Subject: RE: [Asrg] Re: the e-postage argument

From: "Bob Atkinson" <[email-masked]>
Date: Tue, 20 Apr 2004 10:09:10 -0700

An implicit assumption in this discussion is that in the ePostage model
money must flow from sender to receiver.

While that is an attractive model for many reasons, there are other
models in which rather than in-band per message, the money instead flows
out of band up front, and presumably more in bulk, though likely not to
message recipients. In such designs, many of the constraints articulated
below are alleviated.

Indeed, if you think about it, this is more directly analogous to the
gummed-paper physical postage stamps we all know and love.

I'm not here expressing a preference for these systems, only pointing
out that the design surface is larger than was being discussed.

	Bob

-----Original Message-----
From: [email-masked] [mailto:[email-masked]] On Behalf Of John
R Levine
Sent: Tuesday, April 20, 2004 12:57 AM
To: Barry Shein
Cc: [email-masked]
Subject: [Asrg] Re: the e-postage argument

Hi.  It's me, Mr. epostage-can't-work.

I need to keep rewriting my epostage paper to make the fundamental
points
clearer.  The three big issues are transaction costs, settlements, and
identity.  Another is that no postage scheme in the history of mankind
has
existed to deter use rather than to pay delivery costs, but let's skip
that one and decide to innovate.

The transaction cost issue is the simplest: any kind of e-postage system
is going to need a transaction per message to check the stamps.
Spammers
are going to put bogus e-postage on their mail, and the only way to see
if
an e-stamp is valid is to check with the issuer.  Even if you use a
crypto
signature scheme to see if the stamp is real, you still need to ask
issuer
if it's already been used somewhere else.  I have yet to see a faintly
plausible plan that would build and pay for a transaction system big
enough to handle the world's e-mail.  I'm not talking about settlements
here, just whether the stamp is OK.  The biggest transaction system to
date is the one for Master Card and Visa, and it's both too small and
too
expensive by several orders of magnitude each.

> You settle at the ISP level ...

Settlements: You run an ISP, you tell us.  There are something like 5000
ISPs in the U.S. and probably at least that many outside the U.S.  Are
you
going to send out 5000 checks every month for your settlements?  (Or net
it out with each, so it's on average only 2500.)  How are you going to
keep track of whether the other ISPs have paid up, and if they don't,
what
will you do about it?  You can't wave these issues away, these are the
nuts and bolts that make a payment system work or not, and if you don't
shut down the deadbeats, the e-postage stops being real money.

If the ISPs do the settlements on behalf of their customers, the ISPs
are
acting as banks, with all of the fraud and default problems that regular
banks have, and which they spend a lot of money to handle.  Real banks
handle the clearing problem with centralized clearing systems they all
join, Mastercard/Visa for credit cards, NYCE, Cirrus, and PLUS for ATM
transactions, and the Federal Reserve for checks.  These all cost a lot
more per transaction than any likely e-postage system will collect, and
are designed in a world where the vast majority of transactions are OK
and
you handle the bad ones as exceptions, which doesn't impress me as a
good
model for an environment where spam is 80% of all mail and growing.

Even worse, what about the ISPs that aren't in the US?  How do you send
50 cents to each of five ISPs in Bangladesh?  Credit cards?

Identity: lots of people have pointed out the zombie problem, that
spammers will hijack Aunt Betsy's computer and charge the postage to
her.
The response I usually hear from epostage enthusiasts is that Aunt Betsy
won't let the zombies on her PC once she's had to pay a few hundred
bucks
in spam epostage.  Based on my observation of the real world, that's not
gonna happen.  Every month you see the predictable story about some
loser
whose PC got misconfigured or got a Moldavian dialer installed or
something, and was shocked to get a thousand dollar phone bill.  Do they
actually pay the thousand bucks?  Never.  They negotiate it down, stiff
the phone company, or something.  ISPs would be stuck in a no-win
situation where their customers will hate them if they try to collect,
and
their e-mail peers will hate them if they don't.

> Howsabout the whole damned phone system? Isn't that essentially a
> "micropayments" system in many aspects?

