1994-08-21 - Re: In Search of Genuine DigiCash

Header Data

From: rah@shipwright.com (Robert Hettinga)
To: Hal <cypherpunks@toad.com
Message Hash: a9bb6f68ec24ec780efa4d9cd74e404996d1b36547ee6496953b9efc593e4ee0
Message ID: <199408211918.PAA21615@zork.tiac.net>
Reply To: N/A
UTC Datetime: 1994-08-21 19:23:27 UTC
Raw Date: Sun, 21 Aug 94 12:23:27 PDT

Raw message

From: rah@shipwright.com (Robert Hettinga)
Date: Sun, 21 Aug 94 12:23:27 PDT
To: Hal <cypherpunks@toad.com
Subject: Re: In Search of Genuine DigiCash
Message-ID: <199408211918.PAA21615@zork.tiac.net>
MIME-Version: 1.0
Content-Type: text/plain

At 10:16 AM 8/21/94 -0700, Hal wrote:

>I think Eric was referring to simple double-entry bookkeeping.  I don't
>have his original post in front of me, but I believe the suspension account
>was a liability account which represented the digital cash in circulation.
>In double-entry bookkeeping, every transaction alters two accounts so that
>the books stay in balance.  It's not unusual to make up specific accounts
>for the particular assets and liabilities of your business.

No. I was not referring to the process (double-entry bookkeeping), I was
referring to the actual name of the account where the principal is held
until it is redeemed.  I liked the name, but I was wondering about where he
got it from, or whether he invented it himself.  If so, how did he arrive
at the name "suspension account", etc.

>There's something I don't understand about this "immediate and final
>clearing" business.  In an on-line cash system, the cash itself is not
>"cleared" until you send it to the bank and/or have some guarantee from the
>bank that it has not been spent before.  It seems to me that you could get
>the same benefit from a checking account if you called the bank, verified
>the funds were available, and electronically cashed the check on-line.

Right. My use of "immediate and final" comes from Eric (or maybe Perry).

>In an off-line system, is the cash really cleared immediately?

Clearing in this case is when the cash passes from you to me. When I spend
that cash with someone else, and they in turn spend it somewhere else, it's
really clear, because neither one of us can ever trace where it went. For
all intents and purposes, we might as well call the transaction clear at
the time of its execution. Thus it's immediate and final. Just like any
other cash transaction.

>What if it
>is double-spent?  Is the bank going to guarantee to cover all instances of
>multiple spending, in the hope or expectation that it can sue the customer
>who did it?  What if you're talking about huge sums of money, and the guy
>doesn't just double-spend but hundredfold-spends it, then vanishes to Rio?
>Are the banks going to cover that?  They don't cover bad checks, and I don't
>see how they can afford to cover bad cash.

Exactly. Though I think it would be worthy of much more than a civil suit.
I expect that criminal charges come into play here. The culprit has been
identified. Out come the gendarmes, or maybe interpol, since he's gone to
Rio.  Catching an international criminal and extraditing him is not new
technology. You don't even need new law.  Just call it (wire?) fraud and
leave it at that. People and businesses have insurance against fraud. I
expect there will be a whole industry popping up after a while on e-cash
loss control and insurance.

>So for both on-line and off-line ecash there appear to me to be problems
>with the notion that cash has a unique advantage in providing immediate
>clearing of transactions.

Except for where the cash has been double-spent, a very special case,
indeed, the cash has cleared once it's been spent by the person whom you
gave the cash to. It's untraceability clears the transaction.  It's
immediate. It's final.


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