Roger Clarke's 'Electronic Trading'

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COMP3410 - I.T. in eCommerce
eTrading - Topic Outline

Roger Clarke **

Version of 31 August 2010
Note the Additional Required and Further Reading

Available under an AEShareNet licence or a Creative Commons licence.

This document is at http://www.rogerclarke.com/EC/ETIntro.html

Introduction

In this six-hour segment, I'll address the trading of goods and services, including the concepts and processes involved in markets, important technologies required to support markets, and a couple of currently important issues in electronic trading. The topics are as follows:

1. Markets

When trading occurs, whether good, old-fashioned, physical trading or facilitated by electronic tools, it involves 'markets', 'tradable items', trading partners, relationships among them, various ways of 'doing the deal', and business processes to support the activity. Without an understanding of these concepts, eTrading designs can be confidently predicted to be disastrous failures.

2. Technologies Underlying eTrading

eTrading utilises available information infrastructure. Several aspects of I.T. are still failing to deliver, a half-century after computers were first applied to business. This session provides an overview of two key technology topics. The rapid migration towards mobile commerce is one aspect. The other is the diverse forms of malware, which represent a complex and increasingly sophisticated challenge.

3. Electronic Payments

A great deal of trading involves one party delivering funds to the other, and one kind - currency trading - involves both parties doing so. Because of the enormous diversity of circumstances in which payments are made, a wide range of payment mechanisms have been used, and many continue to be used. Electronic payments have been made since 1870, the expression 'telegraphic transfer' (TT) is still in use. The era of closed networks spawned new forms (SWIFT, ETFPOS), the Internet era still more (CNP credit-card transactions, Digicash). A new round of payment schemes based on contactless chips is currently under way, with implications for eTrading.

4. Identity in Marketspaces

The effectiveness of a trading scheme depends on trust by participants in one another's behaviour, and in the infrastructure supporting the activity. Identification (of parties and of tradable items) is one factor. Developing confidence in the assertions that parties make, referred to as 'authentication', is crucial. Biometric technologies have potential benefits, but bring with them significant risks. The roles of anonymity and pseudonymity also need to be understood.

5. eTrading in Digital Objects, incl. P2P

eTrading in music has been a battleground for over a decade, and the large 'music labels' are only just beginning to come to terms with the changes wrought by digitisation. This session delivers the essentials of the legal framework within which music (and other digital objects) are bought and sold - copyright. An overview of Peer-to-Peer (P2P) technologies enables a discussion of the sharing and trading of digital objects.

6. Carbon Trading

Most scientists believe that we're in a phase of 'global warming', and that an important reason for it is our emissions of 'greenhouse gases'. Economists argue that 'emissions trading schemes' will solve the world's problem. Any such scheme will inevitably be an eTrading scheme. How does the information contained in the previous 4 sessions help us design infrastructure to support eTrading in carbon?

Overview
The Examinable Materials
Lecture Outlines
Further Reading
Tutorial Discussion Topics

Overview of the eTrading Segment

The fundamental concept is 'market'. The elements of marketplaces and marketspaces are explained, and an outline is provided of the processes whereby trading occurs. Many different kinds of market exist, and more are being dreamt up. Which form is appropriate depends on a number of factors:

the category of tradable goods and services. Productised items are quite distinct from custom-built items, and different families of technologies and services are needed to support trading in them
the category of trading partners and their relationships. The distinctions will be drawn between B2B, B2G, B2C and C2C segments, and consideration given to the various ways in which participants in a marketspace can be connected with one another
the commercial basis under which the trading is conducted, including sale for cash, barter, subscriptions, sponsorship, indirect recompense and deferred recompense
the extent to which the purchaser invests effort into the selection process. This distinguishes deliberative purchasing (formal processes that organisations, and occasionally individuals, engage in when they are making a decision with significant economic consequences) from spontaneous purchasing

With the maturation of electronic trading, it appears likely that a larger proportion of contracts may be effected by means of auctions. This term refers to a number of somewhat different, formalised processes whereby prices are set for the exchange of goods or services.

Several important technologies underlying eTrading are discussed. The parallel explosions in mobile devices and wireless connectivity are creating new challenges; and Baby Boomers, Gen-X, Gen-Y and iGens use them differently. The security of transactions, especially the payment aspects of transactions, are badly undermined by malware.

An area of continual challenge is payment mechanisms. It would seem to be simple to establish a made-for-the-Internet scheme; but multiple attempts have come and gone and we're still using inherently insecure arrangements based on credit-cards. But a new round of change us under way.

There's a widespread presumption that, in cyberspace moreso than in meatspace, you need to know who you're doing business with. To test the prevailing presumptions about identities in marketspaces, it's necessary to study the concepts of identification, of anonymity and pseudonymity, and of authentication, and the technologies that both support and threaten consumers' interests.

Purely digital goods are a big part of the economy, and the impact of eTrading has been both large and threatening to powerful corporations. Client-server architectures have been complemented by peer-to-peer (P2P) technologies. Old and new notions of copyright are discussed, in the context of easy and cheap replication and reticulation of digital works.

Examinable Material

The examinable material comprises the following:

the Required Readings listed in the Lecture Outline below
the slide-sets
any additional material provided during lectures

The Further Reading is not examinable. It's provided in order to enable you to 'drill down' on topics you're particularly interested in.