From: hnash@mason1.gmu.edu
Date: Wed, 25 Aug 93 21:12:18 PDT
To: cypherpunks@toad.com
Subject: Digital Gold or Digital Dirt?
Message-ID: <9308260407.AA08658@mason1.gmu.edu>
MIME-Version: 1.0
Content-Type: text/plain


Dave Burns writes:
>2) Why should anyone value a digital gold coin in the first 
>place? Money has value because of people's expectation 
>(based on experience) that if they take it to a store they 
>can buy stuff with it. Where will digital gold obtain its 
>bootstrap value? Somebody has to start using it.

Good question.  At this point, we might call it "digital dirt" 
because no one values it at all.  The important thing is that a 
limited quantity of an informational substance exists.  
Therefore, if some community wants to begin using information as 
a medium of exchange, a suitable "virtual substance" exists.  

Furthermore, the fact that these tokens are not backed by any 
particular organization may be essential.  As I understand it, 
the US government prohibits its citizens from making private 
currencies that compete with the US dollar.  But it doesn't 
prohibit them from trading any currencies they like.  Therefore, 
as long as no-one guarantees digital gold (as long as its value 
is due only to convention), it should be legal.  

     Yours Truly, ][adon Nash