Electronic Commerce

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corporations whose Electronic Data Interchange
heritage means streams of electronic bits now flow instead of cash in back-end
financial processes. We need to resolve four key technology issues before
consumers and merchants anoint electric money with the same real and perceived
values as our tangible bills and coins. These four key areas are: Security,
Authentication, Anonymity, and Divisibility.

Commercial R&D departments and university labs are developing measures to
address security for both Internet and private-network transactions. The
venerable answer to securing sensitive information, like credit-card numbers, is
to encrypt the data before you send it out. MIT's Kerberos, which is named
after the three-headed watchdog of Greek mythology, is one of the best-known-
private-key encryption technologies. It creates an encrypted data packet,
called a ticket, which securely identifies the user. To make a purchase, you
generate the ticket during a series of coded messages ...

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is faster. One way to factor out the
overhead is to use a trustee organization, one that collects batches of small
transaction before passing them on to the credit-card organization for
processing. First Virtual, an Internet-based banking organization, relies on
this approach. Consumers register their credit cards with First Virtual over
the phone to eliminate security risks, and from then on, they uses personal
identification numbers (PINs) to make purchases.

Encryption may help make the electric money more secure, but we also need
guarantees that no one alters the data--most notably the denomination of the
currency--at either end of the transaction. One form of verification is ...

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