From: Duncan Frissell <frissell@panix.com>
Date: Fri, 8 Dec 95 02:44:42 PST
To: Nathaniel Borenstein <cypherpunks@toad.com
Subject: Re: Geodesic Payment Systems?
Message-ID: <2.2b8.32.19951208104734.00878b10@panix.com>
MIME-Version: 1.0
Content-Type: text/plain


At 04:40 PM 12/7/95 -0500, Nathaniel Borenstein wrote:

>None at all, if you can find an underwriter who is comfortable with the
>fact that his investigative options will be limited in the case of
>suspiciously large or suspiciously frequent "cash out" events from a
>given customer.  Apparently Mark Twain Bank finds that risk acceptable. 
>I'm sure the larger banks will be watching quite closely.

I seem to remember from my favorite Law School class -- Commercial Paper --
that banks weren't liable if they paid out an account from cleared funds
under the terms of the account.  A bank is responsible for payments made on
a forged drawer's signature and anyone who accepts an instrument from a
forged endorser eats the loss.  But online clearing with digital signatures
makes it hard to forge the drawer's signature and digital cash doesn't have
the sort of endorsement system used on paper checks.  

DCF