From: "Amanda Walker" <amanda@intercon.com>
Date: Fri, 18 Nov 94 19:44:30 PST
To: cypherpunks@toad.com
Subject: Re: Islands in the Net
Message-ID: <9411182243.AA59456@elfbook.intercon.com>
MIME-Version: 1.0
Content-Type: text/plain


> This is just not what "liquid" means.  A liquid asset refers to the 
> speed with which it can be traded, not what kind of value it has. 
> "Liquid" is an adjective about timeliness, not about resolution. 

Hmm.  I had thought about using "valuable," but that seemed too ambiguous.  
"Negotiable" maybe?

> Sometimes currency represents a fiat value, as with today's greenbacks. 

It's not entirely a fiat value; in effect, it's backed by the strength of the 
economy.  The difference between a ruble and a dollar was not the fiat value 
(they were the same, as I remember), but in the fact that it was a lot easier 
to exchange dollars for real assets.

For the record, I think that going off the gold standard was a bad idea, but 
growing up in the days of double-digit inflation probably gave me a biased 
opinion of floating currency.

>    Also, if it loses its ability to be exchanged for real assets 
>    it likewise loses its value (e.g., Confederate dollars from the 
>    Civil War). 
>  
> Under this reasoning, today's dollar bills should be worthless.  
> They aren't.  Real assets are not the only form of value. 

I didn't say that the government had to be the agent of such an exchange.
I can buy real assets with my dollars, but not with Confederate dollars.
While it has been somewhat eroded since the start of the Drug War, dollars are 
still exchangable for real assets, even though the government is no longer 
backing them directly.

> What currency do Visa or Master Card issue, perchance? 

Little plastic tokens that are accepted more places than the government's 
paper and metal ones.  If it quacks like a duck...

> Information doesn't obey conservation of mass, and so can't act as a 
> token. 

Exactly.  On the other hand, with real-time clearing (which the Internet
*does* provide the ability to do, with ever-increasing capacity), you can 
construct something that acts like an "instant check", which is close enough 
to cash for most practical purposes.


Amanda Walker
InterCon Systems Corporation