaum of Digicash
Precedence: bulk

friday, the 19th march 1999, 20.00 hours CET

here you go:


"Tuet ... tuet ... tuet

David Chaum: Good morning, David Chaum.

Moving Art Studio: Hello, this is Jens-Ingo Brodesser from Moving Art
Studio in Brussels. Last year in June [1998] we held an independent meeting
on the form and affects of electronic money. During this meeting the
Digicash's E-cash was described as being the most suitable form of
electronic cash - being both confidential and secure...

C	 Privacy protection, that's right.

M	 We've recently been hearing that Digicash is bankrupt, is this true?

C	 Yes, unfortunately that's true. There are different kinds of
bankruptcy. This one is a Chapter 11 Reorganization here in California.
Basically the assets are going to be sold. Someone will probably buy them
and carry on with the product. That seems to be what's happening.

M	 How did this bankruptcy happen?

C	 [laughs] I can't really comment on that. You can look at our
website and draw your own conclusions.

M	 The system has been licensed to huge interest groups like Deutsche
Bank and Mark Twain Bank.

C	 Yes, I know. [laughs] The system is still alive in Switzerland
(Swiss Netpay from Credit Suisse) and Australia. If you look at the
Digicash website you can see all the places where it's operational. You are
just wondering how Digicash can be bankrupt while all these people are
using it.

M	 Now that the Digicash technology is no longer available to people
wanting to make secure and anonymous online transactions, the only things
remaining are insecure and unconfidential systems such as VISA cards.

C	 At the moment, but I think that things will change.

M	 Do you think that there will be again an online payment system
like E-cash - a system that doesn't keep user profiles? There are some
smart card systems like the Geldkarte in Germany or La Carte Proton in
Belgium, but these route every transaction over hidden shadow accounts
where the users' expenses are tracked.

C	 They do? - I didn't know. Digicash is up for sale and I think
whomever buys it will continue to operate it.

M	 Here in Belgium for instance there is Proton, but the problem with
this kind of payment system is that everything you buy with it is recorded.

C	 And it's also that people assume that this is not taking place.
The way these products are often promoted to the public is that they are
essentially like cash.

M	 Yes. Also often the banks don't give any choice to the customers.
Here in Europe we have the EC-card which now has an EEPROM printed on it.
You are ready to use this system and think that it is a kind of cash system
but actually it's a credit card.

C	 Right.

M	 So you are going to sell the patents and technology on which
Digicash is based to someone who will try to get it back into the market?

C	 That's correct.

M	 There's been no hostility towards Digicash from the national banks
fearing it will affect their monopoly? At first we thought that there was a
strong lobby that caused the Digicash project to fail.

C	 No, but one can never be sure about what really is going on in the
banking world. We haven't experienced any overt problems.

M	 The credit card companies also represent a strong lobby in this
market. Did they see your system as a threat?

C	 Hmm - [long pause] well - [long pause] - It differs. We tried to
ally ourselves with some of the credit card companies. Obviously there are
all kind of players in the field which can see us either as a threat or an
opportunity. [laughs] It just depends - and they could also view it as too
early to worry about.

M	 Do you think then that the Digicash technology entered the market
too early - that people aren't yet used to this kind of technology?

C	 There were things like that. Electronic commerce was hardly
happening at the consumer level when Digicash was trying to gain momentum.
The ease with which things could be integrated into the web has improved a
lot since we were most active. The technological infrastructure was a
little less optimal then for us than it is today - as far as making it easy
for consumers and merchants to use it. I expect that it will get even

M	 Are you thinking about SSL?

C	 Well, a whole lot of things - the way you can maintain and update
software over the net... just a whole lot of problems that we ran into.
When we started people were using all kinds of imperfect ways to get access
to the net. There was a lot more diversity and uncertainty at that point.
It was harder for the end user to make things work well easily.

M	 Will there be an anonymous and secure electronic cash system soon,
or is there a general trend towards existing systems which just carry the
credit card principle on the net? As I said before, there is often a strong
interest in tracking the users' behaviour, knowing what they are buying,
where they are buying it and being also able to connect this information to
targeted advertisement.

C	 I think you have both kind of forces. The thing about the interest
in having consumer controlled privacy protection is that most people (most
consumers) aren't that aware of it, and it's not really a viable option
today, but I believe that it could dominate if it is both made readily
available in an easy to use manner and awareness of it is created. Because
there are also a lot of problems with abuses on the net, you see what I am

M	 In the Digicash system there are electronic coins issued. In the
past this has been, to a very large extent, a monopoly of the State and the
national banks.

C	 That's true, but look at all kinds of other payment systems. The
sacred distinction between money and just payment systems is fading. There
is online electronic payment in general and it is hard to say whether or
not it is really money. I think this is a non-issue. We haven't received
any problems about that. Just look at any kind of technical system of this
general online nature. Either, like the smart card, or whatever, it's
electronic money - the card is the money or the data is the money, or you
could look at this as a bill paying system where actually the money is
stored in the banking system. It's just a matter of how you want to
interpret - for the consumer it's often nice to tell them that their card
is the money - has the money on it, but for the bank regulators you can
say, well, the money is in this pool account while these balance numbers
are stored on the card. It's more a matter of how you want to interpret the
technical system than there really being a clear distinction between an
electronic form of money itself compared to just an electronic banking

M	 And the banks like Deutsche Bank and Mark Twain Bank - did they
stop their Digicash services or are they still available?

C	 If you look at our website you will see that several services are
still alive, those particulars ones are not. Credit Suisse with Swiss
Netpay is and in Australia it's alive and I think that Bank Austria is too,
but they are not doing very much.

M	 Are these services offered just for local customers or can people
from all over the world apply for an E-cash Account?

C	 The Swiss one is more for Cr»dit Suisse customers but I believe
that the Australian one does allow you to pay with credit cards. At least
it was supposed to do so, I am not sure if it does at the moment. But most
of the places you can buy stuff are in Australia so it's not that
interesting outside of Australia.

M	 Why did Deutsche Bank stop their Digicash services?

C	 Actually I don't know.

M	 You didn't get any explanation?

C 	 As I am only loosely affiliated with Digicash at this moment I am
sure that there are more people here at Digicash who know all the details -
I don't personally know.

M 	 What are your plans for now? What are you working on?

C 	 I'm working on some new stuff that's as much as I can say on that
at this moment.

M 	 How do you perceive the future of digital money?

C 	 I think that it will replace paper money eventually and will be a
dominant form of money. Digital cash as I've developed it is actually
better than paper money in the physical world because of the way it solves
the privacy problem and at the same time attenuates the possibility for
criminal use. It also has the advantage of being visible in the physical
world as well as in cyberspace. So, that gives me confidence that it will
replace paper money at some point.

M 	 Thank you very much.

C	 Well thanks. I wish I could be more detailed in my answers, but
right now things are in a state where I can't be. I hope you appreciate
that. Perhaps we will have a chance to discuss things in more detail,
especially when things get rolling again."

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