Bitcoin Forum

How DigiCash Blew Everything

In September 1998 the high-tech company DigiCash finally went bankrupt. The office in Palo Alto, California remained open for a while but it was merely a stay of execution.  Two months ago the company filed for Chapter 11.

Nobody realises, but with the "pending failure" of DigiCash, a bit of Dutch Glory died.  The company made a brilliant product.  Even Silicon Valley was jealous of the avant garde technology invented in the Amsterdam Science Park. Internet "guru" Nicholas Negroponte went so far as to call the electronic payment system, ecash1, "the most exciting product I have seen in the past 20 years." The rise and fall of DigiCash: a story of paranoia, idealism, amateurism and greed.
David Chaum

The name of one man stands out way above anyone else in the history of DigiCash: David Chaum, US citizen, born into a wealthy family, brilliant mathematician and one who had to always have things his own way2. After travelling around the world he ended up in Amsterdam in the late 80's.  Here, he became head of the cryptography department of the CWI (Centre of Mathematics and Information Science). Cryptography is the science of encoding and decoding of data, in order to maintain privacy. Chaum had built a big reputation in this field in the previous few years. Insiders estimated he was in the top 5 of the world at the time.

And at the CWI, they also worked on electronic payment systems. In the early 90s, Rijkswaterstaat3 became interested as they were thinking about introducing automatic toll-collection roads.  Chaum got together a few researchers, mainly from earlier contacts with the university of Eindhoven. All guys who knew each other through a "young researchers" programme sponsored by Philips. They had all spent their youth programming behind a computer. Enthusiastically they started, and within little over a week the job was done.

In light of the various companies popping up recently- some of then obviously fraudulent scams... let's get a bit of perspective, shall we?

http://cryptome.org/jya/digicrash.htm

There is something very seductive about the promise of money that comes from nowhere, carries no responsibility, no national authority and thus cannot be said to cause violence(actually anonymous cash is probably responsible for more violence than the official kind).  Practically everyone has to manage personal debt so these vague promises of alternative money systems soothe some of the more unpleasant factors of life.

Tulips were first grown in Western Europe in the middle of the sixteenth century. They were cultivated by Counsellor Herwart of Augsburg, a man famous for his collection of rare exotic plants. The bulbs were sent to Herwart by a friend from Constantinople, where the tulip had already been popular for a long time. (The word "tulip" is believed to originate from a Turkish word for turban.) In 1559 tulips were seen in Herwart's garden by Conrad Gesner who, in the following ten years, claims to have popularised them in Europe.

Tulips became sought after by the wealthy, especially in Holland and Germany - wealthy people in Amsterdam sent directly to Constantinople for bulbs, paying high prices for them. Bulbs arrived in England from Vienna in 1600.

The tulip's reputation grew to such heights that, by 1634, wealthy people who did not have a tulip collection were judged to have bad taste. Many learned men, including Pompeius de Angelis and the celebrated Lipsius of Leyden, the author of the treatise "De Constantia," were passionately fond of tulips.

An overwhelming desire to own tulips gripped the middle classes. Merchants and shopkeepers, even those with modest incomes, began to vie with each other for tulips - and in the preposterous prices they paid for them. A trader from Harlaem paid half of his life savings for a single bulb. He didn't buy for profit; he just wanted his friends to admire it.