26 March 1998

    Date: Thu, 26 Mar 1998 08:02:34 -0500
    To: cypherpunks@cyberpass.net
    From: Robert Hettinga <rah@shipwright.com>
    Subject: Re: Blind Signatures Digital Cash in Russia?

    --- begin forwarded text

    From: "Maksim Otstavnov" <maksim@volga.net>
    To: Robert Hettinga <rah@shipwright.com>
    Date: Thu, 26 Mar 1998 07:16:49 +0400
    Subject: Re: Blind Signatures Digital Cash in Russia?

        (In fact, I'm not on the list the original msg CC:'ed to, but I think my
        comments on Bob's msg can be useful enough to forgive my netiquette
        violation. Anybody interested is welcome to answer personally.)

    > So, I'm talking to somebody from Russia about the wonders of digital bearer
    > settlement recently :-), and this morning he comes back to me saying he's
    > starting to hear of several people there who are planning on issuing
    > Chaumian blind signature digital cash, with payee anonymity, even.

    The first prototype (PayCash by Tavrichesky Bank) is live at

       http://195.5.138.171

    and those who read Russian are welcome. I hope the English version of the
    site contents and software will be available soon.

    > I don't know if they're denominating things in dollars, or rubles, or what,
    > and I certainly don't know if this is really true, which is why I'm here
    > asking you guys here about it.

    Their current denomination is "petty rubles", "petty yens", "petty dollars"
    and "petty liras". With petty banking and exchange, of course.

    > I always thought (though I now don't know why I think so) that the blind
    > signature patent holds in Russia, but, as the world's only um,
    > anarchocapitalist, society ;-), Russians may honor patents in the breach
    > more often than not.

    Algorithms are not patentable in Russia. Programs, chips topologies and
    databases are protected as copyrighted stuff.

    > I'm not saying that Russia's a cakewalk these days, but it *is* interesting
    > to note the current Russian state (or lack thereof) is about as old as the
    > commercial internet, that not many people use Moscow city phone system
    > because there are 22 voraciously competing cellphone companies,

    MGTS (formerely Moscow state phone monopoly) still has some 90% of Moscow
    market. Introducing of per-time charges on local calls this year may change
    this.

    > In the interest of brevity, we'll ignore their, um, geodesic market for
    > armed personal force for the time being, but maybe things have calmed down
    > now that their mafia has figured out they can do all the "hostile" bank
    > takeovers they want, but ownership doesn't a bank make...

    Armed personal force is distributed rather in feudal centralized model than
    geodesically... in Russia as well as anywhere else, alas...

    > Anyway, I haven't heard of a Russian ecash licensee, certainly.

    I heard of several banks and financial companies who tried to apply for
    ecash(tm) license but negotiations failed. (I have no first-hand evidence
    though). I humbly think there is something wrong with DigiCash's terms. With
    all respect for DigiCash technological excellence and Dr. Chaum's
    distinguished role in "privacy marketing", their PR... aren't the best PR I
    have seen ;)

    One more comment: we actully don't need the full interoperability. If
    Tavrichesky or anybody else issue "real" currency, it would be enough to have
    a market of secondary services of exchanges, e.g. Tavrichesky's erubles to
    MTB's edollars, or MTB's edollars to Tavrichesky edollars etc. The exchanges
    might be located in some friendly jurisdiction - Anguilla, to say, or Grand
    Cayman.

    Another comment: current Russian banking rules do not allow fully anonymous
    banking. But there is at least one ex-Soviet jurisdiction allowing and
    encouraging it, Ukraine. (I'm not sure of Baltic states, Latvia being the
    most probable candidate).

    > If done in dollars, all that seignorage, and there would be bunches just in
    > Russia alone, would be a boon for the Russian balance of payments account,
    > certainly.

    Really? Anybody can audit _national_ payment balance concerning anonymous
    ecash? ;)

    But if there are any realistic arguments (on how to improve national
    payments balance by encouraging anonymous DBSs) I will discuss them with
    Central Bank officials. One opportunity is to have Russian Central Bank to
    back private banks' e-currency (according to Lysyanskaya/Ramzan recently
    proposed architecture, or anything alike).

    Though, ceteris paribus, I would prefer experimenting with fully private
    currencies ;) Just much more fun.

    > In addition to Russians not having to haul those pictures of Ben around,
    > Americans, and the rest of the world, for that matter, could start to
    > safely keep and spend their cash on the net, while, of course, earning some
    > Russian entrepreneur both purchase premia and seignorage.

    An interesting question: who have seinorage on eurodollars? Might "an
    enterpreneur" in question be the Gov (either federal, or, to say, Moscow)?

    > Irony, thy name might be Russia?

    You're virtually welcome...

    Thank you Bob for initiating this topic!

    Cheers,

    -- Maksim Otstavnov <maksim@volga.net> http://www.ice.ru/otstavnov/
    --   - chief, Labs of Civil & Financial Crypto
    --   - editor, "CompuNomika" monthly
    --   - maintainer of The Russian PGP HomePage

    --- end forwarded text

    -----------------
    Robert Hettinga (rah@shipwright.com), Philodox
    e$, 44 Farquhar Street, Boston, MA 02131 USA
    "... however it may deserve respect for its usefulness and antiquity,
    [predicting the end of the world] has not been found agreeable to
    experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
    The e$ Home Page: http://www.shipwright.com/