On 2014-01-24 20:45, fred concklin wrote:
Try taking a crack at building a digital bearer share system in which Bitcoin is the reserve currency and there is a mapping of digital bearer shares to reserves in a manner such that the bank can not defraud clients by misreporting the reserves issued at any point in time.
Bank issues chaumian blinded tokens. Each token issued must appear in the merkle tree. If you have a blinded token that is not in the tree, not a valid token. Each node of the tree contains the sum of the value of all tokens under that node. Further you check the validity of each branch of the tree on which your tokens appear. So total number of tokens issued is correct. Each unblinded token cashed is added into the Merkle tree. If not in tree, could be recashed. So total number tokens paid out on is correct. Difference between these two numbers is bank liabilities for outstanding bearer tokens. So bank liability is known, even if bankers are lying through their teeth.