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Re: W3C Web Payments Use Cases 1.0 first public draft

From: Melvin Carvalho <melvincarvalho@gmail.com>
Date: Sat, 18 Apr 2015 12:55:30 +0200
Message-ID: <CAKaEYhK12JUN6ar0X1tW9NWVTazT-mj+5igPF1veWyKMsSuPTg@mail.gmail.com>
To: Manu Sporny <msporny@digitalbazaar.com>
Cc: Web Payments <public-webpayments@w3.org>
On 18 April 2015 at 06:16, Manu Sporny <msporny@digitalbazaar.com> wrote:

> On 04/16/2015 08:21 PM, Steven Rowat wrote:
> > I admit my reasoning there seems a bit speculative (in fact,
> > hot-headed), and towards the conspiracy theory end of the continuum
> > -- but, now Melvin's come back with some data that supports it; thank
> > you. ;-)
> >
> > And even having calmed down, I'm still thinking that shunting off
> > the simplest A->B payments between two people as 'Future Work' is a
> > mistake (and a slightly suspicious one).
>
> Let me try and explain why those of us that are involved in this work
> are nervous about working on peer-to-peer payments.
>
> The Web Payments IG is still working through the person-to-person
> payments scenarios. The technology for p2p payments is incredibly
> simple, but the regulation around it is fantastically complex and
> expensive to comply with. The price for misreading the regulation is
> extremely steep. You can read more about it here:
>
> http://en.wikipedia.org/wiki/Money_transmitter
>
> Here's why work in the area is going slowly:
>
> It is a felony to engage in money transmission without a license in any
> state that requires a license to operate.
>
> I remember being a speaker at a conference with Charlie Shrem keynoting
> a few years ago. A year later, Charlie was in jail. Granted, he also did
> some other shady stuff, but one of the charges filed against him was
> operating without a money transmission license (aka doing peer-to-peer
> payments w/o being licensed to do so).
>
> There are really no other technologies that W3C is working on where a
> mistake can land you in jail. Accidentally inject a bug in HTML5 -
> people get angry. Badly designed feature for CSS3? Developers are
> annoyed. Botch a crypto implementation - millions of dollars in damages,
> but not much else. Screw up the deployment of peer-to-peer payments at
> your organization? *Felony and jail time*.
>
> When you say you're going to work on "peer-to-peer payments", what
> you're really saying is: "I'm going to try and work on this problem
> knowing that there is a possibility of someone I'm working with (or me)
> ending up in jail."
>
> Personally, I imagine being ripped away from my wife and two young kids
> for writing a spec, a couple hundred lines of code, and deploying it
> into production... and all the program did was move a virtual thing from
> one ledger to another.
>
> So, that's what's in the back of some of our minds while working on the
> peer-to-peer payments stuff... and that's why it's going slowly. We
> don't want to make a mistake.
>
> That said, many in the group want to see peer-to-peer payments succeed.
> The Use Cases document has clearly put Bitcoin (a peer-to-peer payment
> mechanism) in there as something that we want to support:
>
>
> http://www.w3.org/TR/2015/WD-web-payments-use-cases-20150416/#cryptocurrency-payment-bitcoin-ripple
>
> So, it's in scope and we're trying to move on it as fast as we can. The
> problem is in deploying it into production. In order to do that at any
> kind of significant level, you need a heavily capitalized organization
> (like a bank) that's willing to deploy a new payment system and take the
> regulatory heat (tens of millions of dollars in fines) when things go
> wrong.
>
> Purchases are far less heavily regulated and much easier to standardize
> and put into production without risking jail time or stratospheric
> fines. That's one of the reasons the group is gravitating towards those.
> The other reason is that purchases constitute far more economic activity
> than peer-to-peer payments do.
>
> Steven, I suggest you tell the Web Payments IG that you think that the
> group is making a mistake by not taking peer-to-peer payments more
> seriously. It'll be a review comment, and per W3C process, we're very
> strongly urged to respond to you. That will force the Web Payments IG to
> have a discussion about it, on the record, and get back to you.
>
> http://www.w3.org/2014/Process-20140801/#wide-review
> http://www.w3.org/2014/Process-20140801/#formal-address
>

Thanks for the perspective, Manu.  I suspect satoshi had similar concerns
with bitcoin.  But we've seen bitcoin get more mainstream acceptance, with
even the NYSE making it's first investment in over 100 years in that
space.  A quote from Harvard professor and former chief economist of the
world bank, Larry summers:

“The price of handling bits [of data]has come down by a factor of 10,000
fold over the last generation; it’s high time that the costs of payments
processing fall by a factor of even two,” says former U.S. Treasury
Secretary Lawrence H. Summers. “Bitcoin offers the prospect of necessary
and important disruption in finance for the benefit of buyers and sellers
rather than financiers and middlemen.”

I would argue that the web offers the same potential.  It's possible to
misuse, for example, blogging software, which uses specs such as HTTP, but
the authors of the blogging software, or specs should not be liable.

Regarding regulators, those I have spoken to, want to see innovation
driving down costs, particularly in areas such as remittance which has
average 9% transaction fees.  This would help some of the poorest people in
the world.  When sending money home to help your family (perhaps even in a
life saving way) you're not purchasing anything.

If regulation is an issue, or causing a chilling effect, I would suggest
working with bitcoin testnet coins, which are designed to be worthless, but
have all the technical properties of crypto currencies, and none of the
risks.

>
>
> HTH,
>
> -- manu
>
> --
> Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
> Founder/CEO - Digital Bazaar, Inc.
> blog: The Marathonic Dawn of Web Payments
> http://manu.sporny.org/2014/dawn-of-web-payments/
>
>
Received on Saturday, 18 April 2015 10:55:58 UTC

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