179 lines
8.0 KiB
Markdown
179 lines
8.0 KiB
Markdown
---
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created_at: '2015-11-07T23:02:50.000Z'
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title: 'Attention Shoppers: Internet Is Open (1994)'
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url: http://www.nytimes.com/1994/08/12/business/attention-shoppers-internet-is-open.html
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author: sjcsjc
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points: 85
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story_text:
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comment_text:
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num_comments: 21
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story_id:
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story_title:
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story_url:
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parent_id:
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created_at_i: 1446937370
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_tags:
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- story
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- author_sjcsjc
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- story_10526572
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objectID: '10526572'
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---
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At noon yesterday, Phil Brandenberger of Philadelphia went shopping for
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a compact audio disk, paid for it with his credit card and made history.
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Moments later, the champagne corks were popping in a small two-story
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frame house in Nashua, N.H. There, a team of young cyberspace
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entrepreneurs celebrated what was apparently the first retail
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transaction on the Internet using a readily available version of
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powerful data encryption software designed to guarantee privacy.
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Experts have long seen such iron-clad security as a necessary first step
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before commercial transactions can become common on the Internet, the
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global computer network.
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From his work station in Philadelphia, Mr. Brandenburger logged onto the
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computer in Nashua, and used a secret code to send his Visa credit card
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number to pay $12.48, plus shipping costs, for the compact disk "Ten
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Summoners' Tales" by the rock musician Sting.
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"Even if the N.S.A. was listening in, they couldn't get his credit card
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number," said Daniel M. Kohn, the 21-year-old chief executive of the Net
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Market Company of Nashua, N.H., a new venture that is the equivalent of
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a shopping mall in cyberspace. Mr. Kohn was referring to the National
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Security Agency, the arm of the Pentagon that develops and breaks the
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complex algorithms that are used to keep the most secret electronic
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secrets secret.
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Even bigger organizations working on rival systems yesterday called the
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achievement by the tiny Net Market a welcome first step.
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"It's really clear that most companies want the security prior to doing
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major commitments to significant electronic commerce on the Internet,"
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said Cathy Medich, executive director of Commercenet, a Government and
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industry organization based in Menlo Park, Calif., that hopes to
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establish standards for commercial transactions on the Internet and
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other networks.
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The idea is to make such data communications immune to wiretaps,
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electronic eavesdropping and theft by scrambling the transmissions with
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a secret code -- a security technique known as data encryption.
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While Commercenet and other organizations have been working to develop a
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standard for the automated data encryption of commercial transactions,
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the small band of recent college graduates who formed the Net Market
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Company in New Hampshire appear to be the first to implement such
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technology successfully.
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Tests of Commercenet's encryption system, which is based on algorithms
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-- mathematical formulas -- developed by RSA Data Security Inc. of
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Redwood City, Calif., are expected to begin this fall.
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Commercenet hopes to create an easy-to-use industry standard for
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protecting Internet transactions.
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For now, Net Market's approach is available to the limited number of
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computer users who have work stations running the Unix software
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operating system and a sophisticated Internet navigational program
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called X-Mosaic. The data encryption program is called PGP, for Pretty
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Good Privacy, which is based on the same RSA algorithms used by
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Commercenet.
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PGP is available free, but it requires technical expertise to download
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it from the Internet. But within a few months commercial versions of PGP
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are expected to be available for personal computers using the Windows
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and Macintosh operating systems, which comprise the vast majority of
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computers in North America. Security Breaches Reported
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The widespread adoption of standard data encryption tools cannot come
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too quickly for many Internet entrepreneurs, who hope to foster new
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levels of commerce on the rapidly growing network.
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Alarmed by increasing reports of security breaches on the Internet, many
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people and businesses are reluctant to transmit sensitive information,
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including credit cards numbers, sales information or private electronic
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mail messages, on the network.
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But the use of standard data encryption software, which scrambles
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messages so they can be read only by someone with the proper software
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"key," has been hindered by a combination of Government regulations and
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software patent disputes.
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Experts say the PGP encryption software used by Net Market is at least
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as robust as the so-called Clipper encryption technology that the
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Clinton Administration has been pushing as a national standard. But
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unlike the Clipper system, the software keys for opening and reading
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PGP-encrypted documents is not controlled by the Government.
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A version of PGP for individuals is available free through the
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Massachusetts Institute of Technology, but users must retrieve it from
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an M.I.T. computer through the Internet.
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Organizations wanting to use PGP for commercial purposes must obtain it
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on the Internet from a company in Phoenix called Viacrypt, a maker of
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computer security software and hardware tools. Prices for PGP begin at
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$100 a copy. A Browsing Feature
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One achievement of the young programmers at Net Market was to
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incorporate PGP into X-Mosaic, the software that many Internet users
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rely on for browsing through the global network.
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X-Mosaic is a software tool that allows the users of Unix computers to
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browse a service of the Internet called the World Wide Web, where
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companies can post the electronic equivalent of a glossy color brochure
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with supporting sales or marketing documents.
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In the case of Noteworthy Music, the record retailer that leases a
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"store front" in Net Market's Internet computer, a shopper can look at
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color pictures of CD album covers.
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Mr. Kohn, a 1994 honors graduate in economics from Swarthmore College,
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came up with the idea for Net Market during his junior year abroad, at
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the London School of Economics. There, he persuaded an American
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classmate, Roger Lee, to join his venture.
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Mr. Lee, who graduated from Yale this past spring with a degree in
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political science, is president of the company. For technical expertise,
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they recruited two other partners from Swarthmore, Guy H. T. Haskin and
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Eiji Hirai.
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The four men live upstairs in the house in Nashua, commuting downstairs
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each morning to run the business. Because of the pressures of running
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the system and debugging the software, they rarely venture outside, even
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though they have a backyard swimming pool.
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"We don't get much sun," Mr. Kohn said, "but we're down to a case of
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Coke a day." 'An Important Step'
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Although Net Market has been selling various products like CD's, flowers
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and books for several months on behalf of various merchants, yesterday
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was the first time they had offered digitally secure transactions.
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"I think it's an important step in pioneering this work, but later on
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we'll probably see more exciting things in the way of digital cash,"
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said Philip R. Zimmermann, a computer security consultant in Boulder,
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Colo., who created the PGP program.
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Digital cash, Mr. Zimmermann explained, is "a combination of
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cryptographic protocols that behave the way real dollars behave but are
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untraceable."
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In other words, they are packets of worth that have value in cyberspace,
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the same way dollars have value in the real world, except that they have
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the properties of anonymity, privacy and untraceability. Many details
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remain to be worked out, Mr. Zimmermann said.
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For now, Mr. Brandenberger, despite his historic transaction yesterday,
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will be paying with plain old dollars, when he gets his credit card
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bill. And sometime today, the Sting CD will arrive by fairly
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conventional means -- shipped FedEx from the Noteworthy Music warehouse
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in Nashua.
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Photo: A system from the Net Market Company allows credit card shopping
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on the Internet in total privacy. Net Market's chief executive, Daniel
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M. Kohn, foreground, worked at the company's office in Nashua, N.H.,
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yesterday. Behind him, from left, were the president, Roger Lee; program
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developer, Mark Birmingham; senior program developer, Guy H. T. Haskin,
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and chief information officer, Eiji Hirai. (MacArther S. McBurney for
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The New York Times)
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