From: hughes@ah.com (Eric Hughes)
Date: Sun, 10 Oct 93 09:06:05 PDT
To: cypherpunks@toad.com
Subject: Virtual City (tm) Network FAQ 1.0 (fwd)
In-Reply-To: <9310090525.AA29378@jobe.shell.portal.com.shell.portal.com>
Message-ID: <9310101606.AA08264@ah.com>
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On money in Virtual City:

First, a note of history.  Strata and I have been talking about money
in MUD-type environments (virtual, social, text-based).  These
discussions are reflected in her document.  I had decided after much
thought that the MUD type of environment would be a good place to
prototype electronic money.  I asked Strata about technical details,
since I knew that she was setting one up; discussions ensued.

A comment from Joichi Ito, a self-professed MUD enthusiast, which he
made to me at CFP-93 in March, started this train of thought: "I would
pay real money for MUD money."  He spends enough time on MUD's that
his personal life would be improved by spending cash dollars in
exchange for increased ability on the MUD.  

One of the big problems in creating electronic money is that there
must be something to spend it on, that is, some notion of actual value
upon which to base the derived value of the electronic money.  MUD's
seem to have that property.  I don't know exactly whence that value
arises, but certainly it does factually exist.  This question, the
origin of value in MUD's, will develop a life of its own, no doubt, as
various explanations arise, but this question is not central to any
monetary system.  What is needed is only that such value exists.  Let
us stipulate this for the purposes of discussion.

Once there is value, an economy develops when there is a means of
exchange for such value, typically coins.  So the MUD needs a notion
of exchange and a notion of representation of value.  For exchange,
I've designed a conceptual MUD object which is a simultaneous
transacter.  You put your stuff on the tray in front of you, likewise
does your trading partner.  After you both press the big red buttons
in front of you, the contents of the two trays are magically
interchanged. (Magically, of course, since this is a MUD.)  Recall
the big rotating lucite contraptions that post offices are using.

In the MOO (MUD, Object Oriented), one can subclass this transacter
and attach robot servers to the other side of the glass, creating
vending machines.  One particular vending machine could take the coin
of the realm and exchange it for a bank note of the same amount.  The
bank note, digitally signed by the MUD bank, is an informational
object.  Because it is information and not a MUD object, the note can
be freely transmitted _outside of the MUD_.

Once you have the existence of such notes, one can set up inter-MUD
currency exchanges, test the theory of free banking, and the like.

Eric