the value of money

Blanc Weber asks about the size of the money supply.  Uni points out that
nobody paid him any Tacky Tokens for his list of state policies re ID's.
Somebody else also mentioned that nobody paid him any Tacky Tokens for
some .gif.

It appears that the Magic Money/Tacky Token experiment is not succeeding
in producing an informal digital currency.  People have offered services
in exchange for this money but have had no takers.  It may be that there
is not much demand for their services, and the lack of offers simply re-
flects that.  OTOH it could be a money-supply problem: there may not be
enough Tacky Tokens "in circulation" to allow them to be used as money.

(There may also be some problems in advertising these services.  I recall
Uni's post offering his list in exchange for Tokens.  He didn't explain
what the list was, just mentioned that it was about ID's.  I didn't remember
what he was talking about until he posted the complete list here.  Similarly,
the recent complaint about nobody paying for a .gif didn't include any
information about what the .gif was!  Folks, if you want to sell something,
make sure people know what you're selling.)

I think it would be interesting and helpful to our cause if reports
about Cypherpunks were able to say something like, "An informal form of
'digital cash', based on cryptography and providing complete anonymity,
has been used experimentally within the group to buy and sell
information and other services.  Based on the success of these
experiments, plans are being developed for more widespread deployment
of this 'crypto cash'."

Why don't we brainstorm a bit to see if we could come up with a way
to take this digital cash software and do something useful and interesting
with it.  It seems like too good an opportunity to just let it sit there and
do nothing.  I know there has been some abstract discussion about cash
systems in the past, but now we have something concrete and we should be
to discuss it more specifically.

Hal

You wrote:


| Blanc Weber asks about the size of the money supply.  Uni points out that
| nobody paid him any Tacky Tokens for his list of state policies re ID's.
| Somebody else also mentioned that nobody paid him any Tacky Tokens for
| some .gif.
| 
| It appears that the Magic Money/Tacky Token experiment is not succeeding
| in producing an informal digital currency.  People have offered services
| in exchange for this money but have had no takers.  It may be that there
| is not much demand for their services, and the lack of offers simply re-
| flects that.  OTOH it could be a money-supply problem: there may not be
| enough Tacky Tokens "in circulation" to allow them to be used as money.

	I think that this problem might well go back to the ease of
use problem.  I spend a lot of my time reading bad documentation.  I
really don't enjoy reading bad documentation.  I want a money
supply/remail service/mail privacy system that is as easy to use as
those things I use every day.  Or I want a strong incentive to use the
system.  For example, I do go through the hassle of using PGP to
discuss things from time to time, but not often.

	If I could buy real things with tacky tokens, I might use
them.  (Maybe someone could sell copies of Applied Crypto, or the
associated source disks, or even neat freebies (like Cray mouse pads)
as a way of generating a demand for the tokens.)

	To make it worthwhile, there need to be enough tokens in
circulation that someone saving up for something doesn't prevent other
people from saving up tokens, but at the same time, there shouldn't be
so many that they are valueless.

	Perhaps the next person selling t-shirts could offer a
discount in exchange for tokens?


Adam

-- 
Adam Shostack 				       adam@bwh.harvard.edu

Politics.  From the greek "poly," meaning many, and ticks, a small,
annoying bloodsucker.

Have you signed the anti-Clipper petition?

> 
> You wrote:
> 
> 
> | Blanc Weber asks about the size of the money supply.  Uni points out that
> | 
> | It appears that the Magic Money/Tacky Token experiment is not succeeding
> | in producing an informal digital currency.  People have offered services
> 
> 	I think that this problem might well go back to the ease of
> use problem.  I spend a lot of my time reading bad documentation.  I
> 
> Adam
> 
> -- 
BRAVO!  Magic Money is a grand idea, but I've never been able to make it work;
for me, at least, it was not "user friendly";  and I like to think I'm
not totally clueless, since it looks as if I'll pass Assembly Language
this semester ;-).  Can't a derivation of MM at least as easy to use
as PGP and/or UNIX be developed?  And, if we REALLY want it to take off,
how about something that is menu based that a typical commercial online 
user could learn to use at a minimal level in a few minutes?  No, I don't
have the skills to take on such a project...but if widespread use is the
goal, and if there are still fewer than 4000 hard-corps PGP users with
their keys on a keyserver, then it appears that someone needs to come up
with a program no more complex than PGP...preferably much simpler.

Regards,

Dave

Sorry to sound stupid here, but I was off the list for a while and it 
looks like I missed the whole tackytokens thing... could somebody post a 
summary?

Happy Hunting, -Chris.

