From: Jay Prime Positive <jpp@markv.com>
Date: Fri, 22 Jan 93 20:01:10 PST
To: cypherpunks@toad.com
Subject: An ebank's vulnerability.
Message-ID: <9301221959.aa06199@hermix.markv.com>
MIME-Version: 1.0
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From: jpp@hermix
To: cypherpunks@toad.com
Subject: An ebank's vulnerability.

  I think that the physical location of an ebank's value reserve (be
it gold, corn, stock certificates, whatever) is really the trickyest
problem.  At that location the bank can be attacked by governments (or
other crooks).

  [enter fantasy... Person with gun says "Well, if all this money is
your's, then you sure owe us taxes (protection).  Don't pay and you're
going to jail (to the bottom of the river).  If it ain't your's, then
(I'll just take it for myself) you're a bank, and you're going to
jail." ...leave fantasy]

  One solution I see is to not have any physical deposit at all.  This
is what most governments do isn't it?  But without a physical resource
for reference the question of the value, or the origin of ecreds
becomes tricky (at least for my limited economic knowledge).  Suppose
I create a really great joke and try to sell it.  Where does the buyer
get the ecreds from?  If I wanted to buy a taco, would the vendor take
ecreds?  Would they take ecreds *I* printed up?

  Another solution is to use the banking system of a country which
*ALREADY* has anonymous value storage as a comodity for sale.  Supose
some enterprising Swiss citizen wanted to set up ebanking, I bet they
could do it.  I wouldn't mind my ecreds being denominated in Swiss
francs either.  But I suspect the Swiss government might drop by the
bank every year to collect some taxes from the accounts.  At what tax
rate would this become unacceptable?

  Someone could always set up an ungoverned value storage location.
Smuggling gold (or other valuables) into, with in, and out of governed
areas shouldn't cost too much, since valuables generaly have at least
the value/weight and value/volume than marijuana has.  The cost of
smuggling, and defending the valuables becomes the limiting factor.
How much could be "lost" to smuggling and defense befor this becomes
unacceptable?

j'