Doug Barnes wrote:

Actually, there is still an element of trust involved, that (as a previous poster pointed out) the entity who actually holds your gold won't run off with the gold, or give it to someone else, etc. Still (in the best of all worlds) rather have more solidly-backed currency, but you still have to trust someone at some point. I'd rather have US dollars than gold-backed currency from an even less trustworthy gov't.

The important freedom is being able to choose whom and what you trust, without having to slide into a pure barter economy.

There is _always_ some element of trust involved. Crypto changes this in a subtle way I'll get to later. The Swiss bank that holds "your" gold (or whatever) can in theory tell you "But, Herr Barnes, you of course withdrew your holdings yesterday!" Likewise, your local bookie can refuse to pay you what he owes you (I guess you can threaten to break _his_ legs!), or can claim he already paid "you" the day before. Such "burnings" have always been possible, and yet these systems work and are actually quite stable. That these "trust" systems work is related to tit-for-tat strategies in the iterated Prisoner's Dilemma problem, in expectation of future business, and in the whole related area of _reputations_. Your local bookie pays up because to not pay up would eventually have repercussions for his future business...and he deems his _real_ business is making book, not burning any one customer. Emergent behavior. Spontaneous order. Secret accounts and crypto make the equation even more interesting. Anyone depositing money (dollars, gold, who cares, really) into an account and getting back some form of digital money can: - test the system by redeeming small amounts of the money - actually be a service which makes deposits and then redeems the digital money as a "testing service" (issuing a signed report, for a fee, which reprots on the reliability of banks...all privately done, of course) Digital money is a kind of shell game (with no insult intended to either shell games or digital money). $10,000 converted into, say, 100 separate pieces of digital money issued by many different banks, circulating around and being redeemed and reissued....well, it would be apparent pretty quickly--and word would spread--if the money was not being redeemed. Some percentage of all the digital money "in circulation" will actually be primarily "pinging" money, designed to ping (test) the system. (After a while, expect this to go down.) The beauty is that the untraceability means a bank doesn't know it's being tested by a "pinger" or by another bank, or if the money belows to some "Little Guy" who might otherwise be fair game for a rip-off (putatively, although "Little Guys" are not ripped-off by banks in the current system, either). I've said this before: CRYPTO + DIGITAL REPUTATIONS = A NEW ERA. Crypto researchers like Chaum seem mostly oblivious to the nature of reputations, of escrow services (untraceable, too). and of this whole very natural aspect of transactions. Many of the currently "unsolved" problems with digital money fade away--I contend, and will discuss if there's interest--when the elements of reputation and reputation capital are included. (I can understand the reason cryptologists have for purely mathematical or formal proofs, but the problems now stymieing them with digital coins (e.g., the lack thereof) and the like are solvable by injecting local reptutation considerations.) The ecology of these banks, transfer channels, etc., will be quite interesting to study. I expect fairly robust feedback mechanism will evolve naturally be market forces. Crypto makes a lot of interesting things possible. -- .......................................................................... Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@netcom.com | anonymous networks, digital pseudonyms, zero 408-688-5409 | knowledge, reputations, information markets, W.A.S.T.E.: Aptos, CA | black markets, collapse of governments. Higher Power: 2^756839 | Public Key: PGP and MailSafe available. Note: I put time and money into writing this posting. I hope you enjoy it.

-----BEGIN PGP SIGNED MESSAGE----- writes John E. Kreznar:

tcmay@netcom.com (Timothy C. May) wrote:

...

Many of the currently "unsolved" problems with digital money fade away--I contend, and will discuss if there's interest--when the elements of reputation and reputation capital are included.

I'm surprised that many didn't jump on this offer. Maybe it's their preoccupation with Detweiler's shock at discovering that pseudospoofing can be an effective defense against his cherished tyranny of the majority. I for one would value your discussion. Please.

John E. Kreznar | Relations among people to be by jkreznar@ininx.com | mutual consent, or not at all.

As would I. - -- +-----------------------------------------------------------------------+ | Nate Sammons email: nate@VIS.ColoState.Edu | Colorado State University Computer Visualization Laboratory | Finger nate@monet.VIS.ColoState.Edu for my PGP key | Key fingerprint = 2D CD 07 CA 7B EC A8 4A 86 7F F3 A8 1D 15 65 46 | Title 18 USC 2511 and 18 USC 2703 Protected --> Monitoring Forbidden +--------+ Guerrilla Cryptographer Always remember "Brazil"