The question came up here some time ago as to whether it would be legal to issue electronic money, or regular money, for that matter. I got a couple of books out of the library to try to learn something of the history of private bank notes. It seems that private bank notes were the rule rather than the exception in the U.S. up until around the time of the Civil War. However, the notes were issued by banks which generally had a charter or license from the state government. I'm not sure whether a private individual could have legally issued his own banknotes without state permission. Around the time of the Civil War the Federal government levied a 10% tax on all issues of banknotes. This was intended to drive them out of use, and it did. Apparently this tax is still in effect today. George Selgin's book, The Theory of Free Banking, is a call to return to a situation of competitive note issue, where each bank would print its own "money" and people would use all these different monies freely according to their preferences. Regardless of the pros and cons of this idea, he does mention the legal situation briefly in footnote 7 of chapter 11: "Strictly speaking, issue of bank notes by commercial banks is not presently illegal; however, such issue must still meet the bond-deposit requirements established under the National Banking System or the 10 percent tax on state bank notes. Since all bonds eligible as security for circulating notes were retired before 1935 (or had the circulation privilege conferred upon them withdrawn), note issue, while not illegal, is nevertheless impossible under existing law. Restoration of commercial bank note-issuing privileges merely requires repeal of the bond deposit provisions of the original National Banking statutes and of the prohibitive tax on bank notes." One other point I learned was about the nature of "legal tender" laws. If a money is a legal tender, a creditor cannot turn down an offer by a debtor to repay using that money. If he does turn it down, the debt is void (roughly). So, legal tender laws don't forbid repayment of a debt in some other form (I can give you a bike in place of the $100 I owe you), (if we both agree), but they may specify that even if a debt is denominated in some other units, I can repay using federal reserve notes. This is what happened when the U.S. stopped redeemin for gold during the 1930's - long-term contracts had routinely been denominated in gold, but the courts held that dollars could still be used to pay them off. So, legal tender laws don't appear relevant to the use of digital money, except that contracts based on digicash could still be paid off by dollar bills if the debtor wants. Hal Finney 74076.1041@compuserve.com