From: Lee Daniel Crocker (lcrocker@calweb.com)
Date: Fri Mar 07 1997 - 02:15:30 MST
> I've heard of other digital cash schemes, before, also...
> But they were all bound up in real currency.
You mean "government currencies" :)
>> The perrenial problem has been the temptation to make lots
>> of currency, resulting in inflation. They have to have the ability to
>> make some currency for each new participant, otherwise stagnation occurs.
> I think I mentioned how it worked. If not, here it is. When you
> register your business/service at the gvb(global village bank), they
> drop 50 nella into your account. When they have 1000 people signed up
> as service providers, they will put the businesses/services on their web
> page. Then, if you need a service you can look around, and then buy
> their service. So, yes they do have the ability to issue the currency
> to the people. Remember, this is purely fictional currency. The only
> material you can purchase is digital/intellectual property...
As described, this is precisely as fictional--no more, no less--than
ordinary national currencies. There is no reason at all you couldn't
use it to to buy and sell anything, just like all the other cybercash
systems on the net (there are several). If you can sell a document, that
document can be a ticket for redeeming some tangible good, and so long
as there is a relatively fixed amount of currency, or an amount that
inflates at a predictable rate, a useful economy will result. But as
long as issued volume (and therefore value) is controlled by a monopoly,
that monopoly has incentive to inflate.
The only honest, safe, truly capitalist way to issue currency is to set
it at a fixed value in tangible goods--say, grams of gold--issued by
competing private banks (like Hong Kong). And of course, make sure
that you buy deposit insurance valued in currency of the beneficiary's
choice at loss, so that the insurance companies will keep the banks in
line for you. Banks can still manipulate the money supply by doing
fractional-reserve tricks, but they can never go too far without risking
their promise to redeem in hard goods.
-- Lee Daniel Crocker <lee@piclab.com> <http://www.piclab.com/lcrocker.html>
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