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Message no. 1
From: Jan-bart van Beek <flake@***.NL>
Subject: Virtual money
Date: Thu, 26 Jan 1995 15:02:12 +0100
I have the idea that there are some major misunderstandings about digital
financial records.

1. There is no such thing as virtual money, all money there is today is
in some way backed by real assests, it may be gold, it may be vast
resources of oil or it may be land and structures. But every dime in your
electronic bank account is backed by something, and that something is
very real, not virtual at all.

2. The only thing your electronic bank account really means is a record
and proof that you actually own a bit of those vast resources.

So in contrary to what FASAclaimed -money in the future consists mainly
of data- there will be definetly, some form of hard currency backing your
account.
And now the crash.
No bank that's worthy of the name, is gonna trust a crash sensitive
system as a computer for it's sole proof of financial validity. They are
not only gonna keep a back-up system on computers of all of their records
in an off-line version, just to check if there isn't any frauding in the
system by an outside entitie. But they are also gonna keep extensive
back-ups of all their files on some trustable permanent carrier.
I agree that hard-copy isn't a very good choice, but things like CD-roms,
are already at this time used as such trustable carriers.

And cd-roms are not virus sensative, they cannot be altered, so why would
the financial world of the future, if they have any sense left, suffer
any hardship from the virus of 2029 ?


--------------------------------------------------------------
| Beware of what you ask for you may recieve it |
--------------------------------------------------------------

**** The Cornflake Killer Strikes again ****
Message no. 2
From: Robert Watkins <bob@**.NTU.EDU.AU>
Subject: Re: Virtual money
Date: Fri, 27 Jan 1995 01:11:46 +0930
>
> I have the idea that there are some major misunderstandings about digital
> financial records.
>
> 1. There is no such thing as virtual money, all money there is today is
> in some way backed by real assests, it may be gold, it may be vast
> resources of oil or it may be land and structures. But every dime in your
> electronic bank account is backed by something, and that something is
> very real, not virtual at all.
>
Oh? I thought that there were free-floating currencies, such as the US
dollar, the Yen, the pound, in fact, most of the western world.
I know that the US Dollar _used_ to be pegged to the value of gold, but
that was pulled back in the '30s to counter the Depression.

> 2. The only thing your electronic bank account really means is a record
> and proof that you actually own a bit of those vast resources.
>
> So in contrary to what FASAclaimed -money in the future consists mainly
> of data- there will be definetly, some form of hard currency backing your
> account.

Regardless of wether a currency is actually backed by something or not,
most _money_ is just data. Most dollar bills sit inside a nice big vault.
Some notes don't leave the vault they are first put into for years. Most
transactions are digital. Records of ownership are digitial. Lose these and
you lose track of how much money you have.

> And now the crash.
> No bank that's worthy of the name, is gonna trust a crash sensitive
> system as a computer for it's sole proof of financial validity. They are
> not only gonna keep a back-up system on computers of all of their records
> in an off-line version, just to check if there isn't any frauding in the
> system by an outside entitie. But they are also gonna keep extensive
> back-ups of all their files on some trustable permanent carrier.
> I agree that hard-copy isn't a very good choice, but things like CD-roms,
> are already at this time used as such trustable carriers.
>
> And cd-roms are not virus sensative, they cannot be altered, so why would
> the financial world of the future, if they have any sense left, suffer
> any hardship from the virus of 2029 ?
>
>
This is why: The system HAS to be on-line. If it's not, it's too slow to
access, and in markets where milliseconds count (or even nanoseconds), you
can't be slow. Off-line systems are pointless, though you might have
multiple redundancies on the on-line system.

Okay, so when the virus hits, the bank systems are going to go DOWN... but
not all at the same time. One bank gets hit early, another later. Some may
not get hit for weeks.

Why is this important, I hear you ask. Because wealth isn't a matter of
holding bank notes anymore, it's a little record in a bank database saying
you have x dollars in your account. All of a sudden, those records are out
of sync. Here's an example. I'm F. Richh, of New York. I transfer
$1,000,000,000 out of my account at Chase Manhattan into my account in
Geneva. (ooo... aren't I sneaky. :) Later that day, the Geneva bank goes
down, before the transaction is backed up. But Manny-Hanny doesn't go down
until the next day, AFTER the transaction is backed up. Damn, I'm out of
pocket by a billion bucks! I can't prove I own it. Ouch, does that hurt.
Is the money gone? Heck no, it's probably still at the guv'mint mint. But
whose is it? And this is happening EVERYWHERE. And it's months before the
Virus is attacked, and two and a half years before it's completely gone.

