Monday, December 12, 2016

Secure Smart Cards have been preventing double spending before Bitcoin or Apple Pay

GelfKarte from Germany, and the protocol is expanding to other banks.  So. the whole delay has nothing to do with technology, Apple could have done this eons ago, in fact the concept of protected digits in computers is as old as computers. Bitcoin is great technology, but it has nothing to do with double spending, double spending is all about teaching programmers how paper works, and them telling them we want an exact duplicate of paper cash, exact, as in let's not do some theoretical object code emulation.

So how did a bunch of Silicon Valley flying car inventors miss this obvious fact?  It was never about commerce, it was always about stealing bank business, but Apple forgot that the bank's business depended on writing-letters-to_Janet() on each transaction, and that has no friggen relationship to duplicating  paper.

WikiGeldKarte (German"money card") is a stored-value card or electronic cash system used in Germany. It operates as an offline smart card for small payment at things like vending machines and to pay for public transport or parking tickets. The card is pre-paid and funds are loaded onto the card using ATMs or dedicated charging machines.

Jr. Member

Activity: 30

View Profile
April 29, 2013, 01:35:16 PM

Here in Germany, we already got an electronic payment system that uses exactly this approach. You can move funds from your bank account to your Geldkarte. The Geldkarte is a smart card to store money (Euros) on. When you add funds, this transaction will be stored on your Geldkarte. Then, you can go to an OFFLINE vending machine to spend the money. Just insert the card, push a button, wait a second while the Geldkarte creates and signs a transaction that transfers money to the merchant's card. When that's done, you can leave with your product and remove your card. The merchant would later take their merchant's card and move the funds to their bank account. This system is protected against double-spending by not allowing the user to read the keys from their smart card. So basically, the merchant has to trust the customer's bank not to issue cards that can be used for double-spending. In addittion to that, there are a few more safeguards: - all cards will expire eventually. If someone manages to hack one card, they can only double-spend with it until it expires. - the Federal Central Bank maintains shadow accounts for all cards in order to detect any double-spending attempts, even though they should be impossible. - Funds cannot move freely within the system. They can move from a bank account (or cash) to a Geldkarte. From there, they can only be moved to a merchant's card and from the merchant's card, they can only go to the merchant's bank account. Instead of spending funds, users can also request a refund. Even though pretty close to everybody here in Germany has a Geldkarte, only few people actually use this system because: - Nobody bothers to move funds to their Geldkarte - There are always other payment methods available - There are only few places that accept Geldkarte payments; Even though it would be possible to accept the Geldkarte in stores and on web sites (card reader and some software required), I have only seen vending machines to accept them. The Geldkarte has a pretty clear pro - it prevents double-spending without requiring an internet connection. Yet most merchants don't accept it. A large number of merchants uses to process payments by any other payment method, most notably "wild direct debit" - i. e. you authorize your POS payment by signature and it will be processed as a chargeback-prone card-not-present direct debit. Note that those mechants whom I am talking about always use payment processors and card terminals that would support an online balance check as well as chip&pin. However, they would have to pay surcharges for that which are sometimes just considered to be a bit too expensive; It's cheaper for them to risk a chargeback and transfer the matter to a debt-collection agency when neccessary. There are also merchants who make a differnece between small and large transactions - small ones are processed by wild direct debit (it's called "wild" because all banks dislike this payment method because they can't make much money from it - yet all banks offer it to their business customers) while large ones may be processed with chip&pin.

No comments: