`
`SELLING CINLINE WITH...
`
`
`
`F’ETE LEISHIN
`
`FDREWDRD BY NATHANIEL BEIREN-STEIN
`
`
`
`Shopify Exhibit 1013
`
`
`
`
`
`
`
`
`
`SELLING ONLINE WITH .
`.
`.
`FIRST VIRTUAL
`HOLDINGS, INC.
`
`THE INTERNET MERCHANT MASTER SERIES
`
`
`
`LIMITED WARRANTY AND DISCLAIMER OF LIABILITY
`
`CHARLES RIVER MEDIA, INC. (“CRM”) AND/OR ANYONE WHO HAS BEEN INVOLVED
`
`IN THE WRITING, CREATION OR PRODUCTION OF THE ACCOMPANYING CODE (“THE
`
`SOFTWARE”) OR THE THIRD PARTY PRODUCTS CONTAINED ON THE CD, CANNOT
`AND DO NOT WARRANT THE PERFORMANCE OR RESULTS THAT MAY BE OBTAINED
`
`BY USING THE SOFTWARE. THE AUTHOR AND PUBLISHER HAVE USED THEIR BEST
`
`EFFORTS TO ENSURE THE ACCURACY AND FUNCTIONALITY OF THE TEXTUAL MATE-
`
`RIAL AND PROGRAMS CONTAINED HEREIN; WE HOWEVER, MAKE NO WARRANTY OF
`
`ANY KIND, EXPRESSED OR IMPLIED, REGARDING THE PERFORMANCE OF THESE PRO-
`
`GRAMS. THE SOFTWARE IS SOLD “AS IS “ WITHOUT WARRANTY (EXCEPT FOR DEFEC-
`TIVE MATERIALS USED IN MANUFACTURING THE DISK OR DUE TO FAULTY
`
`WORKMANSHIP); THE SOLE REMEDY IN THE EVENT OF A DEFECT IS EXPRESSLY LIM-
`
`ITED TO REPLACEMENT OF THE CD, AND ONLY AT THE DISCRETION OF CRM.
`
`THE AUTHOR, THE PUBLISHER, DEVELOPERS OF THIRD PARTY SOFTWARE, AND
`ANYONE INVOLVED IN THE PRODUCTION AND MANUFACTURING OF THIS WORK
`SHALL NOT BE LIABLE FOR DAMAGES OF ANY KIND ARISING OUT OF THE USE
`
`‘ OF(OR THE INABILITY TO USE) THE PROGRAMS, SOURCE CODE, OR TEXTUAL MATE-
`
`RIAL CONTAINED IN THIS PUBLICATION. THIS INCLUDES , BUT IS NOT LIMITED TO,
`LOSS OF REVENUE OR PROFIT, OR OTHER INCIDENTAL OR CONSEQUENTIAL DAM—
`AGES ARISING OUT OF THE USE OF THE PRODUCT.
`
`THE CD WHICH ACCOMPANIES THE BOOK MAY BE USED ON A SINGLE PC ONLY. THE
`
`LICENSE DOES NOT PERMIT THE USE ON A NETWORK (OF ANY KIND). YOU FURTHER
`AGREE THAT THIS LICENSE GRANTS PERMISSION TO USE THE PRODUCTS CON—
`
`TAINED HEREIN, BUT DOES NOT GIVE YOU RIGHT OF OWNERSHIP TO ANY OF THE
`CONTENT OR PRODUCT CONTAINED ON THIS CD. USE OF THIRD PARTY SOFTWARE
`
`CONTAINED ON THIS CD IS LIMITED TO AND SUBJECT TO LICENSING TERMS FOR
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`THE RESPECTIVE PRODUCTS.
`
`THE USE OF “IMPLIED WARRANTY” AND CERTAIN “EXCLUSIONS” VARY FROM
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`STATE TO STATE, AND MAY NOT APPLY TO THE PURCHASER OF THIS PRODUCT.
`
`Requests for replacement of a defective CD must be accompanied by the original disk, your mailing address,
`telephone number, date of purchase and purchase price. Please state the nature of the problem, and send the
`information to CHARLES RIVER MEDIA, INC., P.O. Box 417, 403 VFW Drive, Rockland, Massachusetts
`02370. CRM’s sole obligation to the purchaser is to replace the disk, based on defective materials or faulty
`workmanship, but not on the operation or functionality of the product.
`
`
`
`.
`.
`SELLING ONLINE WITH .
`FIRST VIRTUAL
`HOLDINGS, INC.
`
`THE INTERNET MERCHANT MASTER SERIES
`
`
`
`
`
`CHARLES RIVER MEDIA, INC.
`
`ROCKLAND, MASSACHUSETTS
`
`
`
`Copyright © 1996 by CHARLES RIVER MEDIA, INC.
`All rights reserved.
`'
`
`No part of this publication may be reproduced in any way, stored
`in a retrieval system of any type, or transmitted by any means or
`media, electronic or mechanical, including, but not limited to, Pho-
`tocopy, recording, or scanning, without prior permission in writing
`from the publisher.
`
`Publisher: David F. Pallai
`
`.
`
`Interior Design/Comp: Reuben Kantor
`Cover: Gary Ragaglia
`Printer: InterCity Press, Rockland, MA.
`
`,
`
`CHARLES RIVER MEDIA, INC.
`PO. Box 417
`403 VFW Drive
`
`Rockland, Massachusetts 02370
`617-871-4184_
`617—871-4376 (FAX)
`chrivmedia@aol.com
`
`This book is printed on acid—free paper.
`
`Pete Loshin. Selling Online With .
`ISBN: 1-886801-41-X
`
`.
`
`. First Virtual Holdings, Inc.
`
`All brand names and product names mentioned in this book are
`trademarks or service marks of their respective companies. Any
`omission or misuse (of any kind) of service marks or trademarks
`should not be regarded as intent to infringe on the property of oth—
`ers. The publisher recognizes and respects all marks used by compa-
`nies, manufacturers, and developers as a means to distinguish their
`products.
`
`Printed in the United States of America
`96 97 98 99 00 6 5 4 3 2 First Edition
`
`CHARLES RIVER MEDIA titles are available for site license or
`
`bulk purchase by institutions, user groups, corporations, etc. For
`additional information, please contact the Special Sales Department
`at 617-871-4184.
`
`
`
`
`
`CONTENTS I
`
`
`
`FOREWORD .............................................. xv
`
`PREFACE ................................................ xix
`
`Part I
`
`Introducing First Virtual and Internet
`Commerce ......................................... 1
`
`INTRODUCTION To INTERNET COMMERCE.
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`.
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`.
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`'. ............_
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`. 3 .
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`. 3
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`BUYING AND SELLING ON THE INTERNET ............................ 6
`
`What’s Different? ...................................... 7
`
`What’s the Same? I..................................... 7
`
`THE INTERNET ENVIRONMENT.
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`. ;' ....... _.
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`L .............. 9
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`The lntemet Advantage ................................. 9
`
`World Wide Web, Killer App of the Internet ............. .
`
`.
`
`. 11
`
`THE WORLD WIDE WEB ...............‘ ....................... 13
`
`World Wide Web Standards ............................ 14
`
`Web Browsers and Web Servers ......................... 16
`Selling on the World Wide Web ......................... 18
`Other Internet Sales Venues ............................ 19
`
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`SELLING ONLINE WITH .
`
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`. FIRST VIRTUAL
`
`INTERNET COMMERCE ISSUES ................................... 22
`
`Informal Procedures Aren’t Enough ....................... 22
`Securing Financial Information ........................... 23
`
`Authenticating Transaction Data ......................... 25
`
`Paying for the Privilege ................................. 26
`
`THE FIRST VIRTUAL WAY ...................................... 27
`
`A Holistic Approach to Security ........... V .............. 28
`Paying for the Service ................................. 30
`
`FIRST VIRTUAL OVERVIEW ..................................... 30
`
`Can't People Steal My Information Products? ............... 33
`
`Can’t VirtuaIPINs Be Compromised? ...................... 34
`
`It Seems Awfully Complicated .......................... 35
`
`' 2
`
`SECURITY ISSUES, SECURITY TOOLS ............................ 37
`
`WHY THE INTERNET Is UNSECURE ................................ 38
`It’s the Protocols ...................................... 40
`
`Where the Risks Are .................................... 42
`
`What the Risks ~Are .................... ~ ............... 42
`
`Internet Security Holes ................................ 43
`
`A Bigger Risk ......................................... 45
`What It All Means .......' .............................. 46
`
`NEW TOOLS FOR CRYPTOGRAPHY ............................... 46
`
`Cryptography .......... ' .............................. 47
`
`Cryptographic Objectives .............................. 48
`
`Codes and Ciphers ................................... 50
`
`Breaking Encryption Schemes ........................... 51
`
`Securing Algorithms .................................. 53
`Distributing Keys and Keeping Them Secret ................. 54
`
`The Public Key Solution ................................ 55
`
`Public Key Implications ................................ 56
`
`Key Distribution and Certification ........................ 58
`
`Trusted Key Distribution and Verification .................. 59
`
`CRYPTOGRAPHIC APPLICATIONS ................................. 60
`
`Encryption .......................................... 60
`
`
`
`
`
`CONTENTS
`
`
`
`Digital Signature ...................................... 61
`
`Nonrepudiation and Message Integrity .................... 69
`
`3
`
`SECURING INTERNET COMMERCE .............................. 65
`
`THE INTERNET COMMERCE STORY, SO FAR . ......................... 66
`Five Internet Commerce Techniques ...................... 66
`
`Security through Obscurity ............................. 66
`Consumer/Merchant Channel Encryption ................... 67
`
`Digital Envelope Encryption ............................ 68
`
`Digital Currencies .................................... 69
`
`Offline Handling of Transaction Data ...................... 69
`
`Representative Internet Commerce Players ................. 70
`Other lntemet Commerce Actors ........................ 7Q
`
`TRANSACTION SECURITY THROUGH OBSCURITY ....................fl ,
`
`. 73
`
`The “No Security” Choice .............................. 73
`
`Choosing No Security .................. ' ............... 74
`
`Incomplete Security Solutions ........................... 75
`Marks of Unsecure Solutions ............................ 76
`
`THE ENCRYPTED CHANNEL APPROACH ............................ 77
`
`How an Encrypted Channel Works ......... - ........... ;
`
`.
`
`I 78
`
`Advantages for Merchants ....... ‘ ....................... 81
`
`Advantages for Consumers ............................. 8Q
`
`Weaknesses and Disadvantages .......................... 89
`
`THE DIGITAL ENVELOPE APPROACH .............................. 83
`
`How Digital Envelopes Work ............................ 85
`
`Advantages for Merchants .............................. 85
`
`Advantages for Consumers ............................. 86
`
`Weaknesses and Disadvantages.......................... 86
`
`DIGITAL CURRENCIEs ........................................ 87
`
`How Digital Cash Works ................................ 88
`
`Advantages for Merchants .............................. 89
`
`Advantages for Consumers ............................. 89
`
`Weaknesses and Disadvantages.......................... 89
`
`
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`SELLING ONLINE WITH .
`
`.
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`. FIRST VIRTUAL
`
`EXTERNAL CHANNEL APPROACH ................................ 90
`
`How the External Channel Approach Works ................ 91
`
`Advantages for Merchants .............................. 92
`
`Advantages for Consumers ............................. 93
`Weaknesses and Disadvantages.......................... 94
`
`Part II First Virtual: The Company,
`Its Products and Services ..................... 97
`
`4 THE FIRST VIRTUAL APPROACH TO INTERNET COMMERCE ........... 99
`
`THE BIRTH OF FIRST VIRTUAL .................................. 100
`
`How FIRST VIRTUAL WORKS .................................. 101
`
`Creating an Account ................................. 102
`
`Account Requirements .
`
`~ .............................. 103
`
`Submitting the Application ............................ 103
`Terms and Conditions ................................ 103
`
`Making a Purchase .................................. 104
`
`Making a Sale ....................................... 105
`
`FIRST VIRTUAL PROTOCOLS ................................... 105
`
`The Green Commerce Model .......................... 107
`
`Cardholders and Cardholder Accounts ................... 109
`
`Green Commerce Transactions ......................... 110
`
`Funds Transfer .
`
`'. ......... L ......................... 111
`
`Cardnumber inquiries ................................ 114
`
`Transfer inquiries ................................... 114
`
`Chargebacks ...................................... 1 15
`
`Green Commerce Server Capabilities ..................... 115
`
`Cardholder Account Application ....................... 1 15
`Account Maintenance ............................... 1 16
`
`Account History Requests ............................. 116
`
`Application/Green-Commerce MlME Content—Type ......... 117
`Simple MIME Exchange Protocol (SMXP) .................. 118
`
`Simple Green Commerce Protocol (SGCP) ................. 118
`
`
`
`
`
`CONTENTS
`
`
`
`SELLING HARD GOODS WITH FIRST VIRTUAL ....................... 119
`
`‘ Added Security Measures ............................. 119
`
`Selling Hard Goods vs. information Products .............. 119
`
`Digital Signature Key Management....................... 120
`
`Validating Digital Signatures ............................ 121
`
`5
`
`FIRST VIRTUAL PRODUCTS AND SERVICES ....................... 123
`
`THE FIRST VIRTUAL ORGANIZATION ............................. 124
`
`A Virtual Corporation. .
`
`4............................... 124
`
`Using Automation ................................... 125
`FirstVirtual Products and Services ....................... 126
`
`TERMS AND CONDITIONS .................................... 127
`
`Getting the Terms and Conditions Documents ............. 128
`
`Buyer’s Terms and Conditions .......................... 129
`Seller’s Terms and Conditions .......................... 129
`
`lnfoHaus Seller’s Terms and Conditions ................... 130
`
`BUYERs’ SERVICES ......................................... 130
`
`Account Requirements .................. - ............. 1 30
`Account Creation .................................... 131
`
`Buying Privileges ..................................... 132
`
`Customer Support Services ............................ 132
`
`SELLERs’ SERVICES ......................................... 133
`
`Account Creation and Requirements ........, ............ 1 34
`
`Selling Privileges ..................................... 135
`
`Customer Support Services ............................ 135
`
`WHY THE 91 -DAY HOLDBACK PERIOD? .......................... 136
`
`THE INFOHAUS SERVICE ..................................... 137
`
`Storefront Creation and Requirements ................... 138
`
`Storefront Management ............................... 138
`
`Rights and Responsibilities ..................... . ...... 139
`Customer Support Services ............................ 139
`
`REACHING FIRST VIRTUAL .................................... 139
`
`Contacting First Virtual via the World Wide Web ............ 140
`
`
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`SELLING ONLINE WITH .
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`. FIRST VIRTUAL
`
`E-mail Addresses .................................... 141
`
`Automatic E—mail Responder .......................... 141
`
`Special Addresses for Sellers .......................... 141
`
`Special InfoHaus Addresses ........................... 142
`Other Internet Resource Addresses ..................... 142
`
`ftp ............................................... 143
`Telnet ............................................. 143
`
`First Virtual Users Mailing List ........................... 144
`
`How To Subscribe To the FV—Users List .
`
`‘.................. 144
`
`Unsubscribing From the FV-Users List ..................... 145
`
`Participating In the FV-Users List ........................ 145
`
`Reaching a Human ................................... 146
`
`Part III Buying and Selling with First Virtual ......... 149
`
`6 OPENING YOUR FIRST VIRTUAL ACCOUNT ...................... 151
`
`THE FIRST VIRTUAL ACCOUNT PROCESS ........................... 152
`
`Methods for Initial Contact ............................ 152
`
`Providing Some Information Online ..................... 153
`
`Different Applications, Identical Followup ................ 156
`
`Providing Some Information Offline ..................... 157
`
`Buying and/or Selling ................................. 158
`\X/aiving the Holding Period for Merchants ................ 158
`
`\
`
`SIGNING UP BY WORLD WIDE WEB ............................. 159
`
`Connecting to the First Virtual Web Site .................. 159
`
`Filling in the Application Form .......................... 160
`What Follows ........................................ 164
`
`' SIGNING UP BY TELNET ...................................... 164
`Connecting to the First Virtual Telnet Server ............... 164
`
`Answering Application Questions ...................... 167
`
`Reviewing and Submitting the Application ............... 170
`What Follows ........................................ 173
`
`
`
`
`
`CONTENTS
`
`
`
`SIGNING UP BY E—MAIL ......................... ‘ ............. 174
`
`Getting the E—mail Application ......................... 174
`
`Filling in the Application Form .......................... 174
`
`Submitting the Application Form ....................... 180
`
`What Follows ........................................ 181
`
`ACCOUNT VERIFICATION AND FOLLOWUP ......................... 181
`
`E—mail Confirmation of ApplicatiOn ...................... 182
`
`Responding by Telephone for Buyers .................... 186
`
`.I ...................... 187
`.
