DBCs now issued by DMT

[Tyler Durden]

I too admit of having done some imbibing (Belgian ale I'm afraid).

I was thinking about this on the heels of your last lubricated missive, and 
a very similar thing occurred to me.

Actually, something far less ambitious (in the short run)...

First of all, I see no deep reason why some bank acount (or, more likely, a 
whole bunch of 'em) can't be auto-administered like a simple mini bank. It 
would be auto-administered via the votes of its "owners", who have never 
met, and who are unaware of the real names of the other owners. Owners vote 
to lend money out of this account to whomever.

As for the administration, well that's 'obviously' handled by a proxy 
program somewhere, that translates the votes into actual decisions about the 
account (including loan amount, interest rate, debt-to-liquidity ratio and 
so on).

Needless to say, since this account is tied to one or more denominations, it 
could eventually be shutdown through the concerted actions of various 
governments. But the mechanisms of such a "bank" are (I think) independent 
of the possibility of reliability of a future digital currency. (And of 
course, there's a lot such a "bank" could do before getting shut down.)

The tough thing (or perhaps not..someone here must surely know) is the 
possibility of lending money to persons who are unidentified in "meatspace". 
(But then again, even in the non-Cyber world, 'meatspace' is very rarely an 
issue when lending money...it all boils down to credit records anyway...)



>
>But do we need a bank? I'd guess we need an issuer, but why can't it be a
>distributed issuer without central control (or even distributed control?)?
>Can't the protocol deal with the problem of issue?
>
>(We'd have to write a damn good one, of course)
>
>--
>Peter Fairbrother
>
>bear wrote:
>
> >
> >
> > On Thu, 5 Dec 2002, Peter Fairbrother wrote:
> >
> >> OK, suppose we've got a bank that issues bearer "money".
> >>
> >> Who owns the bank? It should be owned by bearer shares, of course.
> >>
> >> Can any clever person here devise such a protocol?
> >
> > I thought about this problem for several months.
> >
> > The problem I kept running into and had no way around is that if the
> > holders are truly anonymous, then there is no way for them to seek
> > redress for fraudulent issue or fraudulent transactions.  If the
> > banker goes broke, people want to be able to make a claim against the
> > banker's future earnings for whatever worthless currency they were
> > holding when it happened, and they cannot do that from a position of
> > anonymity.  People want a faithless banker punished, meaning jail time
> > or hard labor, not just burning a nym.
> >
> > The sole method for any truly anonymous currency to acquire value is
> > for the banker to promise to redeem it for something that has
> > value. So the banker, if it's to have a prayer of acceptance, cannot
> > be anonymous.
> >
> > And the minute the banker's not anonymous, the whole system is handed
> > on a platter to the civil authorities and banking laws and so on, and
> > then no part of the system can be reliably anonymous because the
> > entire infrastructure of our legal system requires identity.
> >
> > Look at the possibilities for conflict resolution.  How can the
> > anonymous holder of an issued currency prove that he's the beneficiary
> > to the issuer's promise to redeem, without the banker's cooperation
> > and without compromising his/her anonymity?  And if s/he succeeded in
> > proving it, who could force an anonymous banker to pay up?  And if you
> > succeeded in making the banker pay up, how could the banker prove
> > without the cooperation of the payee that the payment was made and
> > made to the correct payee?
> >
> > We use a long-accepted fiat currency, so we're not used to thinking
> > about the nitty-gritty details that money as an infrastructure
> > requires. It is hidden from us because our currency infrastructure has
> > not broken down in living memory.  We shifted from privately issued
> > currency to government-issued currency largely without destabilizing
> > the economy.  Then once people were accustomed to not thinking of a
> > promise to redeem as being the source of value, we went off the gold
> > standard.  Our economy hasn't broken yet, but you have to realize that
> > this situation is a little bizarre from the point of view of currency
> > issue.  We're not thinking anymore about the promise to redeem
> > currency for something of value, and the implications of failure to
> > honor that promise, because we live in a sheltered and mildly bizarre
> > moment in history where those things haven't been relevant for a long
> > time to the currency we use most.  But any new currency would have to
> > have a good solid solution for that issue.
> >
> > The only way I found to decentralize the system, at all, was the model
> > where all the actors are pseudonymous rather than anonymous, each user
> > has the power to issue currency, and different issued currencies were
> > allowed to fluctuate in value against each other depending on the
> > degree of trust or value of the underlying redemption commodity.
> > Money becomes a protocol and a commodity and labor exchange in raw
> > form, rather than a simple sum - it's back to the barter system.
> >
> >> I'd guess that all the Bank's finances should be available to anyone 
>who
> >> asks. That should include an accounting of all the "money" issued. And 
>not
> >> be reliant on one computer to keep the records.
> >
> > An interesting idea, but it more or less prohibits offline
> > transactions involving a currency issue.  It also means the entire
> > market must be finite and closed.
> >
> >> Or the propounders wanting to: make a profit/control the bank?
> >
> > I do not think that there are profits to be made as an issuer of
> > anonymous or hard-pseudonymous money.  That's one of the reasons I
> > advocate the "everyone is potentially a mint" model -- the expenses of
> > issue, and the cost of doing business uphill against trust until one's
> > issue is trusted, should be shared in something like equal proportions
> > by people who undertake it voluntarily.
> >
> > Bear


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