Re: digital cc transactions, digital checks vs real digital cash

[Bill Stewart <stewarts@ix.netcom.com>]

>Well, the consequence of book-entry transactions, of course, is the
>interference of the nation-state, because that's your anti-repudiation
>mechanism. Book-entry banks need nation-states, or force monopolies of
>somekind, to exist. 

I disagree.  Book-entry banks need some kind of fairly reliable
dispute resolution mechanism, but it doesn't need to be a force monopoly.
If you happen to have a nation-state just lying around to be used,
banks will be happy to use them, because they're more convenient for
wide-area business than Mafia enforcers, probably cheaper, and can be
more dependable and predictable, though your mileage may vary.

If you have relatively dependable identities, you can run a reputation
system without relying on governmental or private violence providers;
it's probably less expensive, but also less effective in most communities,
so the risk of losing money may make it less attractive than governments.
If people know that nobody will take their checks if they bounce them
and don't make good, and know they won't get any credit, and know that
the merchants are all on the Grapevine, they'll generally be honest*.
If identities are fluid, and you're willing to keep creating and burning them,
you can sometimes get away with reneging on obligations,
but people are less likely to trust you if they don't know you -
so they'll want to see certified e-checks from well-known banks.

I tend to view book-entry systems as an effect of an
economy that uses credit to fund business ventures;
you can call the book entries "bonds" or "stocks", but
book-entry is the obvious way to keep track of either one.
Sure, you could do things like split all revenues on receipt,
but book-entry is probably still easier.

[*Honest people will generally be honest anyway, which is most people
in most cultures, but that doesn't mean they'll be good enough at
planning to pay off their loans on time, especially if they're using
the money for risky activities such as farming or software development...
On the other hand, violence providers aren't always good at extracting
payments from people who really don't have the money any more.]

#			Thanks;  Bill
# Bill Stewart, +1-415-442-2215 stewarts@ix.netcom.com
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