`Responding by Mail for Sellers .
`Finishing the Process ................................. 188
`
`GETTING EXPRESS MERCHANT STATUS ....... : ................... 188
`
`ACCOUNT MAINTENANCE .................................... 190
`
`Tracking Your Account Status .......................... 190
`
`Making Changes ..................................... 191
`
`BUYING WITH FIRST VIRTUAL................................ 193
`
`THE TRANSACTION PROCESS .................................. 194
`
`ASAMPLEPURCHASE.......................' ............... 195
`
`TRANSACTION COMPLETION .................................. 199
`
`PRODUCT DELIVERY .
`
`.
`
`.
`
`. .............. . ....... .
`
`.
`
`.
`
`. .......... 206
`
`BUYING HARD GOODS ........ ' ............................. 207
`
`BUYING BY E-MAIL AND FTP ; ................................. 208
`
`Buying by ftp ...................................... 208
`
`Buying by E—mail ................................... 209
`
`SELLING ON THE INFOHAUS ................................ 213
`
`INTRODUCTION To THE INEOHAUS .
`
`.
`
`.I........................... 214
`
`Why the lnfoHaus’? .......................... , ........ 214
`How It Works ....................................... 216
`
`It’s Not Just for the World Wide Web ...... ............... 21 6
`What It Costs ....................................... 217
`
`/
`‘I J
`
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`SELLING ONLINE WITH .
`
`.
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`. FIRST VIRTUAL
`
`SETTING UP YOUR STOREFRONT ................................ 218
`
`Opening Your InfoHaus Storefront ...................... 218
`
`Setting up a Storefront Using Telnet ...................... 219
`
`Setting up a Storefront Using E-mail ...................... 225
`
`Stocking Your Store ‘.................................. 227
`
`Preparing Your Information Products ..................... 228
`
`Uploading Products by ftp ............................ 232
`
`Uploading Products by E—mail .......................... 233
`
`Checking in Products by Telnet ......................... 233
`
`Installing Products by E-mail ........................... 235
`
`ADDING HTML To YOUR INFoHAUS STOREFRONT .................. 238
`
`INFOHAUS PERIODICALS ..................................... 240
`
`Subscribing to a Periodical ................ i: ........... 241
`
`Creating Periodicals .................................. 241
`
`Adding Issues to a Periodical .......................... 242
`
`SELLING FROM YOUR WEB SERVER ........................... 243
`
`WHAT YOU NEED TO Go ONLINE ............................. 245
`
`Hardware, Software, Services ....... -................... 246
`Hardware ........................................ 246
`
`Software ......................................... 247
`
`Services .......................................... 247
`
`If You Outsource Your Web Site ......................... 248
`
`FIRST VIRTUAL RESOURCES .................................... 249
`
`Using First Virtual Programs and Templates ................ 250
`Using the First Virtual Web Site ......................... 251
`
`Scripts, Templates, and More .......................... 253
`
`THE SELLING PROCESS ...................................... 254
`
`Initiating a Transaction ................................ 254
`
`Using E-mail ....................................... 255
`
`Using Telnet ............................. ........... 256
`
`Using the, Simple Green Commerce Protocol ............... 257
`
`Making Sales off the Internet ........................... 257
`
`
`
` CONTENTS
`
`
`
`Verifying a Buyer’s VirtualPlN ........................... 258
`
`Finger ........................................... 258
`Telnet ............................... , ............ 259
`
`E-mail ........................................... 260
`
`UsingtheFV-API.........I..I........‘. ............. 260
`
`INFOHAUS HTML FORMS ................................... 261
`
`Emailform .......................................... 261
`
`> Emailpayform ....................................... 2636
`
`CGI SELLING TOOLS ....................................... 265
`
`Member ........................................... 265 ,
`
`Installing and Running Member ......................... 266
`\X/ebsale. .
