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INSIGHiS
Digital cash
Michael Gianturco a
presaent of Tne
Princeton Portfclios .
His new COGk on
invesnngin
technclogs stxks
<strong>and</strong> furtls is The
Market that 2eats
fhe Market ( Li11e
Bro'Nn, ,895) .
WHO's GOING TO BE THF SViND1ER when encrypted
digital signals replace paper money?
Some big outfits are making bets on cybercash
. blicrosoft is working on sofnvare that will
make financial transactions more secure on
nenvorks . Visa International plans to introduce
a cash card in time for the 1996 Summer
Olympics .
Some role in the coming world of digital
cash is likely to be played by three public
companies with related <strong>business</strong>es : Rainbow'
Technologies, which is in data security ;
eLSt, which sells encrvption chips ; <strong>and</strong> Securiry
Dynamics, which sells software for corporate
nettvork security .
I think you should keep an eve on this
exciting new <strong>business</strong> . One big uinner may
be a companv that hasn't even gone public
yet-although I expect it will someday-<strong>and</strong>
that's Telequip Corp . in Hollis, N .H . Telequip
will do $6 million this year in revenue,
largely from coin-dispensing machines used in
bank drive-throughs . Because these machines
interact with the banks' computers, Telequip
Yonr money cannot be stolen
from the card, not even with
electron microscopes .
silicon, thev cannot be copied out (as the}• could
be From a floppv or hard disk) by bad guvs . If the
card fell out of your pocket at O'Hare, no problem
. Your data, your code keys <strong>and</strong> vour monev
cannot be extracted from the Cnypta PlusNot
even with advanced instruments, codebreaking
computers or electron microscopes .
Whz do we need cards with flash memon<strong>and</strong>
brains? Aren't plastic cards with magnetic
strips enough? Credit cards are fairlv secure,
but for electronic commerce, a new <strong>and</strong> higher
level of security is essential . The securitv of the
account number on a magnetic strip card has a
lot to do with where cou plan to stick the card .
If you push the card into a computer <strong>and</strong> the
computer is on the phone to a nemork, you're
asking for trouble from hackers .
There are plenty of horror stories about
traditional credit card theft . Shoulder surfers
steal telephone credit card numbers bv peeking
over your shoulder at the airport . One clever
bunch of crooks planted a phony automatie
teller machine in a shopping mall <strong>and</strong> used it to
capture account numbers <strong>and</strong> passwords .
But aTM cards are more secure than vour
credit cards . The thief needs not only yotu account
number but also a password number . In
a similarvein, Telequip's Crypta Plus uses a tnropart
secucirv system-the thief would need
both a stolen card <strong>and</strong> a passw ord . To this basic
system, Telequip adds the considerable power
of a microprocessor dedicated to cryptography .
The added securiq• is necessary because
phone-based computer networks are less secure
thanA'[m networks . That is, it would be pretty
hard for a hoodlum to wiretap his vav into a
bank nem ork, while legions of would-be
hackers are lurking on the Internet .
Wottld you tap vour Visa account number or
got into securin' protocols <strong>and</strong>, ultimatelv, cryp- a bank card pass vord onto the Interneti I certainlv
tographv . Telequip has invented a pocket-size wouldn't-at least not vet . This is wht, the Interpersonal
encryption card called the Crypta Plus, net has not lived up to its commercial potenrial .
It could one day replace your checkbook . The cybercash market is the big potential
( The Crypta Plus card contains its own 32-
, payoff for Cnpta Plus, but consumers are still a
bit microprocessor, which is dedicated to cn_p- long way from accepting the notion that the
? tographic processing, <strong>and</strong> 16 megabytes of public computer netvorks can safely mose sums
~ semiconductor flash memorv . Flash memory is of caslt . In the meantime Telequip is selling
the kind that doesn't forget when the po~aer the card to companies that want to protect sensigoes
goes off. It's part of stored-value cards used tive databases . An executive on the road
~ todav for small transactions, such as in vend- wotdd use the card, for example, if he stores
- ing machines <strong>and</strong> pay phones . valuable engineering data on a laptop . Says
~~ Telequip's card plugs into a slot on your Michael Jones, 39, president of Telequip,
portable computer . It works like a floppv disk "Everything is encrypted by the Crypta Plus
?~ with a brain-a suspicious brain . Stored data is card on its way into storage ."
~ locked on the card until you presetu a password . Telequip is also working with a bank consor-
Unlocking i Unlocking the card will also give vou access to tittm (members include Bank of Artterica <strong>and</strong>
your own unique encrvption keys . Citibank on how to turn a card like this into an
You can use the keys to securelv encode electronic checkbook . There are a number of
information for transfer ~ia modem over the competing concepts for digital money, but
phone-including financial transfers . Because the none is based on the familiar <strong>and</strong> already apencryption
encryprion keys are essentially wTitten into the proved machinerv of the checking account . ~
164 2 0 4 6 6 7 34 2 0 )rbcs • A u 91J st 14,1995
http://legacy.library.ucsf.edu/tid/agf97d00/pdf