Re: What backs up digital money?

[Hal <hfinney@shell.portal.com>]

From: rah@shipwright.com (Robert Hettinga)
> When money finally goes onto the net, and never comes back, the digital
> bearer certificates we call ecash will be a currency. Until then, it's just
> a script.
> 
> Or is it an interestless bond? ;-).

I'm not sure exactly what you mean by money "going onto the net and never
coming back".  Is this just a matter of there being a wider variety of
useful things to buy on the net?  Or do you mean that people who receive
ecash will not want to deposit in their bank accounts, but just turn
around and spend it?

I will point out that with regular currency, most merchants who receive
it just deposit it at the bank, save for a bit passed out as change.
Supermarkets don't actually take the cash their customers give them and
hand it to their suppliers.  They deposit it and pay with checks.  So
the "life cycle" of a $20 bill is pretty much from the bank, to the
customer, to the merchant, and back to the bank, only to repeat the
cycle.  Ecash, it seems to me, is already able to circulate to this
extent, although of course it is not yet widely used.

Hal