How simple can an ecash mint be? For the simplest case there should be no accounts. All the mint does is exchange coins for other coins. There are no customer lists, no records of transactions (except as needed for double-spending detection). The very simplest mint is a pure ecoin changer. You give it a coin and it gives you a new one in return. It checks that the coin you gave it is valid and has not been spent before. You also supplied blinding factors so that the new coin you get is blinded and will not be recognized by the mint when spent later. By itself, this trivial mint can support a transaction system, and in principle a whole economy. For Alice to pay Bob, she gives him coins. Bob exchanges them at the mint for new coins, thereby checking that they are good. End of transaction. Bob can spend his new coins elsewhere, unlinkable to the exchange. The mint does not even have to be involved in transfers between ecash and other forms of payment. This is one of the things the e-gold people got right. They outsourced in- and out-transactions. You go to any of dozens of coin dealers, currency services, shady operators of all stripes, to get money into or out of your e-gold account. The same thing would work here. Third parties would offer to buy or sell ecash for dollars, grams of gold, hi grade cocaine, etc. As described, this mint has a constant money supply. There is neither creation nor destruction of coins. In practice there would be slow destruction due to occasional losses of data. This could lead to very slow deflation, or the mint could be adjusted to slightly inflate the currency in order to compensate for this effect.
On Monday, December 24, 2001, at 12:40 AM, Nomen Nescio wrote:
How simple can an ecash mint be?
For the simplest case there should be no accounts. All the mint does is exchange coins for other coins. There are no customer lists, no records of transactions (except as needed for double-spending detection).
The very simplest mint is a pure ecoin changer. You give it a coin and it gives you a new one in return. It checks that the coin you gave it is valid and has not been spent before. You also supplied blinding factors so that the new coin you get is blinded and will not be recognized by the mint when spent later.
This is a terribly important point. Implementing this "atomic transaction" would be a major step. Having a Web site that does this EVEN WITH PLAY TOKENS would be a useful step. (Many dislike toy applications, but a site which did this would be a way to play with the software, test the reliability, and get ideas for further developments. The "Play Tokens" would be of literally no value, ostensibly.)
By itself, this trivial mint can support a transaction system, and in principle a whole economy. For Alice to pay Bob, she gives him coins. Bob exchanges them at the mint for new coins, thereby checking that they are good. End of transaction. Bob can spend his new coins elsewhere, unlinkable to the exchange.
Like a cellular automata, the basic rules dramatically affect future evolutionary paths. With the proper atomic transaction protocols, the rest unfolds naturally. Money changers can profit by returning some fraction (e.g., 0.99) of what they are given.
The mint does not even have to be involved in transfers between ecash and other forms of payment. This is one of the things the e-gold people got right. They outsourced in- and out-transactions. You go to any of dozens of coin dealers, currency services, shady operators of all stripes, to get money into or out of your e-gold account. The same thing would work here. Third parties would offer to buy or sell ecash for dollars, grams of gold, hi grade cocaine, etc.
As described, this mint has a constant money supply. There is neither creation nor destruction of coins. In practice there would be slow destruction due to occasional losses of data. This could lead to very slow deflation, or the mint could be adjusted to slightly inflate the currency in order to compensate for this effect.
--Tim May "That the said Constitution shall never be construed to authorize Congress to infringe the just liberty of the press or the rights of conscience; or to prevent the people of the United States who are peaceable citizens from keeping their own arms." --Samuel Adams
Tim writes:
This is a terribly important point. Implementing this "atomic transaction" would be a major step. Having a Web site that does this EVEN WITH PLAY TOKENS would be a useful step.
