From: dlv@bwalk.dm.com (Dr.Dimitri Vulis KOTM)
Date: Sun, 10 Aug 1997 16:44:04 +0800
To: cypherpunks@toad.com
Subject: Re: uncensorable net based payment system?
In-Reply-To: <v03102801b012ec9a5f93@[10.0.2.15]>
Message-ID: <9oo8ae7w165w@bwalk.dm.com>
MIME-Version: 1.0
Content-Type: text/plain



Steve Schear <azur@netcom.com> writes:

> Not very different from how one might handle a gold-denominated and backed
> ecash coin.  Real gold must be stored in a repository which charges a
> storage and handling fee.  This can integrated with the coin value by
> applying a negative interest rate to the coin based on the epoch in which
> the coin is issued.  So coins are redeemed at a lower than initial value
> (assuming no change in the gold value figured in whatever unit it is being
> exchanged).

I used to models of various commodities and the common wisdom is:

the cost of carrying precious metals (gold, silver, platinum, palladium)
is so negligible that they can be treated as foreigh currencies with
interest rates. That's how most people treat them in practice.
(There are more exotic metals with little carrying costs, like
rubidium...)

Commodities like oil, gas, lumber, as well as baser metals (aluminium, copper)
have a cost of carry that must be figured in your model.

I suggest that if you want to model internet bandwidth as a commodity, you
must assume that it depreciates as it becomes less scare.

---

Dr.Dimitri Vulis KOTM
Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps