Trust and Risk in Internet Commerce

As Internet-based commerce becomes commonplace, it is important that we examine the systems used for these financial transactions. Underlying each system is a set of assumptions, particularly about trust and risk. To evaluate systems, and thus to determine one's own risks, requires an understanding of the dimensions of trust: security, privacy, and reliability.

In this book Jean Camp focuses on two major yet frequently overlooked issues in the design of Internet commerce systems—trust and risk. Trust and risk are closely linked. The level of risk can be determined by looking at who trusts whom in Internet commerce transactions. Who will pay, in terms of money and data, if trust is misplaced? When the inevitable early failures occur, who will be at risk? Who is "liable" when there is a trusted third party? Why is it necessary to trust this party? What exactly is this party trusted to do? To answer such questions requires an understanding of security, record-keeping, privacy, and reliability.

The author's goal is twofold: first, to provide information on trust and risk to businesses that are developing electronic commerce systems; and second, to help consumers understand the risks in using the Internet for purchases and show them how to protect themselves. Rather than propose a single model of an Internet commerce system, the author provides the information and insights needed by merchants and consumers as they develop the Internet for commerce.

People who complain about the weightlessness of "virtual" money haven't looked closely enough at "real" money. While it's true that the Internet has no equivalent of the Federal Reserve--yet--it's also true that every economy ever devised has relied on mutual trust. In Trust and Risk in Internet Commerce, Harvard public-policy researcher L. Jean Camp looks at the evolving Net economy as just another means of exchanging goods and services--an engaging and thought-provoking analysis of the assumptions and technology underlying networked business.

Camp briefs the reader on the basics of the Internet and money itself before launching into a deep consideration of their interactions. Since much of the essential infrastructure (money standards, privacy and security law, and fraud prevention, for example) is currently embryonic, much of what Camp has to say is prescriptive--though she is careful not to let her own values intrude far into her writing.

In discussing privacy, for example, she examines several scenarios advocated by different interest groups, from system designers to law enforcement, and shows how each would develop if followed through; since compromise is inevitable, she suggests the limits of the privacy we will likely find in the future.

The final chapter, "The Coming Collapse in Internet Commerce," warns that any money system is inherently fragile and that we must expect catastrophic failure, perhaps more than once, before we iron out the more obvious wrinkles in the new economy. After that, it all depends on trust. --Rob Lightner