From: jpp@hermix To: cypherpunks@toad.com Subject: An ebank's vulnerability. I think that the physical location of an ebank's value reserve (be it gold, corn, stock certificates, whatever) is really the trickyest problem. At that location the bank can be attacked by governments (or other crooks). [enter fantasy... Person with gun says "Well, if all this money is your's, then you sure owe us taxes (protection). Don't pay and you're going to jail (to the bottom of the river). If it ain't your's, then (I'll just take it for myself) you're a bank, and you're going to jail." ...leave fantasy] One solution I see is to not have any physical deposit at all. This is what most governments do isn't it? But without a physical resource for reference the question of the value, or the origin of ecreds becomes tricky (at least for my limited economic knowledge). Suppose I create a really great joke and try to sell it. Where does the buyer get the ecreds from? If I wanted to buy a taco, would the vendor take ecreds? Would they take ecreds *I* printed up? Another solution is to use the banking system of a country which *ALREADY* has anonymous value storage as a comodity for sale. Supose some enterprising Swiss citizen wanted to set up ebanking, I bet they could do it. I wouldn't mind my ecreds being denominated in Swiss francs either. But I suspect the Swiss government might drop by the bank every year to collect some taxes from the accounts. At what tax rate would this become unacceptable? Someone could always set up an ungoverned value storage location. Smuggling gold (or other valuables) into, with in, and out of governed areas shouldn't cost too much, since valuables generaly have at least the value/weight and value/volume than marijuana has. The cost of smuggling, and defending the valuables becomes the limiting factor. How much could be "lost" to smuggling and defense befor this becomes unacceptable? j'