Unlike fiat currencies, algorithms assert limit of total volume. And the mint and transaction infrastructure is decentral, so there's no single point of control. These both are very useful properties.

Useful for something, but not useful for money. I can't help but note that the level of economic knowledge in the digital cash community is pitifully low, and much of what people think they know is absurd. (Anyone who thinks that a gold standard is better than what we have now, or that the supply of gold is fixed in any but a purely hypothetical sense, is either ignorant of economic history or shilling for gold speculators.) Anyone who's interested in this stuff should study the economic history of the US, because we've tried everything, from gold to bimetalism, to bimetalism plus private paper to bimetalism plus public paper to a central bank with a formal gold standard, a central bank with an implicit gold standard, and the current central bank with no formal backing. The greatest impetus for the creation of the Federal Reserve in 1913 was that US business interests found themselves at a disadvantage in international trade because, due to no central bank, our currency was so flaky that nobody in other countries would write contracts in it, demanding pounds or francs instead. ObCrypto: it would be interesting to figure out how to create a digital currency that has the characteristics of real money. One possibility is to set up a sufficiently credible central bank that can manage the supply, but I doubt that would work unless that central bank was a national central bank, which would make the digital money fully convertible with real money. Another interesting model is ETFs, exchange traded mutual funds. They are tradable in arbitrarily small quantities, but only convertible to and from the underlying assets in large chunks by parties who have to register with the issuer. The trades are close to anonymous, fully so if you use an offshore bank, the conversions are not. The idea is that the conversions are done by arbitrageurs who track the prices of the asset and the ETF and buy or sell when they are sufficiently out of line. This works pretty well, and other than in chaotic markets it is quite rare for the values to get more than a fraction of a percent apart. The underlying asset can be anything with an easily determinable price such as a single currency or a basket of currencies. Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly PS: If you think that the fixed supply of bitcoins is a good idea, look at closed end mutual funds, which issue a fixed number of shares that can never increase. They are as much a payment system as bitcoins are, since there are parties known as "stockbrokers" who stand ready to convert them into a form usable for third party payments at any time, at a price you won't know until you try it. _______________________________________________ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography ----- End forwarded message ----- -- Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org ______________________________________________________________ ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org 8B29F6BE: 099D 78BA 2FD3 B014 B08A 7779 75B0 2443 8B29 F6BE