`.
`.' ....................................... 268
`
`Using Tcl ......................................... 269
`
`Installing \X/ebsale .................................. 269
`
`THE FIRST VIRTUAL APl ..................................... 269
`
`Getting and Installing the First Virtual APl ................. 271
`
`., ............................... 271
`.
`FV—APl Operations. .
`Autosell URLs ...................................... 271
`
`Manusell URLS ..................................... 272
`
`Formsell URLs ...................................... 272
`
`10
`
`TIPS, TRICKS, AND POINTERs ............................... 273
`
`TIPS FOR EVERYONE ........................................ 274
`
`TIPS FOR lNFOHAUS MERCHANTS .............................. 275
`
`GETTING YOUR STORE LISTED ................................. 279
`
`COMMERCIAL OPTIONS FOR MERCHANTS ......................... 280
`
`MAKING TEST SALES THROUGH FIRST VIRTUAL ...................... 281
`
`lnfoHaus "QuickBuy" Numbers ......................... 282
`
`LEARNING MORE ABOUT HTML AND CGI ........................ 284
`
`Getting Help from the World Wide Web ................. 284
`Books about HTML and CGI ............................ 285
`
`l5
`
`
`
`
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`SELLING ONLINE WITH .
`
`.
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`. FIRST VIRTUAL
`
`APPENDIX A
`
`INTERNET COMMERCE GLOSSARY............................. 287
`
`APPENDIX B
`
`ELECTRONIC COMMERCE ONLINE RESOURCES ................... 305
`
`WORLD WIDE WEB RESOURCES ................................ 306
`
`'
`
`Electronic Commerce Companies ....................... 306
`Financial Institutions .................................. 311
`
`International Internet Commerce Sites .................... 314
`
`General Catalog and News Services ..................... 316
`Online Commerce OrganizatiOnS .' ...................... 318
`
`Online Marketing, Buying, and Selling .................... 320
`
`MAILING LISTS ........ I.................................. 322
`COMMERCENET ........................................... 326
`
`CommerceNet Charter ................................ 326
`
`CommerceNet Participation ................... ' ........ 327
`What CommerceNet Offers ............................ 327
`
`APPENDIX C
`
`FIRST VIRTUAL TERMS AND CONDITIONS DOCUMENTS ............. 329
`
`BUYER’S TERMS AND CONDITIONS .......... _.................... 330
`
`SELLER’S TERMS AND CONDITIONS .............................. 341
`
`INFOHAUS TERMS AND CONDITIONS ............................ 360
`
`APPENDIX D
`
`GUIDE TO THE CD-ROM .................................. 371
`
`INSTALLING THE CD-ROM ..................... '.............. 371
`
`Accessing the CD—ROM Index. .
`
`; ....................... 372
`
`SUPPORT FOR SOFTWARE ON THE CD-ROM ....................... 371.
`
`CD-ROM CONTENTS ...... ' ................................ 371
`
`Structureof the CD—ROM .............................. 371
`
`First Virtual Specification Documents .................... 371
`
`InfoHaus Templates .................................. 371
`
`HTML Templates and CGI Scripts ....................... 371
`The First Virtual API ................................... 371
`
`First Virtual Enabling Your ftp Server ..................... 371
`
`ELECTRONIC COMMERCE LINKS ................................ 371
`
`INDEX ................................................. 377
`
`
`
`
`
`FOREWORD '
`
`
`
`We’re living in very strange and interesting times.
