Re: Why emoney? Why not a web of debt?

[davidm@iconz.co.nz (David Murray)]

>At 6:54 PM 01/20/95, anonymous-remailer@shell.portal.com wrote:
>>  But electronic computers are good at checking out these kinds of
>>chains automatically.  Suppose there were a web of debt-trust.  Each
>>person would indicate the other people who's iou's they will accept
>>(and the amount they would be willing to take).
>
>Certainly, that's what money is after all. Pretty much.  But how are you
>going to transfer these IOUs electronically in a way that is relatively
>fraud-proof?  Digital money.  Ecash. [...]
> And another way to look at it is that you are just proposing an
>ecash system where every person issues their own ecash, instead of just a
>few central banks doing it.

The question of how to value ecash issued by different entities of varied
credit-worthiness is an interesting one. I had been thinking along the lines
of one or more centralised (but independent) credit rating agencies (a la
Standard and Poors or Moodys) that one would subscribe to. Then you would
value the various edollars in terms of their credit rating -- so you might
sell something for $4 of CyberCash (NA) BV ecash, or $5 of FliBiNite NL 
ecash and so on.

But of course, since ecash is worth only what you can get for it, the web of
trust model, since it reflects what people will give for it, seems to
reflect that underlying value much better.

The best way to underpin the value of ecash is for the issuer to (credibly)
undertake to convert it into real money. This gets around the problem of 
no one on the net making enough things you want: the old 'you can't eat
cyberspace' saw. McDonalds may not accept ecash, but if a simple trip to the
relevant ebank's Web page can put the price of a Big Mac in your real-money
account, that is only a timing problem.

[Of course, you have to come out from behind the anonymous ecash shield to 
do that, but that is a problem of being a real person. If you want to keep
your wealth anonymous, don't buy a flash car and the latest Monet to go
on sale -- invest it in an anonymous corporation.]

An ebank along these lines could be set up reasonably cheaply (apart from
the technical hurdles ;-), and could easily scale up as needed, and migrate
to safer (taxhaven/banking secrecy) jurisdictions when turnover etc
warranted it.

David