[2585] in cryptography@c2.net mail archive
Re: Credit cards crushing virtual cash
daemon@ATHENA.MIT.EDU (John R Levine)
Mon Apr 27 08:35:02 1998
Date: Mon, 27 Apr 1998 00:58:00 -0400 (EDT)
From: John R Levine <johnl@iecc.com>
To: Robert Hettinga <rah@shipwright.com>
cc: cypherpunks@cyberpass.net, cryptography@c2.net
In-Reply-To: <v04003a01b1678026f773@[139.167.130.247]>
> [ First Virtual hovers on the edge of collapse ]
> "It says more about (First Virtual's) business model than it does
> about virtual cash," said analyst Cliff Condon of Forrester Research
> Inc.
No kidding. Can you imagine a real-world cash system that tried to charge
the way that FV does? Software charges? Transaction fees? Give me a break.
The way you make money in the cash business is seiginorage, that is, you make
money by printing it.
For a good example, look at Amex travellers checks, which are a kind of faux
cash insofar as it's valid if the signatures match without reference to whose
signatures they are. Although the list price of Amex checks is 1% above par,
in reality you can buy them at par all over the place, and banks remit 1% to
2% below par to Amex. They make it up, and more, on the float, since checks
usually aren't cashed for a month and a significant number are never cashed
at all. (Remember Karl Malden telling us to save that last Amex traveller's
check? Gee, thanks, Karl.)
Regards,
John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies",
Information Superhighwayman wanna-be, http://iecc.com/johnl, Sewer Commissioner
Finger for PGP key, f'print = 3A 5B D0 3F D9 A0 6A A4 2D AC 1E 9E A6 36 A3 47
