"James M. Ray" wrote:
>
> ...
> >> In my next post I will be soliciting some advice relating to the
> >> preliminary requirements for DigiGold's offline settlement mechnism(s).
> >
> >I look forward to this promised post.
> >
> >Digigold, if it could be had as paper as well as in webfunds, would be a
> >fantastic currency. There is a real need for a fee free physical cash
> >that is financially sound and gold based if gold is to take off more
> >generally. It seems to me that only by holding financial assets can a
> >currency provider avoid direct fees on users for transactions or asset
> >storage. But I don't think the majority of end users give a damn if
> >their currency is backed by financial assets, provided they know its
> >sound.
> >
> >Paper currency has the advantage of being holdable by anyone, without
> >any joining process.
> >
> >David Hillary
> >
>
> Hi David. Paper (or, our favorite, "lipstick on the mirror") digigold will
> indeed oneday be possible/doable (and therefore done, to some
> extent or another) IMO, BUT...
>
> You may not wish/have to wait. Presently, Norfed does silver notes
> that are admittedly US-centric, but they're coming out with a gold note
> and a one ounce gold coin. I know the proprietor, Bernard von Nothaus,
> pretty well. He's a fun, nice guy, and I own some of his Norfed ALCs,
> though I must admit I don't use them and will not ever redeem them.
>
> They're pretty, though. http://www.norfed.org if interested, and I think
> a number of the redemption centers take e-gold.
> JMR
>
> "e-gold is to 'money' what email is to letters." -- JP May
> --
> Regards, James M. Ray <[EMAIL PROTECTED]> PGP = 0xAE141134
> Try a FREE e-gold account: http://www.e-gold.com/e-gold.asp?cid=9
> http://www.omnipay.net to buy/sell grams. http://2cw.org/jmr to click.
The prob with these norfed notes is that they involve gold storage fees,
which gives them a big disadvantage for practical use. The problem is
not just that holders pay to hold, it is that the notes no longer are
fungable, meaning one can be exchanged for another. The notes last five
years and are redeemable at a 5% discount, being the five years storage
fees. This makes an old note worth less than a new note -- imagine
giving change to shoppers! Cash should be fungable so that each unit is
exactly the same value. The reason these fees are necessary is that the
notes are backed by physical gold rather than gold debt (the people who
create these notes being paranoid about financial risk and 'debt based
money' etc.).
One possible solution is a depreciating currency, whose value declines
by the storage fee over time. E.g. the unit of account would be wigets
with one widget being worth, and backed by and redeemable for, a*e^l*t
where a is the exchange rate at time zero, e is the base of natural logs
(2.718...), l is a value indicating a 'halflife' and t is time. In this
way holders pay for storage and other costs via depreciation of their
asset (diminishing value, e.g. 1% p.a.), and notes are fungable. This
process involves no debt or financial assets, but adds complexity by
introducing another currency and unit of value.
The more likely solution is a currency like digigold, with a backing
including a secondary earning reserve, which is a financial asset, which
earns interest. The interest funds the costs such as note printing and
metal storage (of the primary liquid reserve). Digigold maintains owners
equity at at least 8% of financial assets to ensure that digigold can
meet its liabilities. Digigold could also issue paper notes which would
neither diminish in value or involve charges. This provides a practical
way for the utility of paper notes to be provided.
David Hillary
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