From: hughes@ah.com (Eric Hughes)
Date: Tue, 17 May 94 22:14:26 PDT
To: cypherpunks@toad.com
Subject: Makeing MagicMoney worth something.
In-Reply-To: <9405171933.AA71221@acs5.acs.ucalgary.ca>
Message-ID: <9405180517.AA05379@ah.com>
MIME-Version: 1.0
Content-Type: text/plain


   > Nope.  You're a bank in this case.  A bank is someone who accepts
   > demand deposits, that is, money they give to you which you give them
   > back when they want it.

   What you are, is someone who is issuing
   redeemable notes.

Issuing notes will not, _per se_, make you a bank.

   Or alternatively you are a trustee.  If I gave
   money to my escrow agent, to be paid to me when I want it, she
   would not be a bank.

If the value transferred is liquid, and the payment is made upon
demand, then, in fact, you are a bank, regardless of what else you
might call yourself.  This is the case in the USA.  Canada certainly
varies, as does the rest of the world.

   [...] but the key element
   in all of these matters is jurisdiction.  Who regulates all 
   of this?

   The answer of course is no one.

This is a rather hasty conclusion.  The real answer is that a country
will attempt to regulate this activity if it feels like it can argue
jurisdiction and win.  The easiest barrier to erect is to get some
country to claim jurisdiction; the others will then generally stay
away with their courts.

If there is no stated location, then a country can simply claim
jurisdiction if some of the facts of the situation give it an arguable
jurisdiction.  If, for example, the computers for a cypherspace bank
are known to be in the USA and the bank claims to be outside USA
jurisdiction, guess who wins.

   This
   would mean that the bank, would be everywhere simultaneously,
   without being anywhere at all.

One can imagine all sorts of things, but architectures that can be
built and economically deployed are much more important than
vague characteristics.

The problem of making a jurisdiction-less bank is a mighty difficult
one, and it behooves those who wish to discuss it to ground their
comments in economic and political realpolitik.

Eric