Home' Technology Review : March 2005 Contents TECHNOLOGY REVIEW march 2005
Q&A WITH MIKE LIEBHOLD
Wireless networks can ﬂesh out
the physical world, says Institute
for the Future senior researcher
Mike Liebhold, author of the white
paper “Infrastructure for the New
What’s the “new geography”?
We’ve got huge amounts of data about
the planet, but most stays walled off in
proprietary databases or people’s heads.
Wireless networks let us make that
information not just visible, but visible in
place. It’s ﬁrst-person geography.
You talk about “deep place.”
Coding data by location gives you an
overlay of everything known about a
particular spot on the earth. Imagine you
can ﬂip open a device, and there’s a
menu that has cultural information,
social information, restaurants. Actuarial
information about the probability of a car
wreck at this corner. Or maybe just a red
light to say that you’re in a crime zone.
So how do we get there?
The Open Geospatial Consortium, the
World Wide Web Consortium, and other
standards and hacker groups are
converging on software mechanisms to
bring geodata of all kinds online. But
coming up with a user interface for
receiving the deep information of place
is not trivial. A lot of people have trouble
just ﬁnding the Paciﬁc Ocean on a map.
We can’t ﬁx that, but I’d be happy if they
could ﬁnd out a little more about where
they are right now. With the World Wide
Web, we’ve built the encyclopedia. Now
it’s time to do the atlas. SPENCER REISS
It wasn’t supposed to be this way. In
1997, the bankers, lawyers, and accoun -
tants were fascinated by what the digital
magicians could do with a few equations.
Even though it’s easy to make perfect cop -
ies of digital �les, for instance, mathema -
ticians found a way to produce a digital
$50 bill that would stymie counterfeiters.
They didn’t stop there. They imagined
transactions that avoided the overhead of
a central clearing house, digital currency
that paid interest, and even complicated
digital rights management tools that
locked up music, art, and writing with the
same equations used to protect money.
Some talked about minting just 500 digital
baseball cards for each player and letting
the values rise and fall with batting aver -
ages. In short, they imagined a world
where wealth was not frozen in gold and
locked in vaults, but rather held in digital
mechanisms that could adapt to whatever
people wanted. Some mechanisms could
even be as anonymous as paper cash, and
transactions wouldn’t require much more
than the click of a mouse.
But while the mathematics is still fasci -
nating, the emergence of any system based
on it is receding into the nebulous future.
Today, credit card companies dominate
the Web with a system that, at its heart, is
little di�erent from the one that employed
carbon-paper chits. One of the few com -
panies to �nd some success in �nancial
cryptography, PayPal, gets most of its rev -
enue from eBay auctions, where it ser ves,
in essence, as a well-designed front end
for the credit card system.
Adam Shostack, another of the original
organizers, thinks that the reason for the
failure of �nancial cryptography is simple.
“People are conservative in how they pay
for things,” he says. Indeed, the problem
for �nancial cryptography’s would-be pio -
neers is that the old credit card system
seems to be good enough for the new on -
line world. If Amazon, Wal-Mart, and
other e-commerce sites can keep custom -
ers happy with plastic cards, there’s little
demand for any of the more exciting ideas.
Joseph Nocera, author of A Piece of the
Action, a history of the credit card indus -
try, says digital currency is facing “a
chicken-and-egg question” but points out
that credit cards encountered the same
problem, and that their acceptance took
decades. In fact, 2003 was the �rst year
credit cards and other electronic systems
carried more payments than bank checks.
As they come to appreciate just how
long the road ahead will likely be, some � -
nancial cryptographers are searching for
niches where they can �ourish in the short
term. Take, for example, Waltham, MA-
based startup Peppercoin, the brainchild
of MIT computer scientists Sylvio Micali
and Ron Rivest. Peppercoin is attempting
to specialize in very small sums (see “The
Web’s New Currency,” December 2003).
One of its bigger initiatives is developing a
cryptographic system that would enable
people to use their credit cards at parking
meters, an application that would be pro -
hibitively expensive for the traditional
credit card network, which has a mini -
mum transaction fee of about a quarter. If
Peppercoin’s technology can cut transac -
tion costs enough, it can capture this mar -
ket and also make it possible for people to
spend small amounts online.
The inability to handle small change
isn’t the only weakness of the credit card
system that calls out for cryptographic in -
novation. Fraud and identity theft cost so -
ciety billions of dollars every year. Paul
Syverson, a researcher at the U.S. Naval
Research Laboratory, believes this leaves
the door open for some of the new equa -
tions from this year’s Financial Cryptogra -
phy Conference. The privacy-protecting
mechanisms imagined by some mathema -
ticians also have the advantage of not rely -
ing on identity veri�cation to guarantee
transactions. If the �ow of money is anon -
ymous, there’s no identity to be stolen.
Ultimately, Nocera believes, the high
costs and fraud rate in the credit card in -
dustry could give new life to the dreams of
the original Financial Cryptography Con -
ference. “I actually happen to believe fairly
strongly that if someone could ever �gure
out how to get critical mass for a form of
cybercash that is not backed by a credit
card,” he says, “it would be a transforma -
tive eventfortheWeb.” PETER WAYNER
Digital currency faces the
same problem that credit
cards once did, and their
acceptance took decades.
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