Well, I once dived into the anon remailer thread when knowing nothing about them, and something useful came of it, so I'll risk diving into the electronic money argument today, and I warn you in advance I know even less about that - it's something I haven't been following closely because I couldn't see how anonymous cash could work without some non-anonymous means of stopping double spending, like a central bank. So, my conclusion, based on no research whatsover :-) is that anonymous e-cash is probably not going to work but that a reputation-based system might, and I'm now going to describe what I think is how a reputation- based system would work: it's based on the exchange of personal IOUs and it seems to get round the other problem I've seen here of how to kick-start the eeconomy... Firstly, there's no central money-issuer. Let's say I am running a service for sale - say a newsclipping service where I will scan my mailspool and send you articles matching a set of patterns you've registered with me (I just pick this example because it's a program I'm currently working on), then if you want to use my service, you write me a personal eIOU for the fee, demonimated in the currency of this scheme. Let's call the currency the Ob. (SF readers might recognise it. It stands for an 'Obligation' - a personal IOU of one unit) So, you mint however many Obs I decide I want to charge for the service, and we enter a contract where you transfer the Obs to me. I can either accept them directly, or via a third-party exchange at a central bank which *doesn't* hold any money, but is simply a reputation server - this is necessary when accepting new Obs from someone you've never heard of, on a transaction for an amount greater than you are willing to risk on an unverified transaction. In the simple case, if, at any time in the future, I want something from you, I give you your Obs back in exchange for the service. However, you *have* to be willing to exchange your Obs for cash *or* the Obs of someone with a good reputation at the bank. If you can't, your reputation value at the bank goes down, but that doesn't mean people can't still do business with you - individual people who trust you personally might still take your minted money if they believe that you will be able to repay someday - but total strangers most likely won't accept your personal Obs any more... but they will still deal with you, as long as you pay in Obs from other trustworthy people. You might however be better off enhancing your reputation back up by using these trustworthy Obs you've earned to buy back your own IOUs. (Later you'll see that simply acquiring these Obs is equivalent since it enhances your reputation and revalues your personal IOUs, but I'm talking about the early days of this system where personal IOUs still are treated as such and haven't morphed into a more notional currency) (Note that if I cash in your Obs for servives, that's straight barter, albeit rather complex, if they've been passed round a lot, but provably barter and therefore exempt from tax. If I demand cash from your obs then it's income and expenditure and one would have to pay tax on the money exchanged.) This scheme allows a lot of money to get into circulation quickly, probably starting with small sums exchanging between friends, until the reputation server gets enough data to be meaningful. I haven't worked out the details of how a good reputation server would structure its algorithms - that's probably a full-time PhD-level project, but it looks to me intuitively obvious that something could be made to work. (Note that you *could* simply make the reputation server a strict account-balancer, weighing up what a person has issued against what they've received, and the reputation value being the bottom line, but I think for the scheme I describe here to work, it has to be much more than that, and in fact I'd like to explore the possibility here of working on reputation alone and ignoring the strict bottom-line...) The significance of a good reputation server is to block frauds such as person A mints a large amount of money and exchanges it with a similar number of Obs from person B a few times (or in practice a larger clique of conspirators) in order to enhance the reputations of A and B as trustworthy individuals that people do business with. Anyway, the end result of this is that the economy takes off straight away, possibly even with large sums involved, but restricted at first to cliquish groups of friends who all trust each other, but slowly the cliques merge as people accept Obs from others outside their clique - initially they would make personal real-world reputation checks to verify that someone could back up an Ob, but after enough transactions had happened at this level, a pgp-like web-of-trust would build up in the reputation server which would allow you to accept people's Obs whom you'd never met. Of course, once the system was in place, when you did a transaction with someone you could have the choice of insisting not on their personal Obs as payment, but for an Ob from someone with a sound reputation. This *isn't* like a central bank note - there wouldn't be millions out there under one person's name - but there *might* be millions of people with very sound reputations. Eventually it would get to the point as with current currency that you no longer feel you have to trade it in for gold (as we used to do) to be sure that the currency is still valued - because the reputation system would give more confidence than the gold reserves did, especially if you had a good spread of originators for all the Obs you held. And it would make you appreciate the riskiness of big business at a personal level - would you want to hold a million bucks in money backed only by Bill Gate's personal IOU? The biggest flaw in this scheme you might have spotted already is what to do when someone with a good reputation turns bad - or dies. Well, dying is relatively easy - when someone dies, notionally all the Obs they've issued are returned to their estate to be replaced with all the Obs they've received (ie their current bank balance held in Obs). Any shortfall is taken out their estate in real terms by the executors; and surplus is given to their inheritors. If they're insolvent and can't exchange their Obs for those of people with good reputations, well, unfortunately the holders of the Obs have to take the loss and their reputation is wiped out at the