Corporate executives have flocked by the hundreds to Nicholas Negroponte's Media Lab at the Massachusetts Institute of Technology. Thousands, perhaps millions more people have caught up to his futuristic visions by reading his 1995 best-seller, "Being Digital," or his monthly columns in Wired magazine.

Mr. Negroponte travels the world to advise companies and governments on ideas pioneered at the laboratory he founded in 1984: digital television, intelligent agents, robotics, thinking machines. The gist of his message is that it is far easier to work with computer bits, which can be transported effortlessly and without regard to distance from one machine to another, than with cumbersome matter.

He explored some of the implications for money and banking in the following interview-an exchange conducted via E-mail.

Mr. Negroponte, who did his graduate work at MIT and joined the faculty there in 1966, has been a full professor since 1980. Recently he has become active in the management of Digicash Inc., the developer of Ecash for Internet transactions.


Banks are eager to get customers to use remote banking channels- telephones and personal computers, etc.-because it's cheaper than having people use branches. But the services have been catching on slowly. Do you think the public is reluctant to try new technologies, or is it mostly that they are worried about trusting their finances to the new media?

NEGROPONTE: By some measures, the opposite is true. People are using automated teller machines with abandon. My guess is that the adoption rate is higher than most bankers had expected and would be yet higher if the local regulatory environment allowed for more ATM ubiquity.

Most people feel very comfortable trusting their finances to ATMs. They are much less so on the Net. Security and privacy is very much about perception, and the perception people have of the Net is almost that of an underworld. This will change.

What do you think are the best ways that banks can make use of digital technology?

NEGROPONTE: From the banks' point of view, get rid of the branch offices. From the customers' point of use, make the statement personalized- at least readable.

What role do you foresee banks playing in electronic commerce as it becomes more mature?

NEGROPONTE: In general, less and less. This is partly due to regulation and partly due to an outdated mind-set. There is one place banks can play a role-with software versions of digital cash, by serving as the means to validate tokens and avoid the double-spending problem.

Some banks are opening shop on the Internet, giving customers account access there. But others are fearful of the security risk. Is the Internet safe enough for banking transactions?

NEGROPONTE: The digital networks are perfectly secure, and banks know it. That is why they are not uncomfortable about moving $2 trillion a day around the planet. Most people do not know that encryption is good. It may be unlawful to use encryption in its potent form, but the banking industry is exempt from the international encryption laws. On-line can be as safe as we want to make it.

Do you do your banking on-line?

NEGROPONTE: Only ATMs. I wish I did more.

For those who have not read "Being Digital," what are the messages they could pick up from the book that would be relevant to their business?

NEGROPONTE: Bankers already understand the difference between bits and atoms. Bankers should take away from "Being Digital" that the medium of bits is not theirs alone and that the digital world affects and thus unifies all walks of life.

What are you working on now? Are you planning to update "Being Digital"?

NEGROPONTE: There will be no sequel. Being Digital was a memoir, written ingenuously and without a note. I had never done anything like it before and doing another would be very different. Hopefully my Wired column will keep me and you satisfied.

Everyone in the wired world talks about how great it will be when electronic commerce takes off. Will this happen soon? Do you think the absence of easy and secure on-line payment systems is impeding Internet commerce?

NEGROPONTE: Security (real and perceived) and the payment systems are the cause for the delays. This will change very soon.

What is your role with Digicash Inc. How does that company and its Ecash system differ from other on-line payment systems?

NEGROPONTE: I made a large personal investment in Digicash because I think the field is important. Their technology is the best, but their company is the worst. We restructured the company, moved it to the U.S.A. and (are finding) a new CEO. During this process, I have been the acting chairman, in no way a candidate or capable to be its CEO. The scoop is that I may know (soon) who that person will be.

The companies are very different and there is room for several. Digicash's uniqueness is privacy. My guess, and hope, is that you will see Digicash emerge as a major player after years of small pilot systems.

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