From: hughes@ah.com (Eric Hughes)
Date: Sun, 28 Aug 94 23:34:18 PDT
To: cypherpunks@toad.com
Subject: In Search of Genuine DigiCash
In-Reply-To: <199408211918.PAA21615@zork.tiac.net>
Message-ID: <9408290317.AA28158@ah.com>
MIME-Version: 1.0
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   >In an off-line system, is the cash really cleared immediately?

   Clearing in this case is when the cash passes from you to me.

This is a pretty non-standard usage of the word "clearing", which
happens when the issuer accepts the instrument for deposit.
Settlement happens when money actually moves.

The significant activity that happens at clearing is a liability
acknowledgement by the issuer.  This acknowledgement makes clear that
the issuer has a liability.  If the issuer clears but does not settle,
i.e.  accepts the liability but does not act upon it, the depositor
can use the clearing as a claim against the issuer.  (N.B. Here
'claim' is used in its strict legal meaning as the opposite of a
'defense'.)

Eric