From: cman@IO.COM (Douglas Barnes)
Date: Sun, 10 Oct 93 14:19:47 PDT
To: arthurc@crl.com
Subject: Re: The Bank of the Internet!? (fwd)
In-Reply-To: <Pine.3.05.9310101141.A11495-b100000@crl.crl.com>
Message-ID: <9310102114.AA02874@illuminati.IO.COM>
MIME-Version: 1.0
Content-Type: text/plain


Arthur Chandler writes:
>   Put bluntly, any plans to enter international finance without a
> substantial component aimed at lining up political and traditional
> financial clout seems to me to be doomed to the dustbin of visionary
> schemes.  After the smoke clears, we are far more likely to see Chase
> Manhattan with a platoon of hired cryptologists than EFF or Cypherpunks
> wheeling and dealing on a global scale.
> 

I think that somehow you have acquired a rather distorted impression of
what is actually being proposed, at least here in Austin. Also, I think
you are rather underestimating the knowledge and experience of the
participants.

When Eric came out here to be a guest speaker at our EFF-Austin crypto
conference, we had been corresponding since last spring on the topic
of establishing a fully digital Credit Union. I had planned to spend
the summer working on it, but I got roped into creating Illuminati 
Online. Although things had been on the back burner, I had continued to
do legal and regulatory research, make contacts, visit Credit Unions 
and talk to their staff, etc.

Credit Unions have an interesting history and philosophy that places
them somewhere between an "outsider" movement and an "insider" movement.
They are legal (obviously), but can be started by any reasonably large 
group or combination of groups of like-minded individuals in a geographical 
area. They are non-profit, member-controlled financial institutions that 
nowadays are permitted to offer the same range of banking services as a 
"bank." Many successful ones started from extremely modest beginnings.

I get the feeling you think that we are going into this blindly or naively.
In the process of researching this project, I have consumed over forty
hours of pro-bono legal time from a local lawyer, and have spent about as 
long reading the relevant laws and regulations myself. I know that Eric
has certainly done even more legal research in this area than I have.
Eric's crypto research at the moment is heavily focused towards financial
transactions; I worked in banking MIS for three years. I have an offer
from the CFO of the largest CU in Austin to act as an advisor. 

At the moment we are beginning the process of surveying members of local
groups and employers in the high tech field to see if they are interested 
in being part of the field of membership of a fully digital Credit Union. 
We had our first Austin cypherpunks meeting yestereday, and it's clear that 
they will be the core of the new CU.

I don't deny that the venture faces serious obstacles (writing 
software, putting together a field of membership, starting operations,
etc.) Certainly it could fail, and end up on the "dustbin." I think that 
compared to many of the schemes that have been proposed on this list it 
is a good middle-ground approach. If other, similar Credit Unions are 
established, it would be the beginning of a national network that could 
pool resources for the purpose of creating or embellishing software and 
purchasing third-party services.

This proposal is not about "wheeling and dealing", but rather about
providing high-quality, secure banking services to average people,
delivered by a democratic, member-centered institution. This may
sound like some fantasy out of the 60's, but it's actually a extension
of a fantasy out of the 19th century that has taken root all over the 
world.

Also, I would like to emphasize, while these institutions are dedicated
to the establishing of new or modified digital transactions, they are
not intended, in any way, to break the law, avoid taxes, or push what I
can't help but think of as the "Tim May .sig agenda" outside the bounds
of the law. Many of us believe in aspects of that agenda, but this is an 
approach to push the envelope from the legal side. 

Doug

-- 
----------------                                             /\ 
Douglas Barnes            cman@illuminati.io.com            /  \ 
Chief Wizard         (512) 448-8950 (d), 447-7866 (v)      / () \
Illuminati Online          metaverse.io.com 7777          /______\