[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

*To*: [email protected]*Subject*: Digital Gold*From*: [email protected]*Date*: Tue, 24 Aug 93 16:23:30 -0400*Cc*: [email protected]

-----BEGIN PGP SIGNED MESSAGE----- I tried to imagine a digital currency which is not backed by any bank, but just exists by mathematics and convention, like gold. The result is the following currency system which could be called digital gold. It involves three conventions, (1) a convention for valuing coins, (2) a convention for claiming coins, (3) a convention for transfering coins. I believe the resulting currency is unforgeable, uninflatable, and untraceable. Let me know where I've gone wrong (gently). Digital Gold ----------- Let's associate one digital gold coin with each positive integer. Let's agree that the coin for each integer N is worth half as much as the coin for integer N/2. integers: are each worth: -------- ----------- 1 - 1 1 ounce 2 - 3 1/2 ounce 4 - 7 1/4 ounce 8 - 15 1/8 ounce 16 - 31 1/16 ounce The total amount of digital gold is infinite. However, the amount in circulation will always be finite because the lowest denomination coins aren't worth claiming or to spending. (Claiming and spending of coins will be described shortly. For the time being, let's just assume that each requires a certain amount of computation.) For example, if it costs 1/10 ounce of digital gold to spend a digital coin, then 1/16 ounce coins will not circulate. The total amount of digital gold in circulation will then be 4 ounces. The supply of digital gold is similar to the supply of real gold. As the value of real gold increases (relative to the cost of mining), more real gold can be mined profitably. If the demand for digital gold doubles, its value will roughly double, and a lower denomination can then circulate. Similarly, if the cost of computation halves, a lower denomination of coins can circulate. In either case, the number of coins doubles, but the supply of digital gold increases only slightly. Each denomination represents an equal fraction of the digital gold in circulation. Therefore, as new denominations come into circulation, the supply of digital gold remains relatively stable. However, the number of coins increases in proportion to the demand for digital gold, and to the supply of computation. This seems appropriate. Also, only a small fraction of the digital gold is in the smallest denominations. This is important since the smallest denominations are always inefficient to spend. Claiming Digital Gold -------------------- Let's agree, by convention, that the first person to sign a particular integer, owns the digital gold corresponding to that integer. This is the law of initial acquisition of digital gold. In order to claim a digital gold coin, the claimer must publicize a "claim certificate", containing the signed integer and the public key required to recognize the signature. The first person to publicize a claim certificate will be recognized as the owner. A claimer can use a new alias for each new claim. In this way, he can claim coins without revealing his identity. Spending Digital Gold -------------------- In order to spend a coin, the payor signs a claim certificate from the payee. This voids the payor's ownership of the coin, and validates the payee's ownership. The payor uses his old alias to sign the payee's claim, so that he does not identify himself. The payee can generate a new alias for each new claim certificate, so he can accept coins without identifying himself. The law of property transfer for digital gold is the same as the law of property acquisition. The first person to publicize a new claim certificate signed by the previous rightful owner, rightfully owns the coin. The payee should have the claim confirmed (signed) by some of the agencies where he might like to spend the coin. A confirmation indicates that the agency is willing to accept the coin from the new alias. Before confirming a claim, an agency should establish that the payer owned the coin at one time, and that he has not yet granted it to anyone but the payee. If the claim is good, the agencies should take note of the new owner. If the claim is bad, the payee can confront the payer. Agencies can do enough research to avoid confirming most bad claims. For each coin, there exists a chain of claim certificates extending all the way back the the original owner of the coin. The backward chain proves that each alias has owned the coin at one time. The forward chain proves that each alias no longer owns the coin. Agencies can also sign claims with timestamps, in order to settle disputes over coins claimed by multiple owners. The result is ownership by consensus. If the agencies I wish to do business with agree that my alias owns a particular coin, then I own a certain amount of digital gold. ------- Yours Truly, ][adon Nash --------------------- in founding a family or a state, or acquiring fame even, we are mortal; but in dealing with truth we are immortal, and need fear no change nor accident. --------------------------- ][enry David Thoreau ----- -----BEGIN PGP SIGNATURE----- Version: 2.3 iQCVAgUBLHo/dTIwr9YMSTuBAQE2yAQAqOXczfGi0SffaNoPj294bQQSoSTMkiTU Ko62ELCoshD729+2Qin5NqS+eFcW5zL+o/KZU4c1OZYa5Bt5PqlZIq29kjuNiNSr Z/E6++HyaLO0S4ivjUhWRqOorT5b8WwL+a37zk2cNEdXG8sfsyS6Hn+xhHHhUmgD 2E4dGeMeftY= =HWaS -----END PGP SIGNATURE-----

- Prev by Date:
**Re: No digital coins (was: Chaum on the wrong foot?)** - Next by Date:
**"Trusts" vs. Trust. (was: Re: No digital coins)** - Prev by thread:
**Blinding messages** - Next by thread:
**Re: Digital Gold** - Index(es):