Big Bang Thought Experiment

[Tim May]

On Tuesday, December 25, 2001, at 08:41 AM, jamesd at 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