`Nearly twenty—five years ago, as a high school student, I
`i
`met my first computer. It was an IBM 360, to which I
`l
`typed via a teletype connected cross-town at 110 baud. I
`thought it was the second-coolest thing I had ever seen. Like
`many others of my generation, I quickly realized that this was
`an encounter that would change my life, but I didn’t have a
`clue what was coming. If anyone had tried to convince me, as
`a 15-year-old would-be hippie in Columbus, Ohio, that by
`1996 I would be something like an international banker, I
`would have laughed out loud. Ten years later, as a computer
`science graduate student working on ARPAnet email technol-
`ogy, I would have been equally amused.
`
`In hindsight, it’s clear that computers, communication, and
`banking have been on a collision course for a long time. Now,
`the collision has happened. People who know how to use the
`Internet safely and effectively are suddenly considered vital to
`the future of human commerce. Established players in the
`game of international finance are on the edge of panic, so
`uncertain are they as‘ to how the new technologies will
`
`
`
`
`
`
`
`
`
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`
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`
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`SELLING ONLINE WITH .
`
`.
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`. FIRST VIRTUAL
`
`restructure their world. Their reactions vary in every conceiv-
`able way, sharing only one common theme: a desperate
`hunger to understand this strange new thing called the
`Internet.
`
`First Virtual came from another planet, more or less. The FV
`founders came from inside the Internet, understood it deeply,
`and were totally comfortable with it. Of course, our igno-
`rance and naivete on the financial side of things were pretty
`impressive, too. If the established players had understood the
`Internet, they would have eaten us for lunch. As it was, we
`all found ourselves in a frantic race to learn more. Our
`
`biggest advantage was probably that it was easier to find
`people who could explain the financial world to us than it
`was for banks to find people who could explain the Internet
`to them.
`
`It will be a long time before the dust settles on Internet com—
`merce mechanisms. It may yet happen that all the players cur-
`rently on the scene will. be swept away by forces that are, at
`this writing, just lurking in the Wings. But so far, a few of First
`Virtual’s key features seem to have struck a receptive chord
`with the Internet community. They seem likely to be around
`for a long time in one form or another.
`
`One such idea is open, universal access to commerce. First
`Virtual has without a doubt opened up more entrepreneurial
`horizons than any other payment system in history. With ten
`dollars and a bank account, you can start selling things to
`people all over the planet. There’s no credit-scoring or
`approval process that restricts merchant status to large, estab—
`lished corporations. Anyone can be a seller. This aspect of the
`FV system has met with nearly universal approval, and seems
`to be in tune with one of the most important aspects of the
`Internet — its role in opening, leveling, and universalizing
`human communication.
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` FOREWORD
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`Another aspect of First Virtual’s system design that seems to
`have been validated by experience is our reluctance to rely on
`special consumer-level mechanisms to facilitate commerce. All
`that you really need in order to be a buyer with First Virtual is
`access to Internet e-mail. This means that neither First Virtual
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`nor the merchants who use our system have to be in the busi—
`ness of persuading customers to acquire, learn, and use any new
`tools. In essence, the entire Internet is our installed software
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`base, and FV customers don’t have to sacrifice any freedom of
`choice regarding the software that they use for Internet access.
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`Perhaps the most important aspect of FV’S system design,
`however, is that we have demonstrated that it is possible to
`build a secure commerce mechanism based entirely on proto—
`cols that are truly open. Programmers who want to write
`applications that use First Virtual’s payment system can down-
`load complete specifications, sample code, and even some fully
`functioning software, all for free from our site. There are no
`woolly-headed claims for security through obscurity, no
`requirements for programmers to license patented algorithms,
`and no dependencies on proprietary computing platforms.
`Contrary to many people’s expectations, FV demonstrates that
`it is possible to make Internet commerce as open as the
`Internet itself. Unfortunately, not everyone wants to keep it
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`that way.
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`We all know that there’s a gold rush going on right now on
`the Internet, with people and companies vying for position in
`the much-discussed but little-understood infrastructure for the
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`future of human communication and commerce. What’s less
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`recognized is that implicit in this gold rush is a struggle over
`the very organization of society in the years to come.
