From: Hal <hfinney@shell.portal.com>
Date: Mon, 14 Mar 94 21:40:29 PST
To: cypherpunks@toad.com
Subject: Magic Money promissory notes
Message-ID: <199403150541.VAA01023@jobe.shell.portal.com>
MIME-Version: 1.0
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In the never-ending search for legal bases for digital cash, I thought
of promissory notes.  A promissory note is basically an unsecured promise
to pay back a loan, generally by a specified time with a specified interest
rate.  My wife's college loan was based on such a note.

I think these can be transferred from person to person, with the bearer
being eligible to redeem the note.  I recall old stories where a person's
note was passed from hand to hand, ending up in the hands of the villain.

Perhaps a digital cash system like Magic Money could serve as the basis
for digital promissory notes.  You send me money, I'll send you a certain
amount of digital cash.  That particular denomination and issue date
(determined by the exponent) will be redeemable in one year for X+delta
dollars.  You can hold the note and redeem it in a year, collecting the
interest, or you can pass it on or even sell it.

This might make people willing to accept the digital cash as valuable,
since they would know that it would actually be worth something in a
while.  And I don't think there are a lot of laws relating to promissory
notes, since I've heard of them being used in very informal situations
(scribbled on scraps of paper and such).  I will try to look into the
legalities in a few days.

Hal