______________________________________________________________________________
Christian Douglas Odhner     | "The NSA can have my secret key when they pry
cdodhner@indirect.com	     | it from my cold, dead, hands... But they shall
pgp 2.3 public key by finger | NEVER have the password it's encrypted with!"
cypherpunks         WOw            dCD           Traskcom          Team Stupid
  Key fingerprint =  58 62 A2 84 FD 4F 56 38  82 69 6F 08 E4 F1 79 11 
------------------------------------------------------------------------------

Date: Mon, 2 May 1994 13:55:34 -0700
   From: Hal <hfinney@shell.portal.com>

   Why don't we brainstorm a bit to see if we could come up with a way
   to take this digital cash software and do something useful and interesting
   with it.  It seems like too good an opportunity to just let it sit there and
   do nothing.  I know there has been some abstract discussion about cash
   systems in the past, but now we have something concrete and we should be
   to discuss it more specifically.

There have been several private-currancies in the recent past.  One of
them was written up in Utne Reader, quoting the Whole Earth Review.
I've got the information squirreled away somewhere.  That one was
interesting because it had a zero-sum money supply.  There was no
scrip -- all trades were registered with a central authority.  If I
traded a thing of value to you, my balance went up and yours went
down.  Debt was repudiatable only by leaving the system, and your
balance and trading rate was explicitly public information.  No one
could be forced to trade with anyone else, and trading with someone
(or not) based on their balance and trading rate was encouraged.
Inflation was not a problem because the money supply remained at zero.

The most telling remark from the originator (a Canadian) was that the
system worked best when you had someone with deep pockets who was
willing to run up a big positive balance by trading away things of
value for the private currancy.

So to get digital cash going, (IMHO) we need someone willing to risk a
bunch of bucks to get people in debt to the system.  Maybe someone
with some spare cash could print up a hundred Digital Cash T-shirts
(maybe a bit-mapped image of Johnny Cash? :) worth, say, $7, and sell
them for $10 bucks in digital cash.  The profit that would
(eventually, hopefully) bring would be their return on their risk.

There are other schemes that would work.

-russ <nelson@crynwr.com>      ftp.msen.com:pub/vendor/crynwr/crynwr.wav
Crynwr Software   | Crynwr Software sells packet driver support | ask4 PGP key
11 Grant St.      | +1 315 268 1925 (9201 FAX)    | Quakers do it in the light
Potsdam, NY 13676 | LPF member - ask me about the harm software patents do.

en $729, as the
   money makes it's way through the economy. 

Right.  Banks have to balance liquidity against uncertainty.

   So the money went around, and around, growing and growing, until
   it slowly became worthless.  The only thing that keeps money
   growth in check is market discipline and faith.  The whole house
   of cards doesn't come tumbling down, because Alice has faith that
   she has $1000.  In reality the emperor has no clothes.

In reality Alice's investment is nowhere near as liquid as she thought
it was.  Hers is only liquid if no one else's is.

   No, most major currencies are not on the Gold Standard.  They
   float purely in relation to other currencies.  So what gives
   money it's value?  Purely, the loans which back it up.  This is
   why it is practically impossible to stop, eco-disasters from
   continuing.  If the countries that have "borrowed" this money
   default, the whole thing collapses.  It collapses everywhere,
   simultaneously.

Well, no.  As long as banks can keep collecting and paying interest
and *some* of the principal, they're mostly okay.  They can rebuild
the lost principal through lower profits.  The place where the "faith"
comes in is the confidence investors have that their investment in the
bank is as liquid as they thought it was when they made it.

   Now we get to the problem with digital money. It's a stand alone
   system with no "faith" in it and with no growth built in.  Faith
   is the only thing that keeps things working, that and legislating
   paper as legal tender, so people are forced to accept it.

Not really, not at all.  I can start issuing my own wealth receipts
(digitally or not) as long as I can show people that I actually have
the wealth that I'm issuing the receipts for.  And yes, I'm subject to
keeping a reserve, otherwise how would people trust me?

   Obviously, legislating digital money as legal tender is outside
   our power.  Putting growth into the system without destroying
   faith is also very difficult.  The only logical step is to make
   digital money repesent something.  It must be convertable into
   something that people already have faith in.  Otherwise I fear,
   that digital money may not fly.

In the end, you have the right of it.  Digital cash must be
convertible to be accepted.

-russ <nelson@crynwr.com>      ftp.msen.com:pub/vendor/crynwr/crynwr.wav
Crynwr Software   | Crynwr Software sells packet driver support | ask4 PGP key
11 Grant St.      | +1 315 268 1925 (9201 FAX)    | Quakers do it in the light
Potsdam, NY 13676 | LPF member - ask me about the harm software patents do.

>There have been several private-currancies in the recent past.  One of
>them was written up in Utne Reader, quoting the Whole Earth Review.

These are the LETS systems, Local Exchange Transfer Systems.  They
seem to have been most successful in places of high unemployemnt as a
way of increasing liquidity for services (mostly).

>Inflation was not a problem because the money supply
>remained at zero.

>The most telling remark from the originator (a Canadian) was that the
>system worked best when you had someone with deep pockets who was
>willing to run up a big positive balance by trading away things of
>value for the private currancy.

So it seems that the money supply, that is, the amount of liquidity
available in the system, is not zero, but something else.  There
certainly are some interesting questions here, in particular the
effective exchange rate between the national and local units of value.

Eric