Financial Cryptography

the referenced digital money blog ... in turn has a reference to Schneier's blog on multi-use smartcards ... which has a post mentioning the amex blue card for consumer use.
http://www.schneier.com/blog/archives/2006/02/multiuse_id_car.html

part of the program was giving away "free" smartcard readers. at the time the "pc/sc" standard only supported serial port ... and the distributed smartcard readers were serial port devices. consumers had horrendous problems with getting serial port smartcard readers installed and operational. there were horror tales about 1hr customer call center conversations that were unable to resolve and large number of stories about repeated blue screens of death during install attempts and even people being forced to re-install their systems from scratch.

this experience with serial port pc/sc eventually resulted in an industry opinion that smartcards were not viable in the consumer market segment. it was also during this period that m'soft announced they were canceling their smartcard operating system project.

there was subsequent effort that upgraded pc/sc standard to USB plug&play, which turned out to address many of the problems experienced during the earlier activity with serial port smartcard readers. however, by this time, there was a fairly widespread opinion that smartcards were not viable in the consumer market segment.

for total drift ... i have slight quible with some nomenclature differentiating multi-application smartcards and multi-function smartcards.

it is possible to have a chipcard that just does a single function ... like authentication ... and that single function can be used in a large different of different applications ... resulting in it being a multi-application card.

that is separate from multi-function smartcards that implement lots of different functions possibly for use in a wide-variety of different applications. part of the approach of the multi-function smartcards was left from the 80s & 90s when they were supposed to be the low-end portable computing vehicle ... only to find that they were displaced from that market segment by PDAs and cellphones.

recent ref (last part of the post) consulting with gov. lab in the early 90s on moving gov. technology into commercial sector ... including some smartcard technology
http://www.garlic.com/~lynn/2006k.html#25

part of this orientation has also led to things like embedding significant business rules in the smartcard ... this was at least part of the issue with the "yes card" exploits mentioned in previous threads
http://www.garlic.com/~lynn/aadsm22.htm#20 FraudWatch - Chip&Pin, a new tenner (USD10)
http://www.garlic.com/~lynn/aadsm22.htm#23 FraudWatch - Chip&Pin, a new tenner (USD10)
http://www.garlic.com/~lynn/aadsm22.htm#29 Meccano Trojans coming to a desktop near you
http://www.garlic.com/~lynn/aadsm22.htm#33 Meccano Trojans coming to a desktop near you
http://www.garlic.com/~lynn/aadsm22.htm#34 FraudWatch - Chip&Pin, a new tenner (USD10)
http://www.garlic.com/~lynn/aadsm22.htm#39 FraudWatch - Chip&Pin, a new tenner (USD10)
http://www.garlic.com/~lynn/aadsm22.htm#40 FraudWatch - Chip&Pin, a new tenner (USD10)
http://www.garlic.com/~lynn/aadsm22.htm#47 Court rules email addresses are not signatures, and signs death warrant for Digital Signatures
http://www.garlic.com/~lynn/aadsm23.htm#2 News and Views - Mozo, Elliptics, eBay + fraud, naïve use of TLS and/or tokens
http://www.garlic.com/~lynn/aadsm23.htm#15 Security Soap Opera - (Central) banks don't (want to) know, MS prefers Brand X, airlines selling your identity, first transaction trojan
http://www.garlic.com/~lynn/aadsm23.htm#20 Petrol firm suspends chip-and-pin
http://www.garlic.com/~lynn/aadsm23.htm#25 Petrol firm suspends chip-and-pin
http://www.garlic.com/~lynn/aadsm23.htm#27 Chip-and-Pin terminals were replaced by "repairworkers"?
http://www.garlic.com/~lynn/aadsm23.htm#30 Petrol firm suspends chip-and-pin

That must set a record for topic drift ... and back around back to hand held tokens. I suppose it would be amusing to do a point by point comparison of the features of the smart card versus the laminated pressed flower.

Anyone who's ever worked with smart cards comes to the same conclusion - they really are just too hard to work with, and are only workable where someone pays some enourmous amount of money to get them into production. What the banks realised was that they were so expensive they couldn't be easily duplicated by competitors, but what they failed to recognise was that they would have to pick up the tab.

Iit was this massive expense that led them on the futile search for multi-function / multi-application partners, which any MBA could have told them was a complete dead loss for structural reasons (read any book by Hamel & Prahalad). In that post Bruce Schneier points at the branding issue, but that's only a proxy for the battle for control underneath. It was ownership of the platform that was at issue, and brand was just a cute way of figuring out who was in control and who was taxing you.

Overall, multi-blah blah is a complete non-starter, and I wonder what people smoke in those strategy meetings when they start talking multi-this and multi-that. Embedded in phones, smart cards work fine. For areas where there is still a legally mandated need to have public phones in vandalous areas, they work fine. If the mass transit is going to pay for all its travellers, that's fine.

For everything else, there's pressed flowers :)

Ian, you said: "The large issue that we have now is that issuance of value is still a mysterious process, and more experiments are required."

I suggest Ian, that you rephrase the question. Sometimes just reordering the words or sometimes reversing the order will reveal an answer. Also,examine fundamental assumptions and presumptions.

Here is what I say: "Any act of creating money and of giving or receiving money is an act of communication that exists as a special branch of language. Counterfeiting under this definition then becomes lying with money and using gold or any other precious commodity in direct exchange is more about preventing counterfeiting than exchanging value for value."

Consider that money is not really the value. Money is a descriptive path and title claim to retrieving a value that is stored at another location and by other people.

If Hayek's proscription for a lower cost money system via competition in money systems is to be followed all the precepts of product branding will end up being followed. (That is to say - a product branding of the money system itself.)

Gold in a vault somewhere was being used more as a performance bond. No matter what the economics books say, the gold was never all of the value; what was really happening is the small percentage of gold was keeping the players honest. Think "insurance policy."

A money system as a product is all about the trusted intermediary role where the intermediary steps in as a guarantor of specific performance.

The role of trusted intermediary and insurer of contract is essentially an insurance like role where in the past, the bank held some precious metals that could be sold into the market to recover medium of exchange when the contract to deliver value could no longer be executed. Precious metals still fill that role well, but any physical thing that can be sold into the market can also act to recover medium of exchange that now is still circulating where the original contract to deliver can no longer be redeemed.

Once you understand that the money is an executable contract and a "descriptive path to where the value may be claimed" then Gesellian reasoning becomes more obvious. The actual value available for market stored by someone else - "So how much is the storage fee?" And secondly, if the banker is an insurance agent acting to collateralize and bring liquidity in some common medium of exchange to any and all promises to deliver value in the future, then the proper payer of the insurance fee is whomever is in possession of the claim slip.

Underscoring above comments about financing, then control:

Commercial access on the cards
James Riley
MAY 12, 2006

PRIVATE companies, including retailers like Coles and Woolworths, may be given broad access to government's health and welfare smart card to help deliver emergency payments and other welfare benefits.

Minister Joe Hockey's Human Services department also said the smart card could be used in future to allow welfare payments to carry restrictions, such as allowing the purchase of groceries, but not cigarettes or alcohol.

But while the smart card was capable of delivering new payment programs - such as direct-debiting a portion of welfare payments to cover rent and utilities bills, as Families Minister Mal Brough has proposed - Mr Hockey said those payment policy decision would be made by the portfolio ministers.