[E-Lang] Re: Fwd: [picoIPO] [Fwd: [Intertrader] PR: Recent Intertrader andSystemics alliance brings forth digitaldollar from Hansa Bank (fwd)]

[Ian Grigg]

Hey Mark,

what's cooking in your neck of the woods?

"Mark S. Miller" wrote:
> 
> Wow!  Further correspondence in the thread rooted at this message
> http://list.picoipo.com/pipermail/picoipo/2001-March/000048.html reveals
> that this is (approximately) a dollar backed instrument!

Precisely (!) the instrument is reserved 100% with dollars held
on account with Hansa Bank, the issuer of the instrument.  Those
account dollars may further be placed in accounts in the name of
Hansa held with other institutions, at the discretion of Hansa.

As well as being reserved 100%, the instrument is further backed by
the good name of the Hansa Bank & Trust Company, a bank of a decade
or more, and also by the name and regulatory actions of the ministry
of finance in Anguilla.

(Just to clarify your "approximately" caveat there!  Also, bear
in mind that in economic circles, the term "backing" is considered
vague, so needs defining:  I use the term "backing" to describe
the sum total of things that stand behind an instrument to give it
value -- so reputation is part of backing, as are the nature of the
reserves.  Sorry for the nit-picking!)

> (Follow the
> pointers in the thread for details.)  Ian, Rachel, fractional reserve risk
> aside,

<pedantic :>

There is no *direct* fractional reserve risk here in that the
dollars are reserved 100% with dollars on account.  There might
be indirect risk, in that those dollars might be subject to the
failure of the institution, but that's an issue with any account
dollar.  The only way to overcome that sort of risk would be to
store greenbacks in a vault, which would paradoxically replace
fractional reserves with dollars that are not reserved against
anything at all!

</quibble>

(The contract itself is balanced -- in the event of a designated
reserve dollar account provider [some bank] going bust, the holder
of Hansa dollars keeps claim to the bust bank's accounts, not to
a better form of dollar!  So, there remains that indirect default
risk.  An alternate to that might be to introduce an insurance
policy, but this is not practical yet.)

> is this also an instant settlement instrument?

Yep!  Settlement is less than a second away from just about anywhere
that can ping the server in reasonable time.

> If so, Tyler, Rachel, Ian, have either of you thought about access to this
> instrument through ERTP?  (If you haven't yet looked at ERTP, I recommend
> learning Tyler's version rather than mine.  Tyler, what's the best place to
> start?)

Is that "Electronic Rights Transfer Protocol" or "E-Rights TP"?

Practically speaking, the contract is a Ricardian contract.  You
can only access it via the Ricardian Issuance Server, which
currently only offers the SOX protocol.  To access it via another
protocol would require that protocol to subscribe to the notions
of Ricardian Contracts (no bad thing, and not hard either) and
also for the server to support that protocol (which would depend
on the advantages so offered, of course)...

I'm unfamiliar with ERTP so can't comment specifically...  One
would have to look at the whole gammut of features to see whether
it would work.

-- 
iang