Forwarded From: Aleph One <aleph1at_private> http://www.wired.com/news/news/technology/story/13277.html MS Patents Anonymous Ecash by Chris Oakes 4:00am 26.Jun.98.PDT Microsoft has been awarded a patent on technology that electronic cash transactions to remain anonymous. The patent, issued on 15 June, was given to the Redmond, Washington, giant for a system of creating "untraceable electronic cash," a technology that lets consumers spend digital money without banks being aware of specifics, including user identity. Microsoft had no comment on the technology Thursday, and experts were still analyzing the patent in an effort to understand its workings. Despite the lack of details, the development raised speculation about Microsoft's plans for electronic-payment technology and whether the patent could be an effort to stymie the proliferation of anonymous cash. Some people think that "Microsoft has patented it so that it will never see the light of day," said Phillip Hallam-Baker, a security and electronic transaction consultant. "But I don't think that's accurate.... You don't create a system by sitting on a patent." Such a patent is typical when a company is serious about developing an idea, Hallam-Baker said, adding, "I wouldn't read into it that this represents a policy direction." Security expert Bruce Schneier said he didn't think the move amounted to much more than a patent on research the company has been conducting for a long time. (The patent application was filed in 1995.) "I don't believe this means they're going to be doing [anonymous micropayment technology]," Schneier said. "This is not a blocking patent, this is not an overarching patent. I'm not scared." No patents in the area of anonymous micropayment are fundamental enough to make all businesses dependent upon one company's technology. At the forefront of this sort of electronic cash, Schneier said, is DigiCash, a company led by digital money pioneer David Chaum. "This is something that Chaum pioneered and still hasn't really been able to profit from." With standard micropayment technology, a bank issues validated "coins" to customers. Much like a cashier's check, the validation stamp indicates an amount and the bank's signature on the coin. But since the bank knows each coin it issues and to whom it was issued, the person's use of the coin can be tracked. DigiCash's eCash works around the problem by letting the bank stamp a coin without tying it to a particular user. In this system, the customer's computer creates a coin and sends it to the bank in a digital "envelope" to hide its identity. The bank stamps it "blindly" through the envelope. The coins are unrecognizable to the bank, and it doesn't know from which account the coins came. By contrast, the CyberCoin payment system of CyberCash, by contrast, offers no such anonymity. Any payment can be reconciled to the user. But Zona Research analyst Vernon Keenan says DigiCash has not been very successful in finding customers for its system, suggesting the short-term outlook is bleak not only for anonymous digital cash, but digital cash in general. "The idea of micropayments has not been successful on PCs, because you need to install a wallet and other support mechanisms on PCs," Keenan said. A wallet is a piece of software kept on a user's hard disk that stores the documents associated with electronic payments, such as credit card information, the tokens of electronic cash systems such as DigiCash, and security certificates. The only way any of these systems will be successful, Keenan said, is if wallets are built into a browser or operating system. This has come to pass with the release of Windows 98, he said, but it will be years before a critical mass of users has installed and started to use the wallet technology of that operating system. Keenan was among those who didn't see great significance in Microsoft's patent. "If [Microsoft] is going to make a business out of it, great. It would be nice to see untraceable ecash," said Schneier. "But I'm not sure there's a valid business model." The anonymity is important to many anticipating ecash, but the extra infrastructure it may require has to be underwritten by somebody. The only people interested enough would be consumers. "What are people willing to pay for anonymous electronic transactions? The answer is not very much. As a privacy advocate, I'm sort of disheartened by that. But life is life," said Schneier. Consultant Hallam-Baker said, "All this is really saying is that Microsoft has committed to investing resources into investigating an area of electronic payment." -o- Subscribe: mail majordomoat_private with "subscribe isn". Today's ISN Sponsor: Repent Security Incorporated [www.repsec.com]
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