From: Richard Childers <rchilder@us.oracle.com>
Date: Sat, 28 Nov 92 20:01:51 PST
To: cypherpunks@toad.com
Subject: credibility and banking
Message-ID: <9211290400.AA00660@rchilder.us.oracle.com>
MIME-Version: 1.0
Content-Type: text/plain



"If the operators of an escrow service are anonymous, then either their
 accessible assets had better be enough that you can recover losses if
 they walk with your goods, or their opportunity cost of defecting on
 their clients had better be high enough (in terms of lost revenue,
 lost opportunity on outstanding customer goodwill, name recognition,
 channels, etc.) that they are sufficiently unlikely to that you will
 take the risk."

It seems to me that there are many parallels between this state of affairs
and that which prevailed in the American West of the 1800s, with respect
to banking .... there were no agencies insuring deposits, and only the rep-
-utation of the bank's president - usually a leader of the community - was
guarantee upon the funds. Bank robberies were not uncommon, depositors were
few, runs on the bank, I speculate, may not have been unknown in those cir-
-cumstances where the community of bank depositors lost confidence in the
bank or its officers.

Another parallel which occurs to me is that of the computerized trading that
occurred when programs controlled trading in, um, was it October of 1987 that
the stock market shuddered ? 1989 ? ... it suggests the inevitability of
software shuttling funds around at cyberspace speeds to take advantage of
ebbs and flows in the economic tides of the human race, around the world ...

It would be interesting to further study the origins of banking, as I expect
such a study would provide many such parallels by which the case for digi-
-tized banking could be made stronger ...

-- richard