[ecash] Re: Multi-issuer questions

[Patiwat Panurach <pati@ipied.tu.ac.th>]

On Tue, 19 Dec 1995, Marcel van der Peijl wrote in the ecash mailing list:

> Q: If user A signs up with bank A, and merchant B signs up with bank B, 
> can user A buy at merchant B?
> 
> A: In theory:
> 
> Bank A and bank B need to have an interbank clearing agreement. User
> A sends his money to merchant B. Merchant B contacts his own bank,
> bank B. Bank B recognizes the money as being issued at bank A,
> contacts bank A, and clears the coins there. Bank A credits bank B's
> account at bank A, bank B sends an acknowledge to merchant B and
> merchant B sends the goods to user A.

	I dispute this even on theoretical grounds.  

Am I right in assuming that the only reason Bank B has in contacting Bank
A is to confirm that the ecash hasn't been double spent?  Once that is
confirmed, there should be no need for contact between the two banks. 
Bank A should not have to credit Bank B's account as there has been no
transfer from Bank A to Bank B.  The transfer has been the deposit from
Bank B's customer to Bank B. Bank B is allready "credited", i.e., its 
(e)cash researves have increased, the moment Bank A confirms that the 
ecash is valid.

But this also makes a second assumption: that ecash is truly an open 
standard, i.e., that ecash is a "widely acceptable means of payment."  
Any ecash issuing bank must be obligated to accept customer ecash 
deposits with one and only one condition: that the originally issuing bank 
must validate it.

Now what if this weren't so?  What if Bank B said "I didn't originally
issue this ecash and thus, I wont accept its deposit."  Now this puts the
"cashness" of ecash into some jeopardy. It doesn't immediately make ecash 
useless, but it puts an auxiliary condition to it.  This concerns the 
difference between Validation and Acceptance.  Validation is when Bank B 
checks the ecash with its original issuer to see if it has been double 
spent.  Acceptance is actually accepting that ecash as a deposit.  

If Bank B refuses to Validate any non-Bank-B ecash then ecash pretty much
fails.  Period.  How would Bank B's customer be able to handle commerce
with non-Bank-B buyers?  By having multiple accounts with multiple Banks? 
What if the number of ecash issuers mushrooms into the hundreds?  In
anology, would you want to have to have accounts in 500 banks if your
customers also used 500 different banks?  The other alternitive for the
ecash case would be if Bank-B's-customer could bypass Bank-B by validating
the ecash directly with Bank A.  If it passes, then he must now look at 
the matter of Acceptance.

Now Bank-B's-customer knows that the ecash is valid.  He keeps it
temporarily in his hard disk.  But will Bank B ever Accept it as a
deposit?  If it doesn't, then Bank-B's-customer needn't worry that much. 
He can just use that ecash for transactions purpases.  Just because you
can't deposit every cent of cash that you earn doesn't mean that your cash
is worthless.  The fundamental test of ecash is whether merchants/customer
will accept it.  Of course, there is also important value in checking if
Banks will accept deposits of it, but I consider that secondary. 
 
So some concluding topics include:

+ independant verification of ecash.  some formal system for ecash
merchants (sellers) to check directly with the issuing bank that the 
ecash hasn't been double spent.

OR

+ interbank verification of ecash.  formal interbank system for the
cleints bank to check the issuing bank to see if the ecash hasn't been
double spent. 

AND

+ interbank acceptance of ecash.  formal acceptance of verified ecash 
deposits, no matter the issuing bank.

The type of verification doesn't really matter that much.  Some sort of 
distributed method of resolving ecash issuers has to be standardized (say 
like the DNS, each ecash coin has some information as to the issuer.  
person/bank that wants to verify just transmits that ecash to its 
original issuer and then receives a reply saying: verified (usable) or 
not (double spent).

The interbank acceptance issue is more important, but digicash (the
company) has some power here.  If they really aim at ecash beeing true
cash (instead of checking), then they gotta force all issuing banks to
accept ecash deposits nomatter the original issuer.  Like the Real Life
cash system: all banks accept cash, even though it is the federal researve
that was the original issuer. 


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Patiwat Panurach      	     Whatever you can do, or dream you can, begin it.
eMAIL: pati@ipied.tu.ac.th      Boldness has genius, power and magic in it.
m/18 junior Fac of Economics		-Johann W.Von Goethe
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