What to back an ecash issue with, structure

[Ryan Lackey]

I've read quite a bit about free banking.  The idea of using a
purely-technical basis for a currency, and then allowing it to float,
is interesting -- as is linking to an external accounting system, and
only issuing based on that.

I think the greatest threat to an electronic cash system is 1) not
being deployed 2) not being adopted once deployed.  So I'd be inclined
to go for something simple vs. complex, in backing it -- a warehouse
full of cash, or gold, or whatever else, controlled by a legal entity
which sets a redemption policy.  Trying to explain free banking to
someone becomes complex.

Without a market, automated price presentment in converted form,
etc. users would be annoyed/confused by a free-floating currency.
While I suppose the mint could issue 1m tokens by default, and an
issuer could sell them at a rate on the open market for USD 1/token,
such that the market value does not fluctuate, then you lose the mint
being able to publish treasury and float figures.  I think placing
those two figures into the mint and signed by keys only the mint has
would do more to reassure users of stable currency value than a
potentially-shadowy issuer.  Issuer sets aside $x and tells the mint,
mint issues x tokens, tokens trade near $1 each, and if the issuer
wants to expand the issue, the issuer either devalues the currency, or
adds more money.  This way the issuer could retain a constant unit
price while starting with, say $10k of cash for 10k units, selling
those, then issuing more. 

There are a lot of interesting experiments, but most of them are only
interesting once a basic level of infrastructure is deployed.  First
simple mints, then a market, then more sophisticated, derivative,
etc. issues, then security features.

A purely-technical "high-power money" experiment would be fun, and
might be a better basis for issues than "mint in control of bank
accounts externally" or "external issuer banking issue", but
it's more complex to deploy.  
-- 
Ryan Lackey [RL7618 RL5931-RIPE]	ryan at havenco.com
CTO and Co-founder, HavenCo Ltd.	+44 7970 633 277 
the free world just milliseconds away	http://www.havenco.com/
OpenPGP 4096: B8B8 3D95 F940 9760 C64B  DE90 07AD BE07 D2E0 301F