Tim May: > > > This episode, and the likely fizzling of the silly "E-Gold" > > > scheme, is a useful object lesson.
Someone: > > e-gold is working fine, though there seem to be a huge number > > of ponzi schemes seeking e-gold. > > > > The fundamental pseudonymization mechanism of e-gold is that > > you can melt down gold. Let them trace that! Tim May: > If the gold is shipped, traceability is trivial (pace the usual > issues with physical deliveries). > > If the gold is _not_ shipped, and is stored in some repository, > then the E-gold is noting more than a warehouse receipt. But in both cases, who is the receipt made out to? Even if e-gold had no anonymity and pseudonymity capabilities, it is still a necessary infrastructure to support real e-cash, as there is no other internet medium that supports reasonably irrevocable and instant payments. But, in fact, it does have some limited anonymity and pseudonymity capabilities e-gold does not provide an anonymization mechanism, unlike Chaum's e-cash. But it does allow money that has been anonymized or pseudonymized in real space to then be moved electronically. Let us suppose that someone takes his physical bag of gold, and opens an account. How can they connect the identity owning that account, to that person's other identities. Alternatively, suppose someone goes to a cypherpunk meeting, and buys some e-gold from someone else at the cypherpunk meeting, use ordinary dollars and the sellers web enabled cell phone. He now has an electronic medium of exchange that can only be traced to those ordinary dollars. > The interesting things about true digital cash (i.e., something > coming close to Chaum's early ideas) are about the > untraceability for both sides in a transaction, not whether the > "underlying" thing of value is a Federal Reserve Note, a Bank of > England Note, a gram of gold, or whatever. Absolutely true, but e-cash does need an underlying thing of value. At present interfacing to federal reserve notes is being made more and more difficult. It would seem far more sensible, since the US dollar is now far better accepted as a medium of exchange, to have something like e-gold, but providing convertibility to Federal Reserve dollars, based on fractional reserves. Call them, perhaps, e-dollars, or pay pal, or X.com, or any of the other one hundred and one competitors of paypal. But in practice all of these are not very money like. There are a number of reasons for this lack of money-ness, but one of the reasons is the federal reserve has never tolerated competion and is not going to start, and it is difficult to address that problem except by an infrastructure that transfers underlying things of value that are not Federal Reserve notes.
