F. Griffith argues that a digital cash system in which the cash must be exchanged at the bank between transactions is really just an electronic checking system. It is true that this is an inconvenient attribute of some digital cash systems, but there is still an important difference between these systems and digital checking. The cash exchanges are anonymous. Bob, the merchant, does not know who is sending him (or handing him) the digital cash. With a checking system, OTOH, you know who is giving you the check, because they sign their name to it. There have been some cash proposals which don't require this bank exchange at each step. Barry Hayes had one which was analogous to a check which was endorsed over from one person to the next at each transaction. Alice would write the check to Bob, who would endorse it over to Charlie, who would endorse it over to Delores, and so on. This doesn't sound very anonymous, but Hayes was going to let people use pseudonyms rather than their real names. He used a variation on Chaum's double-spending detec- tion that I posted that long message about to catch people who cheated. This system was described in the AusCrypt proceedings. It's important to be aware of the difference between digital cash and other forms of digital money. Cash protects privacy; most other proposals would impair it. Our goal here, insofar as we can still be said to have one, is to protect privacy. As far as the acceptability of digital cash, there are two issues that I see. One is whether the cash is legal, and the other is whether it would be accepted. My opinion is that if digital cash is or could be made legal, it would be accepted. As others have argued, we have many examples (travelers checks, credit cards) where people accept money substitutes without government backing. As for its legality, I posted some research results on this earlier this year. Until the 1860's, private banks created and circulated their own banknotes. Around the time of the civil war, a 10% tax was created on these notes by the federal government to drive them out of circulation, which it did. This tax is still on the books, but I'm not familiar with its details. The other way banks can issue cash is by holding certain kinds of gold-backed federal certificates, but these certificates don't exist any more. So at this point my conclusion was that it would not be legal for a bank to issue its own cash other than by paying the 10% tax, which was considered prohibitive. Hal Finney hfinney@shell.portal.com