There used to be a little toy server run by Software Agents at www.netbank.com. It exchanged something called NetCash which had the following format. NetCash US$ 10.00 A123456B789012C You could mail the server encrypting with its public key, and it would send you back the results encrypted with any password you specified. The server could do a number of simple things, like exchange tokens for new ones, make change, combine a bunch of tokens into a single one, and check tokens for validity. You could deposit tokens and they would mail you a check, or you could mail them a check, and they would issue tokens. It was a cute little system, restricted to amounts under $100, and got some use by BBS systems which accepted the tokens to pay for a subscription. Anyone remember this? It apparently folded, and netbank.com is now a real bank. -- Eric Michael Cordian 0+ O:.T:.O:. Mathematical Munitions Division "Do What Thou Wilt Shall Be The Whole Of The Law"
-- On 24 Dec 2001, at 9:35, Tim May wrote:
This is a terribly important point. Implementing this "atomic transaction" would be a major step. Having a Web site that does this EVEN WITH PLAY TOKENS would be a useful step. (Many dislike toy applications, but a site which did this would be a way to play with the software, test the reliability, and get ideas for further developments. The "Play Tokens" would be of literally no value, ostensibly.)
No complex system was ever written from scratch. It always started out as a simple system that was patched incrementally. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG nMdb/hR+lZwAvCc+I4FPTCbY+lLO/f78ruGxweC0 43Hy9cqHx0yoOaMjAiUlm6G3vDdy2fq+uHpWHor4C
On 24 Dec 2001, at 9:40, Nomen Nescio wrote:
How simple can an ecash mint be?
For the simplest case there should be no accounts. All the mint does is exchange coins for other coins. There are no customer lists, no records of transactions (except as needed for double-spending detection).
In order to give value to ecoins, it is necessarily to make them convertible with some other currency, normally an account based currency. It is difficult to do this without supporting accounts. One could of course have a pile of gold, and physically and in person exchange coins for physical gold, but it is considerably more convenient to exchange coins for account based money, such as e-gold. It is difficult to make such transactions entirely atomic, because of the possibility that something might go wrong, requiring durable state. We then need a database key for that state. Such a database key looks rather like an account
By itself, this trivial mint can support a transaction system, and in principle a whole economy. For Alice to pay Bob, she gives him coins. Bob exchanges them at the mint for new coins, thereby checking that they are good. End of transaction. Bob can spend his new coins elsewhere, unlinkable to the exchange.
This only works if the transaction is complete and final, for example downloading pornography, or for people who meet physically, and exchange physical assets for ecash. If the transaction is for account assets outside the system, then the transaction must have state that looks very like an account, if only a transient account.
The mint does not even have to be involved in transfers between ecash and other forms of payment. This is one of the things the e-gold people got right. They outsourced in- and out-transactions. You go to any of dozens of coin dealers, currency services, shady operators of all stripes, to get money into or out of your e-gold account. The same thing would work here. Third parties would offer to buy or sell ecash for dollars, grams of gold, hi grade cocaine, etc.
The value of e-gold is ultimately maintained by physical transfers with a pile of gold inside a vault outside US jurisdiction. It takes a great deal of time and cost to actually transfer stuff to and from that vault, hence the numerous intermediaries. The intermediaries therefore find it convenient to maintain accounts with e-gold. While accounts are not needed for many transactions, and should be avoided where possible, they are convenient for many transactions, and essential for some.
On Tuesday, December 25, 2001, at 08:41 AM, jamesd@echeque.com wrote:
On 24 Dec 2001, at 9:40, Nomen Nescio wrote:
How simple can an ecash mint be?
For the simplest case there should be no accounts. All the mint does is exchange coins for other coins. There are no customer lists, no records of transactions (except as needed for double-spending detection).
In order to give value to ecoins, it is necessarily to make them convertible with some other currency, normally an account based currency. It is difficult to do this without supporting accounts.
