Re: In Search of Genuine DigiCash

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

rah@shipwright.com (Robert Hettinga) writes:

>At  4:24 PM 8/19/94 -0700, Eric Hughes wrote:

>>The withdrawal transaction posts a debit to a customers demand deposit
>>account (decreasing it) and a credit to the suspension account
>>(increasing it).

>NewJargonNotice("suspension account")

>Is this new nomenclature? It sounds less risque than "float", I must say...

I think Eric was referring to simple double-entry bookkeeping.  I don't
have his original post in front of me, but I believe the suspension account
was a liability account which represented the digital cash in circulation.
In double-entry bookkeeping, every transaction alters two accounts so that
the books stay in balance.  It's not unusual to make up specific accounts
for the particular assets and liabilities of your business.

>Immediate and final clearing must save money, somehow, but right now, it's
>hard to prove whether cash is still king in cyberspace. I have a (somewhat
>religious, in the sense that it may not be empirically proved in my
>lifetime) belief that that's the case.  That's why I like to agitate for a
>test. Yes, Tim, I know, you guys aren't bankers...

There's something I don't understand about this "immediate and final
clearing" business.  In an on-line cash system, the cash itself is not
"cleared" until you send it to the bank and/or have some guarantee from the
bank that it has not been spent before.  It seems to me that you could get
the same benefit from a checking account if you called the bank, verified
the funds were available, and electronically cashed the check on-line.

In an off-line system, is the cash really cleared immediately?  What if it
is double-spent?  Is the bank going to guarantee to cover all instances of
multiple spending, in the hope or expectation that it can sue the customer
who did it?  What if you're talking about huge sums of money, and the guy
doesn't just double-spend but hundredfold-spends it, then vanishes to Rio?
Are the banks going to cover that?  They don't cover bad checks, and I don't
see how they can afford to cover bad cash.

So for both on-line and off-line ecash there appear to me to be problems
with the notion that cash has a unique advantage in providing immediate
clearing of transactions.

Hal