From: tcmay@netcom.com (Timothy C. May)
Date: Thu, 21 Oct 93 11:18:00 PDT
To: cypherpunks@toad.com
Subject: Re: Gold in them thar Bills...
In-Reply-To: <9310211721.AA22131@snark.lehman.com>
Message-ID: <9310211817.AA06108@netcom5.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


Perry Metzger writes:

> As for "in my book, silicon is worth more than gold", I'll happily
> trade you 100 kilos of silicon for 100 kilos of gold any day you like.
> Assuming you aren't fibbing, you should take the trade, since the
> silicon is worth more to you.
> 
> Of course, you'd be a fool. Silicon is plentiful, and costs pennies
> the kilo. Gold is not plentiful -- the market value is around $10,000
> the kilo.

I suspect what Peter Wayner was referring to was either pure silicon,
which is indeed expensive (dollars per gram no longer in my memory
bank, alas), or silicon that has been processed into SuperSPARCS,
Pentia, and the like. Not raw-out-of-ground silicon (from beach sand
and even rice hulls...no lie). A tiny sliver of silicon is much more
valuable gram fro gram than gold is. Even a blank wafer of ultrapure
silicon may be...I'd have to do some calculations and get some current
prices. 

Be this as it may, electronic money depends on _reputation_, on the
expectation that a depositor or payee will get what he thinks he will,
whether in gold, in dollars, in francs, in Safeway discount coupons,
or in Get Out of Jail Free cards.

The stability of the final currency, inflation rates, etc., are
orthogonal to the issues of expectation and reputation. That is, when
one opens a bank account in dollars or rupees, one worries about the
bank returning the dollars or rupees, not the "meta" (and important,
but at a different level and time horizon) issues of the ultimate fate
of the rupee.

In any case, free banking means accounts can be denominated in
whatever the market wants...chunks of silicon, gold coins, Xeroxed
Slovenian currency, or whatever.

--Tim May


-- 
..........................................................................
Timothy C. May         | Crypto Anarchy: encryption, digital money,  
tcmay@netcom.com       | anonymous networks, digital pseudonyms, zero
408-688-5409           | knowledge, reputations, information markets, 
W.A.S.T.E.: Aptos, CA  | black markets, collapse of governments.
Higher Power: 2^756839 | Public Key: PGP and MailSafe available.
Note: I put time and money into writing this posting. I hope you enjoy it.