I have been tossing some of the electronic money ideas around in my head, and the two things that seemed to be the hardest problems were how to keep the feds from stomping on such a bank and how to give its currency value. Here are a couple of thoughts on these problems: Legalities: Why does it need to be a bank? Actually, it seems to me that the first step is to actually create the "currency" for use as a means of exchange and let the net provide the banking structure. Once currency exists cryptography will allow for the banking structure to be created in whatever manner the market demands. The hard part seems to be the jump-starting necessary to create the currency and get the system going. So why not approach this as a currency problem and not as a banking problem. In other words, how much easier is it to set up a "currency exchange and check cashing" operation compared to a bank or credit union? All the digital currency exchange would need to take in the money from users, and pay out digital coins in cash. Once such an operation existed the formation of a digital economy would be possible by just migrating existing services to work with the system. Such an operation could support itself by charging a small transaction fee (e.g. $0.25 for deposits and $0.25 for withdrawls plus the postage for sending the check...) Products and Value: I have only glanced over the papers available, but the IMP archive stuff (internet mercantile protocols) might just provide the immediate market for us to piggy-back upon. The imp people seem to be oriented towards using PEM for monetary transactions, but it seems to me that it would be possible to subvert such a system for our own use by simply setting up a server similar to an anonymous remailer that allows one to deposit electronic currency from the previously mentioned currency exchange and then creates a imp system PEM message coming from the remailer. The remailer can ask as a sort of purchasing agent, converting the digital coins created by the currency exchange into whatever type of imp certificates the user wants and it uses the purchasing agents identity to provide the anonymity that the imp schemes seem to not care about... So, what say you fellow cypherpunks? jim p.s. Anyone coming to the crypto conference in Austin Wednesday? If so and you want a copy of my most recent draft of a "Musings on a Crypto-Secure Linux" let me know and I will bring a few printed copies...