bank. *However*... what would really happen is that in general people's Obs would be continued to be traded after their death. The executor would do the calculation above, to see if the person was in real debt when they died, and if they were their reputation at the bank would be lowered by a percentage, but not wiped out. This would devalue the utility of their Obs for use in large transactions but they could continue to be used in small transactions where people didn't care too much about the risk (eg trivial net services, like my newsclip example, which I'd be using to generate low-level money) Of course, people would have to trake care never to build up a portfolio of money from too many people of poor reputation - it would be effectively like small change - no-one ever keeps millions in nickles and dimes, but everyone needs them for day-to-day small transactions. So in all likelihood after someone's death the money would simply remain in the economy, because if their books balanced it wouldn't be necessary to call them in. And their books balancing would at a first approximation be equivalent to them having a good reputation at the time of death. The other problem I mention is the harder one; someone genuinely builds up a good reputation, then makes some transactions and ducks out of the system with real good paid for with their personally-minted cash which is now valueless. Well, we have similar problems at the moment with real cash - it's called counterfeiting. Counterfeiters are criminals and once identified have to go on the run and avoid being detected; anyone who copped out of this system would be instantly detected: If reputation servers would be based on real IDs, they would never be able to get back into society, so there would be a great disincentive to doing this in the first place, if reputation servers were based on nyms, it would take them a *long* time to build up a new reputation that would allow people to do business with them. (I guess they could sell off all the stolen goods for 'clean' Obs, but they could never trade on their own reputation for a long time, and anyone doing business with them would insist on reputable Obs, so as soon as the stolen money ran out, they'd be in trouble - broke) But that's just waffle saying the event is unlikely; in reality, it probably would happen. So how is it handled? I guess by trashing the reputation of that person, which would mean that the loss from the theft would be spread out over all the personal Obs they've ever issued - anyone who held a lot of them would be wiped out - they wouldn't be valueless, but they could only be used as small change and would take a long time to offload. Which is fitting I guess, because it's people who took a lot of money from this person who built up the undeserved strong reputation in the first place. Though by the time this scheme turned into a global large-scale economy, I guess personal integrity checks for large transactions would be rarer - on the other hand, once the economy gets to that size, the risk of leaving bad money in the system lessens, as it's slowly decoupled from the original strong concept of a personal IOU. Well, hey, it's Science Fiction, I don't expect it all to make sense. So what do folks think? Is this like any of the existing schemes? (I don't think so - the guy who did the Ghostmark scheme seemed to have limited the currency supply to a fixed amount and only money that he minted could be used, although I may have misunderstood entirely) - I'm afraid I've never been interested in this field until I had the thoughts above last night, so I haven't read the Chaum papers yet. Is this the sort of scheme he proposes? I know you guys are gung-ho on anonymity, and a reputation-based system seems to preclude that. But I'm not so sure - either it could be made to work on nyms (the reputation server software would have to be pretty slick, but it needs to be anyway, and the input from a real-life credit check part of the initial reputation value would become less and less significant as time went on, when this scheme worked effectively from birth...) or anyone who wanted anonymity *in a particular transaction* would merely have to deal in other people's well-reputed Obs. In fact, once there was a good money supply going, people would tend towards doing that anyway - issuing of a personal Ob would have to be done *very* carefully, because it would automatically decrease your reputation - it would be like taking out a bank loan that *could* be called in at any moment, so you'd be sure to do it only when you could afford to, and you'd only be *able* to when you had a good strong reputation or could make a transaction with someone with a strong reputation, who trusted you to pay *them* off - in fact, this mechanism would cover both a real live electronic bank manager, *or* a personal backed loan, like a parent's guarantee to help you through college, for instance. Hell, I was almost finished, but I ran off at the mouth again. I'll stop now until I can get some feedback... G PS If its an idea worth trying on a small scale, what do you say we try it ourselves? - now we find out what our reputations are *really* worth :-) Would *you* sell a used car for tmp@netcom notes? :-) Oh hell, I feel another tract coming on... here goes (sorry)... I mentioned at the start that the scheme didn't rely on a central bank but on a shared unit of currency. There's no reason why there only needs to be *one* shared unit of currency. Long-term, globally, yes, it could be desirable. But in kick-starting the system there could be several independant schemes running - for instance, the Cypherpunk Ob, started by trading among ourselves; the Extropian Ob for those people next door who I've never really understood what they're up to; the RKBA Ob shared by everyone that hasn't yet left rec.politics.guns; the Queer Ob shared by everyone on soc.motss; the Worthless Ob, used by the clique on alt.religion.kibology; the Boston Ob, used geographically among people in Boston because of physical proximity being used to kick-start the reputation server, etc etc. So it's reasonable to trial it here, and if the scheme takes off, the various currencies might eventually set up an exchange rate like national currencies, or they might merge into one - who knows... (this is how the banking system in Scotland developed - we originally had lots of competing banks issuing their own money) G (*really* signing off this time...)