One could of course have a pile of gold, and physically and in person exchange coins for physical gold, but it is considerably more convenient to exchange coins for account based money, such as e-gold. It is difficult to make such transactions entirely atomic, because of the possibility that something might go wrong, requiring durable state. We then need a database key for that state. Such a database key looks rather like an account
Here's a thought experiment: Issue a fixed amount of blinded tokens, for free, and see what happens. How they would be distributed is another topic. But the issuer would promise to exchange them (or make change) in some specified way, e.g., a 1% commission. This would result in fractional tokens, perhaps in the 1-5-10-25-50-100 denominations common with ordinary coins. (Chaum tried something similar in 1995. I'm not suggesting precisely the same thing. Chaum's experiment did not generate much interest, as this experiment might not, either.) The thought experiment is that it is possible that the "thing of value" is the utility of the token, not some underlying store of value. How others might bid for these tokens, possibly bidding with "real money," would be of no concern to the mint. Depends on confidence that the number of tokens is in fact fixed, and that forging of new tokens is not easy. This is what I hoped Mojo would demonstrate. More discussion: 1. Must money be tied to intrinsic stores of value? I think the answer is clearly "No." The U.S. dollar is not in any direct way tied to anything except _other dollars_. Obviously. True, there are already many things already valued in dollars--land, things, houses, loans, taxes, salaries--so there is a somewhat circular argument that echoes what Danny DeVito said in the recent movie "Heist": "Money is money, that's why they call it "money"!" (paraphrased) 2. How much would need to be issued? Depends on a lot of factors. Numbers of users, interest in the experiment, evolution of markets. 3. Isn't it "unfair" to randomly issue money and then see what happens? 4. Are there better ways to issue the money? There could be a preliminary auction, denominated in dollars and with no concern for anonymity/untraceability. (Since the act of moneychanging generates blinded new tokens, it matters not that the original purchasers are traceable. All they need to do is change their money.) 5. Who might use it? Let the market(s) decide. Remailers, warez.... Comment: I'm not trying to trivialize the issues. There are issues with dealing with double-spending ("first to redeem" is a good fix), transfer deadlock (when Alice and Bob exchange something for some token...what if one walks away? A deadlock issue with real money, as with exchanging suitcases of cocaine for suitcases of dollars), and other issues. And it is quite possible that such an experiment would produce little interest. But the cost of trying such an experiment is not especially great. Many such experiments/releases later, we may have learned some interesting things. And possibly one such release will be robust enough (issues about numbers of moneychangers, robustness of mints, etc.) that it nucleates a functioning money system for at least some interesting cypherspace uses. --Tim May "Stupidity is not a sin, the victim can't help being stupid. But stupidity is the only universal crime; the sentence is death, there is no appeal, and execution is carried out automatically and without pity." --Robert A. Heinlein
Many posts have talked about a both a 'fixed level' of money, and a commission. I find this odd, especially as there will be no way to add funds to the system. If you have a commission on every exchange, the money essentially deflates (there will be less of it tomorow than there is today, making it more scarce, and thus more valuable.) Thus it makes sense to hold onto it, making it illiquid, which is a bad thing for a currency. Since this is magic money, why not issue more of it now and again? Adam On Tue, Dec 25, 2001 at 09:44:46AM -0800, Tim May wrote: | On Tuesday, December 25, 2001, at 08:41 AM, jamesd@echeque.com wrote: | | > On 24 Dec 2001, at 9:40, Nomen Nescio wrote: | >> How simple can an ecash mint be? | >> | >> For the simplest case there should be no accounts. All the mint does | >> is | >> exchange coins for other coins. There are no customer lists, no | >> records | >> of transactions (except as needed for double-spending detection). | > | > In order to give value to ecoins, it is necessarily to make them | > convertible with some other currency, normally an account based | > currency. It is difficult to do this without supporting accounts. | > | > One could of course have a pile of gold, and physically and in | > person exchange coins for physical gold, but it is considerably | > more convenient to exchange coins for account based money, | > such as e-gold. It is difficult to make such transactions entirely | > atomic, because of the possibility that something might go wrong, | > requiring durable state. We then need a database key for that | > state. Such a database key looks rather like an account | | Here's a thought experiment: Issue a fixed amount of blinded tokens, for | free, and see what happens. How they would be distributed is another | topic. But the issuer would promise to exchange them (or make change) in | some specified