Archive of UserLand's first discussion group, started October 5, 1998.

Re: Why Stephen King is cool

Author:Paul Snively
Posted:7/25/2000; 3:32:40 PM
Topic:Why Stephen King is cool
Msg #:19068 (In response to 19060)
Prev/Next:19067 / 19069

Dennis Peterson: From King's perspective, the only drawback I can see to Millicent, PayPal, and EGold is the necessity for people to sign up for the service before they can make the payment. (Well, that and Millicent is only in Japan so far.) There's less of a barrier if they can just type in a credit card number. Hopefully these services will attain wide usage before long.

You're right, during this, the period in which there's no clear digital cash and/or micropayment standard, we obviously can't expect that everyone has a Java ring or a smart card loaded with digital cash, and the receptacle/swiper on their computer to read it and send the cash to the site. So the barrier to entry you describe is very real and will remain until the use of digital cash/micropayments becomes sufficiently compelling to a sufficient number of people... which won't happen until there are enough services using it. A pretty classic chicken-and-egg problem.

The problem with the credit-card approach, as we all know, is that it makes no sense for a purchase of $1; the transaction costs are much higher than that. Despite the heavy publicity of the Visas and Mastercards in this world, they are not a long-term acceptable medium of exchange on the Internet--not while the long-term value of the Internet derives from its ability to facilitate information exchange across an extreme range of granularities, a range of granularities that needs to be reflected in a similarly extreme range of granularities in widely-accepted units of compensation for the exchange (there; is that abstract enough?)

It's painfully obvious that we need micropayment systems. To have an effective micropayment system transaction costs need to be ultra-low. To have ultra-low transaction costs, it seems like the most obvious approach would be to use digital cash. Where digital cash has failed in the marketplace thus far, I think it's due to the lack of demand for micropayments to date. The increase in demand for micropayments will result in an indirect increase in demand for digital cash.

Meanwhile, we need the same people in the mix that we always need: the early adopters. The ones who will sign up for e-gold or PayPal precisely because it's new and cool and for whom "practical" isn't in their top five or maybe even top ten considerations. We need to get 'em excited about chopping out the middleman and knowing that all but perhaps some tiny, tiny fraction of the money is going straight to Stephen King, or Courtney Love, or whomever (yes, the folks providing the infrastructure need to be paid, too; we can rely on the infrastructure continuing to get cheaper but not the human middlemen). My question is, how do we do this?

Dennis: Another potential middleman: trust account holders for the street performer protocol...

Thanks for the reminder! I need to re-read Schneier's cryptogram on the protocol with new eyes.

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