Re: E-cash and Interest

What interest, if any, is a contractual arrangement a customer makes with a
bank. Some banks pay no interest at all, some pay low rates, some pay more.
A function of a lot of factors.
Before saying that digital cash will not pay interest, one would have to
know the type of digital cash and the ancillary contracts that may go with
it.
For example, the online clearing model could certainly still have
interest-bearing accounts, in the underlying currency or commodity that
represents the store of value to be paid out when the digital cash is
redeemed. It might be cumbersome, but it would certainly be possible for an
agent to buy what I'll call a "digital bond," worth one unit at time zero,
1.1 unit after one year, and so on.

>interest until it is withdrawn. If you write a check to pay for
>something, that ends your interest accumulation for that money.

Actually, writing the check does not end your accumulation of interest. The
payout of funds to the check casher is what ends the accumulation. Some
parallels with online clearing digital cash.


>With the E-cash systems that I have seen, you generate your own E-cash
>and have it signed by a 'bank' At that moment, it becomes like cash in
>your wallet and you loose interest that this money could be earning.
>Has this issue been addressed, or am I missing something?

Depends on the exact type. From your description, you're looking at the
model in which one closes out a bank account (presumably interest-bearing),
and says "Give it to me in unmarked bills" (loosely speaking). Well, if the
digital cash is really just a call on funds still held (and perhaps used,
hence they can give interest), then interest is still possible. If the bank
has given out funds to some other bank, then they can no longer pay
interest. (If this sounds confusing, it is because even in digital cash
systems one must think about where the store of value really is, who has
it, who must trade it for the numbers representing cash, etc. "There is no
digital coin" means more than just that there is no unforgeable thing that
is unforgeable the way a gold coin is; it also means that the numbers are
not actual value, that the value exists in other places...it gets murky,
though.)
In any case, most initial uses of digital cash will more closely resemble
currency exchanges (which it can be argued is a better model....), for
which the customer usually pays a fee, or there are buy/sell rates that
give the moneychangers in the temple their pound of flesh.
--Tim May
We got computers, we're tapping phone lines, we know that that ain't allowed.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May | Crypto Anarchy: encryption, digital money,
tcmay@got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets,
Higher Power: 2^756839 - 1 | black markets, collapse of governments.
"National borders aren't even speed bumps on the information superhighway."

I think that you have hit the nail on the head. Money could still 'earn' 
interest until it is spent. The 'bank' still has the 'real' money. In 
fact, it is an improvement over cash, in that you could still earn 
interest on the money on your hard drive.
Thanks for the clarification.
Regards, 
Tim Philp

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On Wed, 10 Jan 1996, Tim Philp wrote:

> I think that you have hit the nail on the head. Money could still 'earn' 
> interest until it is spent. The 'bank' still has the 'real' money. In 

NO!  money could still earn interest untill it is _withdrawn_.  This 
includes withdrawals from MTB accounts into the Mint.  Coz ecash in any 
form (whether in the mint or in the HDD) is equivalent to cash.  And cash 
(by definition) cant earn interest.

-------------------------------------------------------------------------------
Patiwat Panurach      	     Whatever you can do, or dream you can, begin it.
eMAIL: pati@ipied.tu.ac.th      Boldness has genius, power and magic in it.
m/18 junior Fac of Economics		-Johann W.Von Goethe
-------------------------------------------------------------------------------

I guess that it would depend upon your definition of 'withdraw'. If you 
say that money is withdrawn when it is on your hard drive, what you say 
is true. However, if the money is 'withdrawn' when it is returned to the 
'bank' for 'clearing it could still earn interest. Of course, this is 
predicated on an e-cash/check analogy that requires specific clearing. In 
any case, at some point, this stuff has to be turned into 'real money'.

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On Fri, 12 Jan 1996, Patiwat Panurach (akira rising) wrote:

> On Wed, 10 Jan 1996, Tim Philp wrote:
> 
> > I think that you have hit the nail on the head. Money could still 'earn' 
> > interest until it is spent. The 'bank' still has the 'real' money. In 
> 
> NO!  money could still earn interest untill it is _withdrawn_.  This 
> includes withdrawals from MTB accounts into the Mint.  Coz ecash in any 
> form (whether in the mint or in the HDD) is equivalent to cash.  And cash 
> (by definition) cant earn interest.
> 
> -------------------------------------------------------------------------------
> Patiwat Panurach      	     Whatever you can do, or dream you can, begin it.
> eMAIL: pati@ipied.tu.ac.th      Boldness has genius, power and magic in it.
> m/18 junior Fac of Economics		-Johann W.Von Goethe
> -------------------------------------------------------------------------------
> 
> 
> 
>