From: rah@shipwright.com (Robert Hettinga)
Date: Wed, 23 Aug 95 04:11:57 PDT
To: cypherpunks@toad.com
Subject: Re: e$: The Book-Entry/Certificate Distinction
Message-ID: <v02120d04ac60b6165a45@[199.0.65.105]>
MIME-Version: 1.0
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At 12:41 AM 8/23/95, Steven Weller wrote:
>In such a system, where does credit come in? If I have a certificate that
>is worth X, then does the recipient know that it's from my "credit card"?
>How do I obtain credit, and in what form does it exist?

You have follow me through the looking glass a little bit here, but
remember that we're talking about a world where microprocessors and
bandwidth are everywhere.  The compute cycles and the bandwidth have to be
available for this stuff, but given those, it's easy to see how this works.

To replicate a credit card in a certificate bassed scenario, you issue a
bond, just like the old days. (Remember that Babylonian clay thingy with
"J. Nebbuchanezzar"'s seal on it for three cows?) A bond is a certificate
with your signature saying that you'll pay a certain amount of money on a
certain date, or that you owe a certain amount of money, and will pay
interest at a certain rate to the bearer on a certain schedule, and
principal on a certain date, *or* you could issue a bond with coupons that
could be sent in to collect the interest.

This is what a bank does with a credit card, only the transactions with you
are book entries, and nowadays, the bank even lumps your credit card debt
with others and then "securitize" them by selling bonds collateralized with
that debt on the open market.

Now the issuing of personal bonds instead of a book entry credit card work
the same way, in that someone has to actually give you the money, and it
may be unlikely that a store knows your reputation.  It could be that a
bank gives you a guarantee, a certificate, to buy your debt up to a certain
amount, and that makes your bonds instantly tradable on the market.  The
store could then sell your bond to the bank, or to the open market,
depending on where the price is highest.  With enough processing power and
bandwidth, it could resold while you're walking out the door with your
purchase.

>
>Furthermore, how do we assess the value of real physical things in a system
>like this?

"The price of anything is the foregone alternative." (Walter Johnson)
Snappy comebacks aside, the price of something, physical or not, has
nothing do to with its method of purchase, excluding transaction costs,
which for both book entry and certificate economies is measured in
processing and bandwidth costs. You advertise your house for a certain
price, I pay you the price in digital cash, you give me the deed to the
house. QED.

Cheers,
Bob Hettinga


-----------------
Robert Hettinga (rah@shipwright.com)
Shipwright Development Corporation, 44 Farquhar Street, Boston, MA 02131
USA (617) 323-7923
"Reality is not optional." --Thomas Sowell
>>>>Phree Phil: Email: zldf@clark.net  http://www.netresponse.com/zldf <<<<<