Oh, no problem, you say. We'll just look on the backup and see you took the
billion out of Manny-Hanny and sent it to Geneva. The Geneva bank has an
unclaimed billion dollars, it must be yours. Okay, so I'll change the
scenario. I didn't transfer it electronically, I got a cashier's check for
the amount, which I sent to Geneva. Now, I can give a good case the billion
is mine, but it could be awkward, especially if the check itself isn't
still around (the electronic record of the serial number is gone from
Geneva, remember?)

And who says that the Geneva bank HAS a spare billion? I didn't send them
the physical money, I just made a little value in a database change.
Actually, a couple of values: my account, and the bank's total accounts.
Both are gone. Oops, it seems Geneva DOESN'T have a spare billion, after
all. They KNOW they got a billion from me, but they don't have it anymore.

This is going on world wide. Maybe some bright spark says: okay, well we'll
just find out the latest back up that EVERYONE has, and we'll take it from
there. No can do, compadre. Unless everyone is logging EVERY transaction
to hard media instantly, there's going to be a large difference, probably
enough for slip ups. But lets say they are logging EVERY transaction
instantly. There'll be minor discrepencies (oh, on the order of a few
tenths of a percentage points per institution), but we say we accept them
so that we can get on with living our lives.

And here we have something interesting. We can't fix up those backups until
the Virus is gone, or at least well tamed. The earliest this could happen
is six months after the Crash, more likely a year or two. What do we do in
the meantime? Some people have cash in their pockets, but not many, and not
much. Credit cards don't count. Cheques don't count, as the banks can't
prove they can pay for them. A bank MIGHT honour a cashier's cheque they
issued, but they might not. What are people going to do? Money is
effectively useless. They can't buy food, they can't pay for electricity or
water, they can't pay a rent, or a mortage. Employers can't pay employees.
A year or two later, the world might get a fresh start, but it's still
chaos. Shop keepers payed money for inventories they no longer have, and
they have to buy more. Vast amounts of wealth is invested in stocks, many
in companies that have collapsed. In short, the world is in the grip of a
massive stock market and bank crash that is on pause for the worst period
for two years.

No, the only mistake FASA is making is in assuming the world would recover
from such a massive collapse. World War II started in part because of an
economic sinkhole in both Japan and Germany. A collapse of the world's
computer systems could easily trigger another World War.

Sorry about the large post, but it's a complex subject.

--
Robert Watkins bob@**.ntu.edu.au
Real Programmers never work 9 to 5. If any real programmers
are around at 9 am, it's because they were up all night.
Message no. 3
From: cabanc@******.WKU.EDU
Subject: Re: Virtual money
Date: Thu, 26 Jan 1995 10:51:25 CST
Jan-bart van Beek <flake@***.NL> writes:
>
>
>1. There is no such thing as virtual money, all money there is today is
>in some way backed by real assests, it may be gold, it may be vast
>resources of oil or it may be land and structures. But every dime in your
>electronic bank account is backed by something, and that something is
>very real, not virtual at all.

Whaaaaaaa???! I thought we were off the gold standard.
Totally against anything I've learn about economics. Well, on second
reading, the bank may not actually have your 1 Million stacked neatly
in the vault, they actually have 100 thousand in assets and the other
900 thousand is in investments.

>
>2. The only thing your electronic bank account really means is a record
>and proof that you actually own a bit of those vast resources.
>
>So in contrary to what FASAclaimed -money in the future consists mainly
>of data- there will be definetly, some form of hard currency backing your
>account.

I don't think so, most corps today use electronic means to
keep records of the cash and the banks shift the money today. Though
if somebody who knows more that me about how this works could you
E-mail me the way it works.

>And now the crash.
>No bank that's worthy of the name, is gonna trust a crash sensitive
>system as a computer for it's sole proof of financial validity. They are
>not only gonna keep a back-up system on computers of all of their records
>in an off-line version, just to check if there isn't any frauding in the
>system by an outside entitie.

I donknow, a while back a large bank had a software error and
they had a 6 billion dollar debt showing. Had to borrow from the
government regulator (don't remember the actual name) to balance the
books and had to pay the interest.

>And cd-roms are not virus sensative, they cannot be altered, so why would
>the financial world of the future, if they have any sense left, suffer
>any hardship from the virus of 2029 ?

that's it banks, don't have sense. look at your checks, see
the computer code. folklore says when they first came out a guy got
as bunch of checks printed with no name on them and slipped the
deposit slips (with code) in the slots at the bank so people would
deposit their money into the bank.
So my argument is that the people running the show don't
understand the tech, so problems can easilly happen.

