Flakey wrote:Had to sign up about this. People are taking about cheques, and clearing houses, but why would they have them?
I live in the UK, and I have not had a check book in 15 years, no one I know has a check book, unless they happen to be self employed, and even then not all of them do. It is over 10 years since I had to deposit a check. About the only stores that now like to handle cheques are mostly those that cater to trades.
In the future modern day 'cash' would not be able to exist. Modern day notes and coins (or even futuristic notes and coins) would be very easy to copy using a house-hold or office 3d printer.
Therefore money would only be able to exist electronically, unless you are talking about specie (precious metals/elements). The only 'money' is money inside a bank account.
Now on current day planet earth electronic communications have lag times measured in microseconds. Financial entities can conduct transactions in the blink of an electronic eye. These transactions can be confirmed by both parties immediately after they are processed.
Now even in the future, businesses and individuals will have a stubborn insistence on being paid in 'real money'.
Since the 'real money' is stored electronically in a bank, in order for the money to be transferred from the payer to the payee, the payer has to communicate with the bank to let them know to transfer the money to the payee's account. At inter-planetary distances or interstellar distances this may take minutes, hours or even months.
The payee also has an interest in confirming that they have been paid (see above). Therefore before letting the customer walk out the door (and possibly out of the star system) with their new iPhone MCCXXXIV they will want to communicate with the bank as well to ensure the payment has actually been credited to their account.
Someone who flies into a star system waving a datachip around saying 'I've got a trillion hyperbucks in my pocket' is not going to get very far - no one would be willing to sell him or her as much as a cup of coffee unless those hyperbucks were transferrable/convertible to their bank account. Now we are back to square one with the payer needing to communicate with a bank and the payee needing to check that the transfer has been made.
>>>> A quick digression about the trillion hyperbucks on the datachip:
Now those with devious minds might be thinking: with a little help from my friends copy and paste, I could easily turn that trillion hyperbucks into TWO trillion hyperbucks! In fact, if I was willing to put a little wear on my Ctrl-C and V keys I could have as many hyperbucks as I could spend!
Obviously the Government, Banks, Business community
and Consumers would not be in favour of this practice. The currency would quickly become devalued into uselessness and people would be reduced to bartering for goods using gold coins and sexual favours.
Therefore in order to maintain the value of the currency banks could only accept 'real' money and
must only allow people to spend it once.
>>>>End digression.
So what is happening at the bank(s) during this transaction?
1. The payer's bank needs to confirm the authenticity of the trillion hyperbucks on the datachip.
2. The payer's bank needs to confirm that the trillion hyperbucks has not already been spent before.
3. The payer's bank needs to deduct the value of the cup of coffee from the payer's account (what!? 5 hyperbucks for a cup of coffee? What a rip-off!)
4. The payer's bank needs to transfer funds to the payee's bank (assuming they use different banks).
Step 1 is done using encryption. Encrypted messages can only be decrypted using the matching key. Who decides the what the key is? The central clearinghouse.
Step 2 can be managed two ways:
One way is to communicate with
every other branch of the payer's bank to ensure the money has not been spent before. This may mean the payer needs to wait for minutes, hours or months for their cup of coffee.
The other way is for the funds to be 'locked' into a 'cheque' that can only be cashed at one particular branch. This means the branch only needs to check its own records to see if the money has been 'spent' before.
Step 3 has some interesting ramifications. Whilst the bank could re-write the datachip with 999billion, 999million, 999thousand and 9hundred and ninety five hyperbucks after making the transaction, this is inefficient. Then the next time the payer wishes to make a transaction, the bank has to go through step 1 and 2 AGAIN. It makes more sense that when the payer arrives in system, they deposit the entire cheque into the bank and then withdraws the balance (into another 'cheque') when they leave. Remember that whatever remains on the datachip
cannot be spent in another star system (or 'branch') anyway.
Step 4 is relatively simple, but relies on trust and reliability of both banks, which needs to be closely regulated by a trusted authority.
Why involve a central clearinghouse rather than use a 'peer-to-peer' (branch-to-branch) system? I have a feeling that when dealing with an entity like a trading cartel which may be
borrowing money from many branches simultaneously there needs to be some sort of control to ensure that the account does not go 'bad'. Also inter-bank settlements etc. would be an issue.
Finally the clearinghouse is where the regulatory supervision regarding the management of the money supply would take place. Since the value of a Fiat Currency depends on the circulation and money supply, for other parties to accept the currency as payment, they would need to have some degree of assurance that the currency would still retain equivalent value in the future.