`Computing technology serves fundamentally to amplify
`human abilities. Thus, it inherently tends to push organiza—
`tions towards one of two extremes, centralization or democra-
`tization, depending on how it
`is applied and in what
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`organizational structures. Nowhere is this more important
`than in the area of payment systems.
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`Internet payment systems can be designed to enable the masses
`to be entrepreneurs, or they can be designed to further concen—
`tratepower in the hands of the largest companies and wealthi-
`est individuals. If you look carefully at the technical design of
`a payment system, you will always find assumptions about the
`social structure of commerce, and you will often find a politi-
`cal agenda as well.
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`First Virtual makes no bones about its political agenda: We
`want to make sure that the little guy has a chance, along with
`the big guy, to set up‘ businesses on the Internet. Ultimately, we
`want a musician in rural Uganda to be able to sell his music
`directly to consumers in the United States, Tonga, or anywhere
`else. We don’t believe our payment system is the only way to
`enable such commerce, but we do believe that this goal is con-
`spicuously absent from many other proposed payment systems.
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`Unlike this preface, the book you’re holding in your hands is
`not a political or ideological statement. It’s a very practical
`“how-to” book, and by the time you’re done reading it, you
`should be able to set up a whole new business in cyberspace
`starting with nothing but $10, an Internet connection, a good
`idea, and a willingness to work. I hope that’s Why you’re read-
`ing these words. I don’t really mind if you don’t share my
`political agenda. If you’re an industrious would—be entrepre—
`neur with a dream of your own, you are my political agenda. I
`hope you do very well.
`
`— Nathaniel Borenstein
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`Chief Scientist, First Virtual Holdings
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`PREFACE _
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`usiness people who heard about the Internet in 1994
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`tended to ask, “What is it good for?” It was a valid
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`question back then — most people had never even heard
`of the Internet. In 1996, there are still many people in all
`walks of life who aren’t sure how they can make the Internet
`pay off. This book will show you how to use the First Virtual
`Internet payment system to sell (and buy) goods and services
`over the Internet — safely, easily, and inexpensively. What’s
`more, this book will provide you with a solid foundation for
`understanding all types of Internet commerce, as well as how
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`the First Virtual approach fits into the global Internet.
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`You’ll find here everything you need to know to confidently
`get started selling on the Internet using the First Virtual sys—
`tem. Part One will give you a basic understanding of the issues
`and tools now in general use by Internet merchants of all
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`stripes. Chapter 1, “Introduction to Internet Commerce,”
`explains what it means to buy and sell using the Internet to
`carry your transaction information, as well as what problems
`you can expect to encounter in doing business on the Internet.
`Chapter 2, “Security Issues, Security Tools,” explains how
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`advances in cryptography have been providing the tools
`needed to solve Internet commerce security issues. Chapter 3,
`“Securing Internet Commerce,” explains how companies have
`been putting together the various cryptographic tools to create
`Internet commerce solutions. Here is an overview of how
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`Internet commerce is developing, your choices as an Internet
`merchant, and the advantages and disadvantages of using
`these different solutions.
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`Part Two provides an overview of the First Virtual organiza-
`tion and their products and services. Chapter 4, “The First
`Virtual Approach to Internet Commerce,” explains how the
`company came to be, the logical and technological underpin-
`nings of the First Virtual system, and how that system works.
`Chapter 5, “First Virtual Products and Services,” provides a
`summary. of First Virtual contact, product, and information
`resources.
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`In Part Three, the nuts and bolts of buying and selling with
`vvFirst. Virtual are laid out in full. Chapter 6, “Opening Your
`First Virtual Account,” explains in detail how to open your
`, account for buying and selling,including applying for Express
`Merchant status. Chapter 7, “Buying With First Virtual,”
`examines the process of making a purchase with First Virtual.
`Chapter 8, “Selling on the InfoHaus,”lexplains how you can
`set up-your own Internet'storefront using First Virtual’s
`InfoHaus hosting service; Chapter 9, “Selling from Your Web
`Server,” explains how to use scripts and other tools for selling
`your own information products or hard goods on your own
`Internet or World Wide Web server. Finally, Chapter 10,
`“Tips, Tricks and Pointers,”