An article for Wired magazine

[Jon Matonis <74774.3663@compuserve.com>]

This is so that you have the complete context of the post.


---------- Forwarded Message ----------

From:	Jon Matonis, 74774,3663
TO:	Electronic Cash (post), INTERNET:ecm@ai.mit.edu
DATE:	8/14/95 11:10 AM

RE:	Copy of: Re: An article for Wired magazine

Robert Hettinga (rah@shipwright.com)wrote:

>My point is that there isn't e$ denominated in a government's currency,
>more to the point, a popular currency like dollars or marks, or yen.  That
>would make it possible for me to pay a dollar on the net for goods worth a
>dollar. That's what I meant by "real" currency.  What we have are unique
>digital certificates with indeterminate lifetimes which have no nominal
>value except what people are willing to pay for them in the open market.
>This is fine. In fact it's pretty cool that people are willing to impute
>value to them by buying and selling them exclusive of any other economic
>backing.

Since this is for a magazine article, I want to clear up some misconceptions.
The e$ experiment as conducted by DigiCash has broader implications, which the
article may or may not decide to address.

First of all, digital money can take various forms.  Existence on a hard drive
is one of those forms.  But, it is also possible to have digital money on a
card-based platform. Mondex in the UK currently has official government units of
account digitally represented for their Mondex card trial in Swindon.  They have
also announced that in the future this card will hold up to five "official"
currencies.  Furthermore, they make no secret about the fact that this digital
money is ideally suited to transfer on the Net.  Visa and Mastercard are both
working on stored-value cards which will also digitize official currencies.
CyberCash has also announced plans for an electronic token which will most
likely represent an official currency.  Others will announce soon.

Even DigiCash, in its own material, states that they are only the supplier of
technology.  This cyberbuck experiment was to demonstrate that technology --
primarily to banks.  They don't intend to be in this business as the monetary
supplier.  So, the e$ technical experiment served its purpose.  It was unbacked
because that was not what they were promoting.  Banks, as licensees, will
perform the monetary functions and they will undoubtedly issue digital money at
par with governmental units of account.  The trend here is definitely towards
"official" currencies and that will give digital money the trustworthiness and
familiarity which it needs so desparately for acceptance.

But that is not to say that this is the preferred course.  Other trustworthy,
brand-name issuers (non-banks, i.e., Coca-Cola, AT&T, United Airlines, Fidelity
Investments)  with similiar technology (or ones that license it) can certainly
monetize any bearer instruments and then digitize those instruments for the
purpose of a negotiable unit of value.  I argue that this is the preferred
course because it will eliminate the reliance on banks (and central banks) and
speed up considerably the proliferation of digital money for the benefit of all.
Stand-by though:  governments and central banks will do everything in their
power to discourage and prevent this for the power to issue and coin money is
one of THE most cherished privileges of the Crown !

This WiReD article is just the beginning !

Jon W. Matonis