From: Hal <hfinney@shell.portal.com>
Date: Thu, 19 May 94 09:12:52 PDT
To: cypherpunks@toad.com
Subject: Re:  Mosaic to support digital money in September
Message-ID: <199405191613.JAA11739@jobe.shell.portal.com>
MIME-Version: 1.0
Content-Type: text/plain


From: jamesd@netcom.com (James A. Donald)
> The model uses account based digital money.  It is overly
> centralized, but it is an excellent step towards a
> decentralized system of digital money.
>  
> The cypherpunks are experimenting with digital token based
> money.  Digital token based money is damn inconvenient,
> and each digital token currency requires a single
> centralized server which tends to monopoly and is thus
> highly vulnerable to government coercion.  Although the
> server does not know which of its clients has been
> transacting with which, it does know the thing that the
> government is most interested in knowing - how much the
> client got, and how much he spent.
>  
> For this reason I think decentralized account based
> digital money is the best hope.

I don't know to what extent this system represents "account based digital
money".  It doesn't sound that different from emailing your credit card
number, something you can do already using PEM or PGP2.4.  I suppose you
will have digital checks with this system as well.  But all of these
systems will allow total tracking of your transactions by the banks.

The digital cash systems we have been experimenting with do not know
"how much the client got, and how much he spent."  There is nothing stopping
a given holder of Magic Money cash from being anonymous to the bank.  He
does not have an "account" with the bank.  (The structure of the client
interface is somewhat misleading in this regard - the user has to go
through an initialization step in which he communicates with the bank, and
it might appear that he is in some sense registering or opening an account.
Actually, he is just grabbing an information packet which shows the current
exponent-to-cash-value mapping.)  In a (hypothetical) "mature" Magic Money
system, people could exchange cash tokens issued by a number of banks using
anonymous networks to communicate with each other and the banks.  There is
no need to trust the bank's circumspection or immunity to political pressure
to preserve your privacy.

Hal