From: "Perry E. Metzger" <perry@snark.imsi.com>
Date: Wed, 4 May 94 03:52:17 PDT
To: cypherpunks@toad.com
Subject: Re: Why Digital Cash is Not Being Used
In-Reply-To: <199405032110.RAA23590@hikita.WPI.EDU>
Message-ID: <9405041051.AA01062@snark.imsi.com>
MIME-Version: 1.0
Content-Type: text/plain



"Michael V. Caprio Jr." says:
> So what is the natural currency to trade in on the Internet?

Dollars.

> What is the medium that is most widely spread across the myriad
> nodes and networks that crisscross the globe?  What would someone
> like to be able to buy, that is easy to acquire, and offers an
> advantage over real money?
> 
> The answer is quite simple:  information.

Information is useless as a currency, for five reasons.

1) It is not fungible.
2) In order to demonstrate that you have it you generally speaking
   have to have already given it away.
3) It can decay in value, unpredictably. My inside information that
   Joe Blow is a communist spy is valuable today and might become
   worthless tomorrow.
4) It cannot be effectively loaned or borrowed.
5) It has highly unpredictable value. Two pieces of information might
   be worth the same number of pieces of gold from me, but you may
   find one of them worthless and the other very worthwhile.

Dollars are a natural currency for use in internet trade. So are gold,
D-Marks, Yen, etc. There is nothing wrong with these things.

I'll agree that I don't like government sponsored currencies, but
since everything is denominated in them right now I'd say that they
are perfectly fine.

Perry