Candi Cabaniss
CABANC@******.wku.edu
Message no. 4
From: Alex van der Kleut <sommers@*****.UMICH.EDU>
Subject: Re: Virtual money
Date: Thu, 26 Jan 1995 13:22:43 -0500
On Thu, 26 Jan 1995, Jan-bart van Beek wrote:

> I have the idea that there are some major misunderstandings about digital
> financial records.
>
> 1. There is no such thing as virtual money, all money there is today is
> in some way backed by real assests, it may be gold, it may be vast
> resources of oil or it may be land and structures. But every dime in your
> electronic bank account is backed by something, and that something is
> very real, not virtual at all.
>
> 2. The only thing your electronic bank account really means is a record
> and proof that you actually own a bit of those vast resources.
>
> So in contrary to what FASAclaimed -money in the future consists mainly
> of data- there will be definetly, some form of hard currency backing your
> account.
> And now the crash.
> No bank that's worthy of the name, is gonna trust a crash sensitive
> system as a computer for it's sole proof of financial validity. They are
> not only gonna keep a back-up system on computers of all of their records
> in an off-line version, just to check if there isn't any frauding in the
> system by an outside entitie. But they are also gonna keep extensive
> back-ups of all their files on some trustable permanent carrier.
> I agree that hard-copy isn't a very good choice, but things like CD-roms,
> are already at this time used as such trustable carriers.
>
> And cd-roms are not virus sensative, they cannot be altered, so why would
> the financial world of the future, if they have any sense left, suffer
> any hardship from the virus of 2029 ?
>

Because they are read only. If they could be altered, a virus could
infect it. If not, they're not dynamic and useless except for static
programs. No records that change everyday.

> --------------------------------------------------------------
> | Beware of what you ask for you may recieve it |
> --------------------------------------------------------------
>
> **** The Cornflake Killer Strikes again ****
>

Money is not backed now by gold, or oil, or anything else. If that was
the only thing you need, the peso would still be in great shape because
of all that Mexican oil. Currency is backed by confidence. The reason
that i can get a book for 15 dollars is that the person selling it thinks
that they can get 15 dollars worth of stuff from something else, etc. For
a good explanation of viruses, bank crashes and backups, read Debt of
Honor. Scary stuff.
Message no. 5
From: Walter Whimpenny <73422.3454@**********.COM>
Subject: Virtual Money
Date: Thu, 26 Jan 1995 13:56:09 EST
Jan-bart van Beek, writes:

>1. There is no such thing as virtual money, all money there is today is
>in some way backed by real assests, it may be gold, it may be vast
>resources of oil or it may be land and structures. But every dime in your
>electronic bank account is backed by something, and that something is
>very real, not virtual at all.

----snip----

>So in contrary to what FASAclaimed -money in the future consists mainly
>of data- there will be definetly, some form of hard currency backing your
>account.

Hard currency essential is virtual money. Just pieces of paper and cheap
metal, which represent a certain value, possibly backed by something other
than the word of the government issuing it (Though not necessarily). There
for these pieces of paper are symbols and therefore bit of data acting as
symbols for a certain value would be as valid. How well backed the
currency is depends more on the credit rating of the government issuing the
currency than any actual land/gold/oil/etc. owned by the government. When
things get so bad that pepole are actually asking for the gold etc. for
their currency generally the government falls (oftentimes via a war) and
the currency is then completely devalued. i.e. the symbol (paper or bits)
are worthless.

-Walt

aka -DarkJack-
Message no. 6
From: Erik S Jameson <esj@***.UUG.ARIZONA.EDU>
Subject: Re: Virtual money
Date: Fri, 27 Jan 1995 15:04:55 -0700
On Thu, 26 Jan 1995, Jan-bart van Beek wrote:
>
> 1. There is no such thing as virtual money, all money there is today is
> in some way backed by real assests, it may be gold, it may be vast
> resources of oil or it may be land and structures. But every dime in your
> electronic bank account is backed by something, and that something is
> very real, not virtual at all.
>
Uh, no. The fact of the matter is this. Money USED to be backed up by
material resources. Remember the gold standard and the silver standard
for the US dollar? Doesn't exist any longer, hasn't for decades. The
only value to your dollar is the one that society says it has. It'll
never happen, but if everyone decides that fig newtons are the new
currency, then our paper dollars are junk.

I mean, do you really think there are trillions of dollars worth of gold
in the governemnts hands?

Erik, a.k.a. the Whistler

Further Reading

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Thwap!