Electronic Money

George Michaelson ggm@connect.com.au
Sat, 05 Oct 1996 10:11:44 +1000

  With ecash (particularly DigiCash), once Mary has had a coin signed by
  the bank and then unblinded, I presume that Mary can give this coin to
  another individual (Bob) to use.  Only the threat of Mary spending the
  same coin prior to Bob getting to spend it would encourage him to return
  it to the bank immediately.  If a mutual trust network built up amongst
  dealers etc, would this allow the establishment of a more cash-like sub-

I think "Give" has to be what CS people call "atomic" for the act of giving
to be complete and the entity of exchange to be a real money token.

If you envisage a transfer that has long (unbounded) time between
donation and realization so to speak, you have a flawed model of
exchange. For this to survive, you need a trusted party like a bank to
agree to honour the disadvantaged party to some limit which in effect
puts a ceiling on the value of the medium.

Still, this exists for other forms of exchange like cheques, but under
a system of guarantee by the banks for some limit of exchange. Thats
why in the UK cheques include a cheque guarantee card which specifies
a limit of "countersign" status on the instrument until presented for

I still have my brothers cheque for a million pounds, I think after 12
years some statute has made it unpresentable. Even an old white fiver
is ultimately only paper if the bank chooses to dishonour it once
withdrawn as legal tender. 

The mutual trust network you describe sounds supiciously like the
practice of company-signed paper where the more classy sigs you can
collect on the bill reduces the rick-component affecting yield.

In practice these kinds of things come down to somebody in an office
scrutinizing the chain-of-signatures when lawsuits erupt.

George Michaelson         |  connect.com.au pty/ltd
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