2022-02-17 22:33:27 -05:00
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</style><title>Net Money</title></head><body>
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<p><a href="./index.html"> To Home page</a> </p>
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<h1>Net Money</h1><p>
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Net money. Net money that is reasonably liquid, that many
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people acquire, that many people spend, money that is
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readily convertible to worthwhile goods and services. Don’t
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worry about blinding and all that. Once any sort of net
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money is flowing in large amounts, all that stuff then
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becomes possible and desirable. If there is no liquidity,
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nobody cares about blinding, and if you have blinding it
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does you no good anyway without liquidity. </p><p>
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Once we get that, we will shortly get it all. As long as we
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do not have that, we have very little. </p><p>
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Digicash failed because it was proprietary. For net money to
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be a success we need a standard for transferring promises to
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pay that is separate from the software issuers, and thus
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separate from the issuers of promises to pay or deliver. It
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has to be a standard such that anybody can play, anyone can
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write software that will interoperate with software written
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by others, and anyone can issue promises to deliver anything,
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so that Ann, Bob, and Carol can transfer and exchange
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promises between each other subject only to the need to trust
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each other, without needing permissions or licenses from
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anyone else. </p><p>
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And it has to have software that is competitive with existing
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methods of transferring value. </p><p>
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Credit cards are very competitive for transactions of modest
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size, because of the additional services, in particular
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dispute arbitration and resolution provided by the card
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issuers, and because of their large installed base. Smaller
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players cannot hope to compete in that area. </p><p>
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We have however no adequate means for small payments, five
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dollars to fractions of a cent. This offers a fertile
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opportunity for the development of net money. </p><p>
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We also have no entirely satisfactory means for large low
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margin payments. </p><p>
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The large payment problem could be addressed by some system
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that provided a tight connection between internet money and
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US dollars in US banks, or, better, a system that provided a
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tight connection between internet money and US dollars in non
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US banks, or, if we had a large and liquid micropayment
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system, it could be provided by a tight connection between
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micro and macropayments. </p><p>
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If several banks in some moderately popular banking haven
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allowed people to transfer funds instantly and cheaply from
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one account to another within the haven, through digitally
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signed messages passing through https protocol, this would
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make it possible to readily solve the large payment problem
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by offering the means to create a tight connection between
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net dollars and offshore dollars. If this were done then the
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revolution would ensue within a few years. So far none have
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been willing to do this, perhaps out of fear of reprisals,
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more likely out of sheer inertia. </p><p>
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The offshore dollar system is probably larger and more
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liquid, and is certainly considerably more free, than the
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onshore dollar system, but it is inconvenient for modest
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payments. People use it primarily for transfers of many
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thousands of dollars. Also the connection between the
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offshore dollar and the onshore dollar is weak, because it is
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inconvenient, slow, and costly, to transfer dollars between
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the offshore and onshore banking systems. </p><p>
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I see no possibility that anyone will be permitted to create
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a strong connection between an internet dollar and the
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onshore dollar, whereas it is quite possible that someone
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will get away with creating a strong connection between the
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internet dollar and the offshore dollar. </p><p>
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Alternatively, (and perhaps more likely) a satisfactory
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solution to the micropayment problem automatically brings in
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its train a solution to the large payment problem, since the
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software must accumulate many small promises into a few large
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promises, and provide means to transfer these large promises
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through numerous intermediaries, thus a large volume of
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micropayments will create the liquidity for macropayments.
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We do not need the banks to win this one, though they would
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be very handy. </p><p>
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Large promises to pay could acquire value not through a fast
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and cheap connection to the banking system, whether onshore
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of offshore, but through a fast and cheap connection to the
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micropayment system, resulting in an internet dollar that
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derives its liquidity from the internet market, and is
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coupled to the US dollar no more strongly, and no less
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strongly, than the offshore dollar is coupled to the onshore
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dollar. </p><p>
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Of course for this to work, we will need a large and liquid
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market for aggregated micropayments. The existing finance
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systems for self publishing, dirty pictures, and gambling,
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really do not work very well, so there seems an obvious and
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large market for micropayments. </p><p>
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One cent, or half a cent, is probably the sweet spot for
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pages and dirty picture, with quarters being the sweet spot
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for games and gambling. </p><p>
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Obviously pay pages cannot and should not be searched by
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search engines, so the typical design would be a free,
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searchable, index page containing lead in paragraphs and pay
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links to the non free pages on the site, or a collection of
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free summary pages each containing a pay link to the
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corresponding non free page, or (better) both a free index
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page and also a collection of free summary pages. </p><p>
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We want the payment system to introduce no additional delays
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when we click on a link, so the index page should cause any
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necessary negotiations between the browser and server so that
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the server is ready to accept the coins of this particular
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user, so that the user can get the pay page with a single
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message, a single URL containing a coin. The server then
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immediately starts downloading the page without waiting for
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any further messages to complete, and simultaneously attempts
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to deposit the coin. </p><p>
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Suppose you are browsing dirty pictures, and both you and the
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server are clients of the same token issuer. Then the token
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issuer knows that you are browsing the dirty picture pages,
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and knows how much money the dirty picture issuer is making.
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</p><p>
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But for the scheme to be successful, we need many token
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issuers, and the means to transfer aggregated token values
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between issuers, so that in general the entity that takes
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your bank money and provides you with net money, and the
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entity that takes the dirty pictures servers net money and
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provides it with bank money, will be very different entities,
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probably in very different jurisdictions, separated by a
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chain of intermediaries, who have an economic incentive to
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aggregate transactions, thus obscuring individual spending
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and getting. </p><p>
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If any creditworthy person can issue tokens, privacy is not
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such a big problem, and if the aggregated values representing
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large numbers of tokens are readily transferable in a large
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liquid market intermediary market, it is not a problem at
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all, since the dirty picture issuer and the guy looking at
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the dirty pictures are likely to be anonymous to the token
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issuer. </p><p>
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Micropayments have not failed. They have not yet been tried.
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We still have not seen a scheme attempted that had all the
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requirements that real net money will need. It is simply
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quite a bit of work to design these things, and to get them
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deployed in a form that ordinary mortals can use. </p>
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<p style="background-color : #ccffcc; font-size:80%">These documents are
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licensed under the <a rel="license" href="http://creativecommons.org/licenses/by-sa/3.0/">Creative
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2022-02-18 15:59:12 -05:00
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Commons Attribution-Share Alike 3.0 License</a></p>
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2022-02-17 22:33:27 -05:00
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</body></html>
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