way, e.g., a 1% commission. This would result in | fractional tokens, perhaps in the 1-5-10-25-50-100 denominations common | with ordinary coins. | | (Chaum tried something similar in 1995. I'm not suggesting precisely the | same thing. Chaum's experiment did not generate much interest, as this | experiment might not, either.) | | The thought experiment is that it is possible that the "thing of value" | is the utility of the token, not some underlying store of value. How | others might bid for these tokens, possibly bidding with "real money," | would be of no concern to the mint. | | Depends on confidence that the number of tokens is in fact fixed, and | that forging of new tokens is not easy. | | This is what I hoped Mojo would demonstrate. | | More discussion: | | 1. Must money be tied to intrinsic stores of value? I think the answer | is clearly "No." The U.S. dollar is not in any direct way tied to | anything except _other dollars_. Obviously. True, there are already many | things already valued in dollars--land, things, houses, loans, taxes, | salaries--so there is a somewhat circular argument that echoes what | Danny DeVito said in the recent movie "Heist": "Money is money, that's | why they call it "money"!" (paraphrased) | | 2. How much would need to be issued? Depends on a lot of factors. | Numbers of users, interest in the experiment, evolution of markets. | | 3. Isn't it "unfair" to randomly issue money and then see what happens? | | 4. Are there better ways to issue the money? There could be a | preliminary auction, denominated in dollars and with no concern for | anonymity/untraceability. (Since the act of moneychanging generates | blinded new tokens, it matters not that the original purchasers are | traceable. All they need to do is change their money.) | | 5. Who might use it? Let the market(s) decide. Remailers, warez.... | | Comment: I'm not trying to trivialize the issues. There are issues with | dealing with double-spending ("first to redeem" is a good fix), transfer | deadlock (when Alice and Bob exchange something for some token...what if | one walks away? A deadlock issue with real money, as with exchanging | suitcases of cocaine for suitcases of dollars), and other issues. | | And it is quite possible that such an experiment would produce little | interest. | | But the cost of trying such an experiment is not especially great. Many | such experiments/releases later, we may have learned some interesting | things. And possibly one such release will be robust enough (issues | about numbers of moneychangers, robustness of mints, etc.) that it | nucleates a functioning money system for at least some interesting | cypherspace uses. | | --Tim May | | | "Stupidity is not a sin, the victim can't help being stupid. But | stupidity is the only universal crime; the sentence is death, there is | no appeal, and execution is carried out automatically and without pity." | --Robert A. Heinlein -- "It is seldom that liberty of any kind is lost all at once." -Hume
On Tuesday, December 25, 2001, at 01:50 PM, Adam Shostack wrote:
Many posts have talked about a both a 'fixed level' of money, and a commission. I find this odd, especially as there will be no way to add funds to the system. If you have a commission on every exchange, the money essentially deflates (there will be less of it tomorow than there is today, making it more scarce, and thus more valuable.) Thus it makes sense to hold onto it, making it illiquid, which is a bad thing for a currency. Since this is magic money, why not issue more of it now and again?
For all intents and purposes, the total supply of gold has been relatively constant for decades. A fraction of the total is mined and brought to market each year, but only a small fraction of the total. And yet the assay and marking cost (several percent) has not crippled gold. Further, the fee for assaying and marking (melting, minting, stamping gold bars, etc.) is a fee for a service, and goes back into circulation. I expect the operators of a money changing operation would similarly aggregate their 1% or whatever and use the aggregated fee as their compensation for providing a service. Even if the money deflates, so? If it encourages people to hang on to their money, so? (I made most of my money by _not_ spending what I earned.) In any case, let's see how the experiment turns out. Let anyone try any approach they wish, ranging from "the total amount of money is 1" to "I generate 30% more money in the system every year." As I said, I expect multiple tries, multiple experiments. Right now we are more limited by the notion that Some Big Startup has to Get it Right the First Time. --Tim May ""Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are ruined." --Patrick Henry
On Tue, 25 Dec 2001, Tim May wrote:
On Tuesday, December 25, 2001, at 01:50 PM, Adam Shostack wrote:
Many posts have talked about a both a 'fixed level' of money, and a commission. I find this odd, especially as there will be no way to add funds to the system. If you have a commission on every exchange, the money essentially deflates (there will be less of it tomorow than there is today, making it more scarce, and thus more valuable.) Thus it makes sense to hold onto it, making it illiquid, which is a bad thing for a currency. Since this is magic money, why not issue more of it now and again?
