Let's see, I'm selling spindles for $2.59 and you come up with a piece of ecash you bought ten years ago for $1.00, which is now worth $2.59, and I sell my spindle to you for it. I deposit the cash in the bank and it's worth $2.59. Now who isn't this fair to? How is it different from you putting $1.00 into your interest-bearing checking account ten years ago and writing me a check for $2.59 today, the amount your $1.00 grew to?
The problem is, you have to price the cash before you use it to buy something, and then you and the seller has to agree that that's the value of it. To do that, you or the person you're offering the cash to need to somehow communicate with the underwriter, thus destroying the anonymity of the cash transaction, and also increasing it by the communication costs, and creating an on-line cash system when we wanted an off-line one.
WHAT?!? If I want to sell some stock and I want to figure out how much it is worth, I go to the Bloomberg in the Sloan basement and get a 15 minute delayed quote. If I want to buy something in Mexico with dollars, I look at the exchange rate in the bank or in my hotel. If I want to buy something in digicash, I check the exchange rate, and then I conduct the transaction. Where is the problem here?
Of course, the issuer could publish the prices based on the compounded interest accrued *for each certificate*, for the time period it's outstanding, possibly complete with the compounding factors for each compounding period used. (a day, a month, a year, or even continuous over the life of the instrument) Lot of overhead there, but mutual funds do it all the time. You'd want to just take their word for it, I suppose, and trust their price, right?
OK, I see the problem. You are assuming that certificates will be issued at a consistent set of notional values. (like ten bucks, five bucks ect.) The correct way to do things [:-] is to set the notional value of new certificates based on the trading value of old certificates. Suppose the first certificate had a principal of $10 and is now worth $11, then the new certificates that I issue will have their principal adjusted so that including the effect of interest rates, my new certificate is worth as much as your old certificate. Thus, there is only ONE value that needs to be published at any given time.
There's nothing awful about keeping the interest, folks. (Unless you're a moslem, of course :-) ) It's really just a type of liquidity premium paid to the underwriter to offset whatever risk (business risk, and legal risk at this point) taken to issue e$ for use in internet commerce. As more people get into internet commerce and underwriting it, then the premium goes down because the risk goes down.
Seting prices based on convenience instead of value derived? *BLECH*. That sort of thing is anathema to free markets. JWS