Re: Electronic money

Francis: the expert in this field is Dave Birch, www.chyp.com,
@dgwbirch. I can introduce you if you'd like. More inline...

On 12/01/2014 23:26, Francis Davey wrote:
> 
> 
> 2014-12-01 22:04 GMT+00:00 Phoebe Queen <[email protected]
> <mailto:[email protected]>>:
> 
>     I think for that to happen there'd have to be an electronic currency
>     backed by a sovereign state, and I don't believe such a thing exists.
> 
> Not necessarily. Privately issued tokens which act as negotiable
> instruments and are liabilities on the issuer are not uncommon. Indeed I
> am about to go to Scotland where there are 3 banks that issue bank notes
> all of which are exactly as described. But of course they are physical.
>  

See also alternative currency such as Ithaca Hours and Brixton Pounds.

> 
>     What does exist are various cryptographic token systems being
>     exchanged as units of de facto commodity value in lieu of state
>     currency. The exchange markets for them are naturally quite unstable
>     - there's nothing material they're reliably exchangeable for in a
>     large enough scale to stabilise their value (compared with eg USD
>     which is first tied down by the need for half a billion people to
>     pay their taxes in it, and secondly in the sense that it's the
>     default global currency for valuing oil and many other goods).
> 
> Right. In several useful sense of the word such systems (like Bitcoin)
> are not "money" (though of course there are many ways to define it). For
> my purposes they certainly aren't, because they represent no obligation
> on anyone. I could hold bitcoins and everyone else involved in the
> system could decide to stop. I would have no recourse against anyone in
> that situation. I am well aware of *those* sorts of things.

> 
> But since there is an elaborate system of regulation of "electronic
> money" I was trying to find out if it actually existed in fully
> dematerialised form in open circulation. 

Many things have been tried. You mentioned Mondex; before and during
that was David Chaum's Digicash. Most came too early. I believe Bitcoin
is the first to achieve some traction.

> 
>     PS: I think there are many sovereign currencies which aren't
>     liabilities on the issuer, through a variety of other money creation
>     mechanisms.
> 
> Money theorists argue about this. The pound Stirling doesn't really
> represent a liability on the UK state, although it has value
> principlally because the UK state has an enormous tax bill all of which
> it will reliably accept in Stirling (so it has some use). Also Stirling
> is always exchangeable for legal tender and legal tender can,
> ultimately, be used to defend against an action for debt.
> 
> I am happy to assume that pounds are not liabilities on the UK. 
> -- 
> Francis Davey
> 

wg
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