For all intents and purposes, the total supply of gold has been relatively constant for decades. A fraction of the total is mined and brought to market each year, but only a small fraction of the total.
And yet the assay and marking cost (several percent) has not crippled gold.
But gold is, at least for this sort of discussion, illiquid. How many gold coins do you have in your pocket right now? I'll wager asymptotic to nill.
Further, the fee for assaying and marking (melting, minting, stamping gold bars, etc.) is a fee for a service, and goes back into circulation.
Actually the payment for the fee for the assayist and the mint aren't likely to come out of the metal they are processing today. Now if we were talking of a 'frontier' sort of situation then you wouldn't have those fees going back into circulation, at least not immediately. In that case the 'cut' would be collected over some suitable period of time and then sold. Or the assayist could simply take their cut on the upstream broker payment (this assumes of course they have sufficient liquid capital in hand).
I expect the operators of a money changing operation would similarly aggregate their 1% or whatever and use the aggregated fee as their compensation for providing a service.
But these examples, at least from the perspective of the money changer are dealing with effectively 'unlimited' cash pools to draw from. Your objections to Adams points don't hold. -- ____________________________________________________________________ Day by day the Penguins are making me lose my mind. Bumper Sticker The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------
-- James A. Donald:
One could of course have a pile of gold, and physically and in person exchange coins for physical gold
On 25 Dec 2001, at 9:44, Tim May wrote:
1. Must money be tied to intrinsic stores of value? I think the answer is clearly "No." The U.S. dollar is not in any direct way tied to anything except _other dollars_. Obviously. True, there are already many things already valued in dollars--land, things, houses, loans, taxes, salaries--so there is a somewhat circular argument that echoes what Danny DeVito said in the recent movie "Heist": "Money is money, that's why they call it "money"!" (paraphrased)
I fully agree that a server sustaining play money is a good start, but I see no prospect that e-cash could be introduced without convertibility. Cato recently had an article discussing the same matter as Danny DeVito, at somewhat greater length. The point that they made was that even if everyone was better off for adopting some arbitrary form of fiat money as money, it would not be adopted, because of the critical mass problem. With all existing examples of fiat money, this critical mass problem was overcome by first issuing it as convertible, non fiat money, then later suspending convertibility. Suspension of convertibility was accompanied by some other form of free lance confiscation, in the form of legal tender laws that guaranteed that debts contracted for silver could be paid by paper, even though the value of the paper had fallen well below the value of the silver, with the result that creditors suffered dramatic losses, and debtors dramatic gains. While issue of a purely fiat digital currency without state backing would be an interesting experiment, such a currency could never gain value, never become useful as a medium of exchange.
Comment: I'm not trying to trivialize the issues. There are issues with dealing with double-spending ("first to redeem" is a good fix), transfer deadlock (when Alice and Bob exchange something for some token...what if one walks away? A deadlock issue with real money, as with exchanging suitcases of cocaine for suitcases of dollars), and other issues.
With an in person transaction, this is not a problem. If either party defaults, violence will ensue, and the cost of the violence will greatly exceed the value to be stolen. E-gold now supports this capability. Since one can now do e-gold transfer's through one's sprint cell phone, one can now exchange e-gold for suitcases of cocaine, though because e-gold is somewhat traceable, one would be unwise to do this. However the niche market where most people expect the introduction of digital cash is internet transactions, where breaking the defaulter's neck is not a viable option. e-cash will be most useful for sales of information, especially pornography in its more controversial forms, and sales of rights over assets that do not involve any accompanying physical movement of assets. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG 7becawq45A8LcVWWvnNM2lGVWddDFI27K+uRGxOr 4VUXQD+RQrS5MrS5aIXPY7VPkoRmgA1vEu1KpX64u
participants (6)
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Adam Shostack -
Eric Cordian -
jamesd＠echeque.com -
Jim Choate -
Nomen Nescio -
Tim May