Brown: All commerce, whether conducted on Main Street or in cyberspace, is fundamentally based on the principle of trade. Green has something that I want; if I in turn have something that Green wants, and if I also covet Green's goods more than I do my own (and vice versa), then we should negotiate a trade. Each of us will be better off after the trade. This seems mildly paradoxical, but since each of us has a different set of values and needs, the paradox is easily resolved.
Green: You mean that if we were all the same, then there wouldn't be any commerce?
Brown: I suppose you could look at it like that. But I don't think that's a practical concern.
White: Think how the existence of money makes the trade between you and Green easy. Think how inconvenient it would be if you wanted what Green had, but your feeling was not reciprocated.
Brown: I've noticed that sometimes about Green, I must say.
Green: But the point is that if Brown has money, then the problem is alleviated because I will always want to trade for money, in some amount. If Brown has possessions or services which are valuable (perhaps to others but not to me), but has no money, then market-clogging complications may set in. We may both get bored trying to figure out how to work our trade, we may have to involve third parties in a triangular swap, and in any case we expend time and energy in trying to resolve the details.
White: Precisely. Now take cash. . . .
Brown: Gladly, and in whatever denominations may suit you, White.
White (ignoring Brown's paltry attempt at humor). Cash has a number of characteristics that make it desirable. In the first place, cash is self-authenticating. You don't have to run the risk that the cash you accept from Green will be refused by another trader. In fact, cash is quite unusual and enjoys a favored place in our system of property.
Brown: You mean, it's as good as gold? (Snickering . . .)
White: Better than gold, Brown. If you steal Green's gold watch, and then swap the purloined watch to me in return for one of my inspiring commercial law seminars, then Green can recover the watch from me in a legal action. It doesn't matter that I believed that the watch was really owned by you and that I provided the service in good faith and with pure heart. It's Green's watch, and your theft of it doesn't change Green's right to have it back. But if you steal Green's cash and pay me with that, no one would think that Green can get the cash back from me if I've taken it in a bona fide trade.
Brown: And therefore, you're more inclined to take cash than the watch in payment.
Green: Just so. Cash is also convenient, especially for small amounts. Who would want to write a check for forty-three cents, after all? Or use a credit card for that amount and have to endure the tedium of sorting through the month-end statement?
White: And we now have cash on the Internet. Digicash, which has patents for its electronic cash systems, has teamed with Mark Twain Bancshares in St. Louis to offer its customers the benefits of a cash-type system that is entirely based on the exchange of intangible electronic information.
Brown: Big banks have been doing this for years, White.
White: True. But now we can as well. At least if the other party to the trade has a Digicash account and is willing to trade in the coin of the electronic realm. The bank will issue you "digital coins" in denominations you select, and charges your account, just as if you had cashed a check. You can then swap these digital coins with participating merchants, who redeem them with the bank.
Green: How does the merchant know that the coins are genuine, White? Couldn't they be counterfeit?
White: The system uses the same kind of dual-key or public-private key technology that is employed for digital signatures, Green. The depositor submits an electronic coin request to the bank, which uses digital signature methods to confirm that the request is genuine and in fact comes from the depositor. The bank will then encrypt the depositor's electronic coin with the bank's own digital signature, which acts as a form of endorsement or guarantee of payment to the merchant, and will return the coin to the depositor.
Brown: So when the depositor sends the coin to the merchant, the coin will be decrypted using the bank's public key. If the message is determined to be genuine, the merchant accepts the coin, provides the goods to the depositor and forwards the coin along to the bank, which also determines that the message is genuine by cryptographic methods and then credits the merchant's account.
Green: What prevents the merchant from sending the electronic coin to the bank, taking credit to its own account, and then not delivering the goods?
White: The merchant could try that, but it would obviously be bad for its business good will. What prevents your friendly dry cleaner from taking your ticket and your money and then keeping your newly pressed suit?
Green: For one thing, I'm standing there and will scream bloody murder. The Net seems to complicate this aspect of the cash transaction. The Digicash method seems more like sending cash through the mail; it's a great solution for the seller who requires payment in advance, but not for the purchaser who may be sorely disappointed with the results.
Brown: But the same problem exists to some extent already with credit card payments on the Internet, doesn't it? Can't an unscrupulous merchant charge your card and then fail to send you the merchandise?
Green: I suppose that's right. Maybe what we really need to foster transactions on the Net is the Cyberspace Escrow Agent, whose integrity is beyond question. That organization would collect the cash from the buyer and the goods from the seller, and would then execute the swap when both parties had performed.
White: I'll be looking for that one on the Web soon, Green. Until then, you may want to check out the Digicash site (http://www.digicash.com) for your amusement and edification.
Edmund B. (Peter) Burke in an attorney involved in technology law at Sutherland, Asbill & Brennan, a law firm with offices in Atlanta, Austin, New York and Washington, D.C. [email protected]