In some, yes, in others, no.  It differs from e-mail in that it's a
closed
system, with relatively few players, rather stringent barriers to entry
and really complicated financial settlements that start with the
difference between "bill and keep" and "reciprocal compensation" and get
worse from there, with the ITU, an impenetrable government
meta-bureacracy, in the middle.

> Don't people feel a little silly arguing that the entire phone system
> as currently constituted among several billion people world-wide
> represents a charging/payment model which is easily (in a few pages of
> this paper, apparently) ``proven'' to be completely untenable because
> someone, somewhere might defraud it etc?

You must have read some other paper than the one I wrote, because I
never
said or implied that.

Here's a thought experiment: imagine that you run a store in some part
of
the wild west, and 90% of the cash that people offer you to pay for
stuff
is bogus.  How are you going to handle transactions?  How long will you
spend examining each coin?  Will you refuse to do business with anyone
who's offered you bogus money?  What about people who've gotten it in
change somewhere else and didn't notice?  This is the environment
e-postage has to face, not a little fraud, but vastly more bogus
transactions (at least attempted ones) than real ones.  I don't know of
any financial system that works in an environment like that.

> It's time to go for an e-postage system that simply reflects the
> resources being used.

OK, so build one.  I don't know how to build one where the transaction
costs aren't 10 times greater than the costs that the transactions are
supposed to cover, despite a decade of micropayment research, but maybe
we've overlooked something.  I think we all agree that it's not going to
sit on top of SMTP mail, so someone should take a tip from the phone
system, build a closed system that you can only get into by spending a
hundred grand and being approved by the club that runs it, and give the
end users a nice point and click program that runs on Redmond Crudware
yet
isn't going to be instantly subverted through the weekly egregious
system
security hole.  People will rush to use it.  Right?

Regards,
John Levine, [email-masked], Taughannock Networks, Trumansburg NY
"I dropped the toothpaste", said Tom, crestfallenly.

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---

From: "John R Levine" <[email-masked]>
Date: 20 Apr 2004 13:18:08 -0400

> money must flow from sender to receiver.

That could alleviate the settlement issues, but the transaction cost and
identity issues aren't affected.

> gummed-paper physical postage stamps we all know and love.

I've never heard much support for a model where we all have to buy stamps
from one central post office or a small number of post offices.  In the
paper stamp model, the price of the stamps actually pays for delivering
the mail.  In the e-postage model, I've never understood what the stamps
are supposed to pay for beyond acting to deter senders, particularly if
they don't go to the recipient to defray the cost of handling incoming
mail.

In the phone system, which Barry cited as a model, there is a complex and
often contentious system of settlements and compensation to calculate how
much the recipient network gets paid to handle incoming calls.  I think it
supports the point in my paper that any system with real money is going to
have its own mountain of rules, fraud, lawsuits, and so forth that is
likely to be much worse to deal with than whatever it was supposed to solve.

If it sounds like I'm saying we should throw up our hands and give up, I'm
not, but there's an old saw that for any complex problem there's a
solution that's simple, elegant and wrong, and if the problem is spam,
e-postage is that solution.

Regards,
http://www.taugh.com

---

From: der Mouse <[email-masked]>
Date: Wed, 21 Apr 2004 06:23:33 -0400 (EDT)

> An implicit assumption in this discussion is that in the ePostage
> model money must flow from sender to receiver.

Well, yes.  The basic problem with spam is the imposition of cost on
unwilling recipients; I see little point in epostage that pays some
other party, as then the recipient has still lost; it's just that
someone else has benefited instead.  I fail to see how this improves
matters significantly.

If what you're after is a deterrent effect, call it what it is, a fine,
and make the amount more appropriate to a fine!

> models in which rather than in-band per message, the money instead
> flows out of band up front, and presumably more in bulk, though
> likely not to message recipients.  In such designs, many of the
> constraints articulated below are alleviated.

> gummed-paper physical postage stamps we all know and love.

Yes, though there most of the cost the stamp is paying is incurred by
the entity who sold the stamp, rather than the recipient.

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