From: jeff@BlackMagic.Com (Jeff)
Date: Sat, 30 Mar 1996 19:24:48 +0800
To: Hal <cypherpunks@toad.com
Subject: Re: What backs up digital money?
In-Reply-To: <hfinney@shell.portal.com>
Message-ID: <199603292029.PAA14637@Molasar.blackmagic.com>
MIME-Version: 1.0
Content-Type: text/plain


On Mar 29, 10:32am, Hal wrote:
> Subject: Re: What backs up digital money?
> From: jeff@BlackMagic.Com (Jeff)
[snip]
> Another factor that arises is that if some token does catch on and
> circulate widely, it could be subject to regulation.  I understand that
> in Las Vegas, some people started using casino chips as money.  You
> could buy things with them, and they were accepted since people knew
> they could be turned in for cash at the casino.  But the Feds cracked
> down and brought the practice to a halt.  (I will ignore for now the
> question of whether such a crackdown could work on the net, but it would
> at least be a barrier to the acceptance of such tokens.)

  Absolutely- that's certainly the case with anything that "catches on",
  not just ways of transfering value.  If you get big and popular, there
  will be regulation, thus if life.  see: the Internet itself.

> The idea of your "market square" token, which represents a basket of
> other tokens, is interesting, but it seems like you're basically
> re-inventing money.  I don't quite understand the specifics of your
> proposal, where the market square token is based on the "market value" of
> the other tokens.  In what units is this market value expressed?  It
> seemed like what you had instead was a set of relative prices, where each
> token was worth a certain number of each other kind.  I don't see how you
> can get a unique market value for each token out of that system.  It
> doesn't seem like the relative value idea really works, anyway, as it
> suffers from the barter problem that there will be too few people who
> want to trade their shoe tokens for fruit tokens.  That was what
> motivated the transition from barter to money in the first place, or so
> the story goes.

  In that particular dream-land I was saying that the "market value" of the
  token follows the trade value of tokens on the exchange- that is to say,
  if X tokens are being traded for .5 Y tokens and 2 Z tokens, then X, Y,
  and Z can all be expressed in terms of a common 'A' value.  That A is the
  basis of the market value I was talking about.  What is a "dollar" if not
  expressed in terms of it's purchasing power.  The only thing that makes
  the dollar, or yen, etc, special is it's universal acceptance in whatever
  marketplace you happen to be trading.  I don't think there is any real
  problem with the idea itself, the implementation in my opinion would be
  darn near impossible though and would be dependent on the "lack of 
  something better", which a pupular digital cash scheme has already
  eliminated.  But now I'm just repeating your point ...

> If your overall point is that even without digital cash, we would end
> up with some form of electronic money eventually anyway, I think it is
> true.  Entrepreneuers abhor a vacuum, and if the need is there it will
> be met.  But the fact is that we are likely to have digital cash before
> all these other things, so I don't really see the whole scenario coming
> to pass.  I do think a lot of your specific applications are
> interesting, though, and hopefully there will be many more creative
> uses of this technology.  I know Eric Hughes a while back was talking
> about a way for players to transfer wealth between MUD games using a
> token based system.  There are a lot of game possibilites.

  Agreed- but what system did Eric Hughes use to implement his idea ?  I've
  yet to find one that isn't buried in patents/controls.  Which leads...

  To my "point" if I had one, and back to my mini-rant ... nobody has any
  CLUE what these tokens could be used for eventually.  This is an entirely
  new mechanism, one in which unique values can be transferred between
  people without losing their value to something as simple as duplication.
  Who knows what could happen if the technology were open to the public- I
  have big doubts that my car's head lights will be buying electricity from
  it's powerplant (with the electrical systems overhead charge of course),
  but I don't think it's unreasonable to think tokens could be passing all
  around the net for priority bandwidth, or CPU cycles, etc.  So if there is
  a point, it's that we JUST DON'T KNOW what could happen, what this totally
  new capability could be used for, and we won't unless we have access to it
  and all the net.developers get a shot.  This sounds like I'm complaining
  and whining like a child for one simple reason- I am.  This also sounds
  like interesting stuff with a lot of potential for one reason- it is.

  In all of these threads, I forgot to make it clear that I have the UTMOST
  respect for the people who design and implement these token systems, and
  crypography people in general.  In the end, if nobody wants to give the
  end user a way to put value into these tokens, so be it- I didn't invent
  the system(s), all I can do is bitch and moan about it.  But if someone
  came up with a radically new process for creating microchips, they would
  NOT just patent the process and sell the chips, they'd license and sell
  the process as well.

  I'll shut up after this, even I'm getting sick of hearing me-- these
  tokens systems may be the only good transport of a dollars value, but the
  transportation of dollars is not the only good use of these token systems.

> Hal
>-- End of excerpt from Hal

  Jeff.


-- 
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