[Webfunds-users] Napster for Money?

Sun, 15 Apr 2001 13:20:39 -0400

David Hillary wrote:

> I am not sure I 'get' webfunds and ricardian contracts at this stage buy
> a couple of weeks ago, as I was in bed I finally 'clicked' about how
> digital bearer certificate financial crypography *could* work.
> 
> you need an Issuer -- an entity of high reputation for capacity to pay
> such as a bank.
>
> and you need Bearers -- entities who deposit funds with the Issuer in
> exchange for Bearer Certificates, or who provide value to others in
> exchange for Bearer Certificates.

See my other notes concerning deposits / banks.  Also, bearer is
not a useful term, it suffers from overloaded definitions, and lack
of political correctness.

> A Digital Bearer Certificate is a digitally signed *promise* from the
> issuer to the Bearer to pay a certian sum of money on demand. This
> promise is backed by 1). the reputation of the Issuer for being able to
> redeem such demands and 2). the user's faith in the cryptography
> assuring them that a) no one could have read/copied the Digital Bearer
> Certificate in transit and b) that the signature is authentic, showing
> that the promise is genuine and enforcable.

In our system, the instruments (more or less the certificates,
although not 100%) identify a contract.  That contract is the
promise.  It may promise a certain sum on demand, or may not.
It depends on the contract.

When we at Systemics talk to issuers, we suggest (as is doco'd
on the site) that reserves of 100% are maintained.  How the
instruments are redeemed is a commercial decision of each issuer.

Once you have those instruments, you have a claim to whatever the
contract says.  Then, the cryptography will defend that claim as
you move the assets back and forth.

> Digital Bearer Certifaces can be copied, backed up and otherwise stored
> to protect against loss. They can also be printed out or saved to disk
> or saved onto a magnetic strip card or smart card or whatever, its just
> a sequence of characters.

Right, same with our Ricardian instruments.

> To make a payment to another bearer, simply send it to that party,
> whether by physical delivery of it printed out or saved on disk, emailed
> or whatever.

OK, approximately the same.  In token money (those "certs") you do
indeed send the money.  In our system, you write a payment from one
nymous account to another.  At the user level there is practically
no difference, but underneath, it is very different.

> The recipient then checks the validity of the Digital Bearer Certificate
> by communicating with the Issuer. Once the Digital Bearer Certificate is
> deemed valid, the recipient then asks for a fresh Digital Bearer
> Certificate in exchange for the old one. This makes any back up copies
> of the original Digital Bearer Certificate invalid.

In our system, deposit the payment.

> The Issuer does not need to know who holds the certificates when it
> re-issues certificates.

Right, in that bearer systems are untraceable.  In contrast, our system
is nymous, and thus it traces, but it doesn't know who it is tracing.

-- 
iang