From: eric@remailer.net (Eric Hughes)
Date: Fri, 6 Jan 95 18:31:50 PST
To: cypherpunks@toad.com
Subject: Re: for-pay remailers and FV
In-Reply-To: <wj3QKlz0Eyt5AxIAJg@nsb.fv.com>
Message-ID: <199501070231.SAA20999@largo.remailer.net>
MIME-Version: 1.0
Content-Type: text/plain


This whole fracas between blind-sig money and FV money is a symptom of
the confusion between clearing and settlement.

Roughly speaking, clearing is when authorization moves (i.e. a
liability is created), and settlement is when money moves (i.e. when
that liability is discharged).  Clearing should always happen at or
before settlement.  In order to do on-line digital postage, you need
clearing to happen at the point of remailing.  Settlement can happen
at some later time.

Settlement need not be in real money.  The liability of other
settlement facilities can be used.  This is in fact how central
banking works.  Only the central bank moves "actual" funds; everyone
else moves liabilities around.

To wit, a remailer consortium would do best to issue a local banknote
usable only by themselves and have customers settle with the
consortium issuer, rather than any member of the consortium itself.
If the consortium issuer were to use blind sigs, the consortium
members wouldn't be able to ascertain who paid.

The mechanism for settlement could be credit cards directly, mailed in
checks, even FV.  The preferences of the consortium members for issues
of timeliness of settlement, reversibility, loss sharing, etc. would
decide the actual choice of settlement mechanism.

Eric